Business News
Mutual Benefit to propose dividend for the first time since 2008
Shareholders of Mutual Benefits Assurance Plc finally have a reason to smile, as the company appears set to break its 9-year dividend drought.
In a recent notice sent to the Nigerian Stock Exchange informing it of board approval for its 2017 results, the company hinted at the possibility of dividend payment. Mutual Benefit last paid a dividend in 2008.
At its meeting held on the 22nd of February 2018, Mutual Benefit’s board of directors approved dividend payment. Details of the recommended dividend will be communicated to the Exchange (NSE) after the approval of the audited financial statements by the National Insurance Commission (NAICOM).
Insurance companies on the NSE, have a history of poor performance in terms of price appreciation and corporate governance. The recent shift in the minimum price floor to N0.01 left many insurance stocks hard hit.This may have been an impetus for the proposed dividend payment.
How were accumulated losses wiped?
As at when this article was written, Mutual Benefit was yet to publish its 2017 Full results. However, its most recent result was its 2017 9 Months results which showed that the company had accumulated losses (negative retained earnings) of ₦1.2 billion.
Companies are barred from paying dividends while they have negative retained earnings (This indicates Mutual Benefits now has positive retained earnings. The company does not also have a Share Premium account, which is typically how accumulated losses can be set-off against to allow for dividend payments.
Its recent rights issue which sold for 50 kobo did not have any Share Premium thus we do not know for sure how the company will fund dividend payment.
Mutual Benefits shares are currently trading at ₦0.33 in today’s trading session, down 2.94%. Year to date, the stock is down 34.94%.
Results for the 9 months ended September 2017 show gross premium written increased from N9.8 billion in 2016 to N10.5 billion in 2017. The company made a profit before tax of N1.1 billion in 2017 as against a loss before tax of N324 million in 2016.
It could pay dividends this year if its profits for the year is so good that it exceeds the accumulated losses and retains some profits where it can pay dividends from.
Coronavirus
FG announces schedule for 4th evacuation flight from the USA
The evacuees will be expected to present an original COVID-19 negative test result not older than 14.
The Federal government has approved the fourth evacuation flight for Nigerians stranded in the United States of America for July 28.
According to a statement that was signed by the Consulate General of Nigeria, the Ethiopian Airline with flight number ET509 will depart Newark Liberty International Airport, New Jersey on Tuesday 28 July 2020 by 21:15hrs and arrive Nnamdi Azikiwe International Airport, Abuja on Wednesday 29 July 2020 by 13:25hrs.
“All prospective evacuees duly registered with any of the three Nigerian missions in the USA should purchase their one-way tickets at a cost of $1250 for economy class and $2800 for business class for adult/child fare including all taxes with the usual percentage reduction for infants under 2 years,” the statement read.
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In line with the earlier announced protocols from the Nigerian Presidential Task Force on COVID-19, the evacuees will be expected to present an original COVID-19 negative test result not older than 14 days on the day of departure at the airport.
There will also be a temperature check at the airport, and any intending evacuee with a body temperature above 38°c or any symptoms suggestive of COVID-19 will not be allowed to check-in.
Evacuees are also required to wear a face mask as a matter of necessity and be in possession of hand sanitizer for intermittent use during the flight, while also adhering to the instructions of the
Furthermore, all returnees are enjoined to adhere strictly to all instructions of Port Health Services (PHS) officials and observe other entry screening protocols on arrival.
Notice on the FOURTH Evacuation Flight from the United States of America to Nigeria. #StayHomeSaveLives #COVID19Nigeria #COVID19 #PTFCOVID19 @NigeriaGov @DigiCommsNG @USinNigeria @FMICNigeria pic.twitter.com/NFVWWDGgSx
— Geoffrey Onyeama (@GeoffreyOnyeama) July 10, 2020
Hospitality & Travel
Covid-19: British High Commission to resume visa application in Nigeria
Nigerians who want to visit the UK can do so as soon as international flight operations resume.
The British High Commission in Nigeria has announced plans to resume visa processing in the country. It revealed that it will soon begin receiving visa applications from Nigerians who want to travel to the United Kingdom (UK).
This was disclosed in a public statement by the British High Commission in Abuja on Thursday, July 9, 2020.
It said that Nigerians who want to visit the United Kingdom can do so as soon as the international flight operations resume in the country. The statement said:
“We know there are many Nigerian nationals hoping to be able to travel to the UK when flights resume, both for employment and to see family members.
“UKVI are working closely with TSL contact, our commercial partner, to reopen visa application centres that were suspended due to COVID-19. UK visa application centres are reopening in phased manner globally when it is safe to do so and when we can operate an effective service.
“TSL contact are putting appropriate measures in place and working hard to reopen in Nigeria. We will share details of when VACs will reopen soon,”
READ MORE: US to stop issuing visa for Birth Tourism
It can be recalled that the Federal Government had shut down the airports to both domestic and international flight operations in March as part of measures to contain the spread of the coronavirus disease.
Following the gradual resumption of domestic flight operations, Nigerians are expecting that international flight operations might be resuming soon.
Commodities
Nigeria’s excess crude account falls to $72 million
Nigeria’s excess crude account has now fallen by a whopping 98% in just 5 years.
Nigeria’s Excess Crude Account (ECA) now stands at $72 million as the country continues to grapple with an unprecedented revenue crisis not seen since the early eighties. The ECA account has now fallen by about 98% within the last 5 years.
The information on the excess crude account was revealed by the Minister of Finance, Zainab Ahmed in a National Economic Council Meeting during the week. The ECA is a savings account retained by the Federal Government and is funded by the difference between the market price of crude oil and the budgeted price of crude oil as contained in the appropriation bill.
There were major concerns last November when it was reported that the ECA balances held just $324.5 million one of the lowest balances recorded at the time. At $72 million the ECA is in low territory highlighting the effect of the fall in crude oil prices this year. Crude oil prices have crashed to sub-zero in March and have risen back o just over $40/barrel in recent weeks. However, it still remains low from Nigeria’s previous budget benchmark.
ECA in the news
About a year ago Nairametrics reported Nigeria’s Excess Crude Account has dropped to $480 million. This is as controversy continues to trail the $1 billion military spendings which were withdrawn from Nigeria’s Excess Crude. According to the Central Bank of Nigeria’s annual report for 2018, Nigeria’s crude excess account fell from $2.45 billion in 2017 to $480 million as of December 2018.
(READ MORE: Rising COVID-19 cases in world’s biggest economy falter crude oil prices)
Just 5 years ago (August 2015) the ECA stood at $2.2 billion. This was the early days of the Buhari administration. It was $3.6 billion in February 2014, one of the highest balances on record. That same month, at its monthly FAAC, the government agreed to remove