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Oando vs Gwarzo vs Adeosun: Is this State Capture? by @Nairametrics



  • A case of State Capture is being alleged after the Minister of Finance, kemi Adeosun suspended SEC Director General, Mr Mounir Gwarzo.
  • The Ministry claims he was suspended due to alleged cases of financial impropriety leveled against him
  • A Thisday and Businessday article alleges that his removal may be related to the Oando investigation, citing a letter from purportedly written by Gwarzo
  • We explain this whole controversy and how a case of State Capture may actually be conceivable.

Reports from two of Nigeria’s highly rated traditional media firms, Thisday and Businessday, suggest the recent suspension of SEC DG, Mr. Mounir H. Gwarzo by the Minister of Finance, Mrs Kemi Adeosun is related to the suspension of trading of Oando shares and the subsequent forensic audit of the financial affairs of Oando Plc conducted by SEC.

Brief Background

Oando has been in the under the radar since August, after two of its shareholders, Gabrielle Volpi and Alhaji Mangal accused the Oil and Gas company of financial impropriety. This led to a threat to Oando’s AGM which the duo unsuccessfully wanted suspended. We explained the matter here

They had written a petition to SEC requesting that the AGM be suspended and that the current CEO of Oando, Wale Tinubu and his Executive Directors be sacked from the board. SEC declined the request citing legal and regulatory constraints.

The National Assembly also weighed in citing complaints from shareholders of the company.

In surprise to many, SEC later announced a suspension of the trading of Oando shares on the floor of the Nigerian Stock Exchange leading to the Johannesburg Stock Exchanging issuing their own suspension.

SEC went a step further requesting for a forensic investigation of the Financial affairs of the company in line with its power as the regulator in the capital markets. Oando kicked replying that SEC does not have the powers to investigate its affairs and went to court requesting a restrain of SEC from the courts.

Justice Mohammed Aikwa of the Federal High Court, later struck out a suit filed by Oando Plc seeking to restrain SEC from conducting a forensic audit on the affairs of the company, and imposing a technical suspension on the company’s shares.

The judge then advised Oando to take its case to the Investment and Securities Tribunal (IST), as the laws setting up the tribunal exclude any other body from hearing a dispute between a company and a capital market operator.

While all this was going on, the suspended DG of SEC was accused of his own financial impropriety, alleging that he misappropriated a sum of N108 million when he was SEC Commissioner, an accusation Gwarzo denies. He claimed the money was part of Severance paid to him when he retired as SEC Commissioner.

Government Angle

In what seems like a wicked coincidence, Gwarzo was suspended last week and Abdul Zubair appointed as the acting DG of SEC. According to Thisday, Gwarzo had met with the Minister of Finance 48 hours before he was removed and was “verbally instructed” by the Minister “to discontinue the Oando probe, which he apparently objected to”.

The Minister the report continues said Gwarzo, objected to the instruction and wrote a letter to the Minister the next day. The letter the report claims may have infuriated the Minister “suspended him the next day – exactly 48 hours after their meeting and 24 hours after being in receipt of his letter”.

The report also reveals the Government alleges that the minister took the action to suspend him “purely due to the allegations of financial impropriety leveled against Gwarzo and mounting concerns that he was using the Oando issue as a smokescreen to prevent a probe into his stewardship as the DG of SEC.”

The official also revealed that the reason Adeosun had instructed Gwarzo to discontinue the Oando audit had more to do with “the fact that the management of the oil company had admitted wrongdoing in the charges against them, so she felt there was no need to continue the audit and had recommended that they be penalised.”

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State Capture?

Various analysts comments surveyed by Nairametrics allege this case has a political undertone and bears characteristics of a state capture. The actors in this matter, Wale Tinubu, Gabrielle Volpi and Alhaji Mangal are all politically connected persons and exert varying degree of influence with the current government and the immediate past government.


State Capture by definition is a form of systemic political corruption in which private interests significantly influence a state’s decision-making processes to their own advantage.

Considering that the courts had already referred this matter to the IST, why then is the government involved in this matter, if not for political interest? Could this be State Capture?

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For example, Wale Tinubu is related to APC Chieftain, Asiwaju Bola Tinubu and is thought to have the ears of the APC led government. Volpi is alleged to be a close associate of former Vice President, Alhaji Atiku who has recently abandoned the ruling party, APC for PDP, the party that ruled Nigeria for about 16 years. Volpi’s mega logistics company, Intels is also a subject of another controversy with the Nigerian Ports Authority.

Suspicions that the state is getting involved in a matter that is purely within the purvey of SEC and the markets draw mostly from this comment highlighted in the Thisday article.

“The minister then without mincing words reminded him that there were petitions bordering on financial impropriety and that he should have been suspended a long time ago. “She also insisted that a committee be set up comprising the legal officers of the ministry, SEC and Oando to agree on the penalties to imposed on the officials of the company. “Gwarzo, however, refused, telling her that there were implications of doing so and that the commission does not take decisions based on recommendations of committees but is guided by its Investment and Securities Act (ISA) and capital market regulations formulated by SEC.

Gwarzo’s Problems Persist

Claims that the SEC DG misappropriated about N104 million as Commissioner in SEC as well as several allegations of crony capitalism is worrisome. They claim he awards contracts to his personal businesses and to companies linked to his wife and cronies.

Gwarzo has denied these claims and insist that the N104 million was payment he received as severance. Whilst Gwarzo had denied this claims, payment of a Severance Package of N104 million to a Civil Servant is shocking nonetheless, especially if you consider he is back in the same SEC as DG.

What next?

It should be easy to verify severance payments as the money trail is not one of the most difficult to investigate. Thus, removing Gwarzo at a time when a high-profile case such as the Oando Financial Forensic Investigation is going on is a source of huge concern for the capital market.

Investors will be watching keenly to see if the new acting DG of SEC, Abdul Zubair will suspend the investigation and impose penalty on Oando. If this occurs, then it could fuel claims of “State Capture” and could strengthen Gwarzo’s claim that his suspension was not due to his own case of financial impropriety but because of the Oando investigation.


The market is very interested in how this case pans out especially when you consider the billions in market value that has been wiped out of Oando’s shares over the last two years. The record losses incurred by the company and the issues pertaining to related party transactions in the company is a major source of concern to hundreds of thousands of shareholders of the company.

Nairametrics is Nigeria's top business news and financial analysis website. We focus on providing resources that help small businesses and retail investors make better investing decisions. Nairametrics is updated daily by a team of professionals. Post updated as "Nairametrics" are published by our Editorial Board.

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Secret behind MTN’s blistering performance

Despite COVID-19 disruptions, MTN Nigeria’s 2020 financials showed marked improvements compared to its 2019-year-end.



NCC, MTN’s parent company faults regulator’s recommendation for data price reduction, MTN Nigeria reacts to poor internet as network issues go beyond Nigeria 

MTN Nigeria Communications Plc (MTN Nigeria) released its audited financial results for the financial year ended December 31, 2020.

Despite a challenging 2020 to individuals and businesses caused by COVID-19 disruptions, MTN Nigeria’s financial and non-financial information showed marked improvements compared to its 2019-year-end as well as prior quarters of 2020 results that were impacted by the COVID-19 pandemic.

Indeed, the evolving pandemic which intensified lockdown, remote working, and work-from-home procedures, appeared to have led to increased adoption of MTN Nigeria data and digital services.

Specifically, year-on-year on non-financial information, mobile subscribers increased by 12.2 million to 76.5 million; active data users increased by 7.4 million to 32,6 million while the company’s mobile money business continued to accelerate with a 269.2 % increase in the number of registered agents to over 395,000 and 4.7 million active subscribers from approximately 553,000 in 2019.

Year-on-year on financial information, service revenue increased by 14.7 % to NGN1.3 trillion driven principally by voice (with revenue growth of 5.9 %) and data revenues (rising by 52.2 % led by increased data use and traffic); profit before tax (PBT) grew by 2.6 % to N298.9 billion; profit after tax (PAT) increased by 0.9 % to N205.21 billion; while Earnings per share (EPS) rose by 0.9 % to N10.1 (N9.93, 2019).

Nonetheless, significant increases were noted in its operating expenditure as well as capital expenditure. First, there was a 2.3 % increase in operating expenses arising from the rollout of new sites and the impact of naira currency depreciation affecting the costs of MTN Nigeria lease contracts. Secondly, EBITDA margin declined by 2.5 %age points to 50.9 % (from 53.4 % in 2019) There were also other significant cost rises including a 25.4 % increase in net finance cost, and 19.4 % increase in capital expenditure which had a 11.7 % knock-on increase in depreciation and amortization costs.

On the back of the year-end result, MTN Nigeria has proposed a final dividend per share (DPS) of N5.90 kobo per share to be paid out of distributable income and brings the total dividend for the year to N9.40 kobo per share, representing an increase of 18.7 %. MTN Nigeria paid N4.97 as final dividend for the year ended December 31, 2019. This was in addition to an interim dividend of N2.95, which brought its total 2019 dividend to N7.92 per share.

The proposed dividend implies a yield of 3.4%. Having paid an interim dividend of NGN3.50 in 2020, the proposed dividend, if approved, will bring the total dividend per share to NGN9.40 or c.19% higher compared with 2019.  We expect a positive reaction from the market due to the marked improvement in earnings. However, the market’s reaction may be dampened by negative investor sentiments on equities arising from the uptick in yields on fixed-income securities.

We expect that the introduction of additional customer registration requirements requiring subscriber records are updated with respective National Identity Numbers (NIN), and the continued suspension of the sale and activation of new SIM cards will affect subscriber growth.

MTNN share price remains unchanged at the end of trading yesterday at N174 per share.


Tade Fadare PhD, is an economist, and a professionally qualified accountant, banker and stockbroker. He has significant experience working or consulting for financial institutions in Europe, North America, and Africa.

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How does a bank make N19 billion a month?

The strategy for banks globally is to attract deposits at a lower rate than it lends out to borrowers.



How does a Financial Services Group make N19b a month, post a Profit After Tax figure of N230b in an environment where global commerce virtually ground to a halt in 2020?

The Zenith Bank Plc (Zenith) Year-end 2020 final results are a blockbuster, not just in the quantitative, but the qualitative as well. In all major headline numbers, Zenith posted growth on a Year-on-Year basis, specifically, Gross Earnings are up 5.2%, Net Interest Income up 12%, Customer deposits up 15.3%.

Somehow Zenith grew her loan book by 18% in a recession and reduced the volume of Non-Performing Loans in the same period. Zenith was also able to post a higher revenue number from non-interest income even as yields on fixed-income fell across Nigeria. I must stress, Zenith has posted these results by servicing her target segment of the high-end corporates in Nigeria.

READ: Union Bank Nigeria Plc posts N15.9 billion profit in 9M 2020, up by 2%

So how did Zenith achieve this? I want to do a deep dive into how to make profits in a recession. However, it is important to start with a background on how banks make money which is basically in two ways;

  • Interest income: which is income generated from the bank gathering deposits from customers and investors and “renting” out these funds to individuals and corporates for a fee called interest. Interest Income is seen as the main business of banks. It is a measure of how well the bank has fine-tuned its people, process, and systems to generate returns from a commodity called cash.
  • Non-Interest Income: This is the income the bank generates from deploying its brands and people to juice revenues from activities that do not necessitate a transfer of cash. For Example, a bank asset management business leverages the bank’s skillsets to earn fees by providing investment advice to clients. Does a business want to expand? The bank can advise on the process to make that happen.

READ: Zenith Bank spends N20 billion on IT in 2020, up 122%

The strategy for banks globally is to attract deposits at a lower rate than it lends out to borrowers. This allows the bank generate a spread between cost and revenue. The bank’s interest spread can be magnified by the number of quality loans it creates as Interest Income rests also on the quality of the loan book. Positive spread drives the funding of other banking services and is supported by the banks internal competencies to manage risk

So a bank makes profits by

  1. Attracting cheap deposits
  2. Earning positive spread
  3. Providing value addition for a fee
  4. Effective Risk Management

All these have to happen simultaneously. A bank that sources expensive deposits by paying higher rates generates a lower spread. Lower spread exposes the bank to cost overruns and will prove fatal to long-term growth.

READ: Zenith USSD banking transaction value rises by 30.8% Y-o-Y to hit N497.29 billion

With this in mind, let’s review Zenith FY 2020 Performance

  • Attracting Cheap Deposits: In 2019, Zenith’s total interest expense, which represents how much it paid to get deposits was N148b, that figure dropped in 2020 to N121b. this means the bank was able to grow deposits by 25% but at a lower cost. How? Zenith changed her deposit mix, reducing borrowed funds/leases and time deposits by 41% and 38% respectfully and increasing the share of current accounts by 155%. By swapping the deposit mix, the bank’s cost of funds ratio fell by 18mn%.
  • Earning Higher Spread: Zenith grew Net Interest Income by 12.2% in 2020. This figure represents income earned from the deposits and investments of the banking group. Again, this was achieved by asset mix reorganization. In the face of falling rates especially on shorter-dated FGN instruments, Zenith shifted allocation from Treasury bills to longer-dated FGN bonds which paid a higher yield. Zenith’s Non-interest Income also grew to N275b a 5% jump from 2019. This is driven largely by extraordinary items including foreign currency revaluation gain, which is the gain realized from the revaluation of foreign currency-denominated assets. I must highlight this. Zenith was able to post a gain of about N43b which is a 256% gain from FY 2019 based on the Naira being devalued to the US Dollar.
  • Providing Value Addition: Value addition will include all non-core banking services Zenith Group provides to the public including subsidiaries like the Zenith Penson Custodians which has N4t in assets under custody. Commission on agency and collection was a big contributor to Zenith’s non-core banking revenue.
  • Risk Management: Zenith was efficient in deploying its internal competencies to minimize and avoid risk and impairments from the ordinary and extraordinary course of business. Zenith like other financial institutions saw a pullback in commercial activities from her clients. Take the Commerce subsector, the Non-Performing Loan share in that sector grew from 9% to 24%. Zenith, booked an increase in the number of NPLs by volume to N125m in FY 2020 but the bank was able to keep the NPL ratio down to 4.29%. An extraordinary feat.

Overall, the bank was able to navigate a difficult year and post a good return and a handsome dividend of N3 to investors. Zenith was able to achieve all this while increasing the staff strength by 4.6% to 7555 employees.

However, there are red flags as well:

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  • Net Interest Margin was down in FY 2020 as yields declined. If yield continues to stay muted, can Zenith keep finding profitable avenues to invest that N5.34 deposit base?
  • Interest income positive in FY 2020 at 420b but when compared to 2017, interest income is falling.
  • If you ignore the revaluation gain, then Non-Interest income will be considerably muted, possibly negative in FY 2020
  • Fees on electronic products fell 36% in an environment where online banking has been not just sound business practice, but life-saving as well.

Overall, in an environment with months of local and international shutdowns, Zenith has posted good numbers and demonstrated it is possible to eke out gains from a hard environment. When one looks at the dividend yield, P.E. Ratio of the bank, for me, this is a Buy.


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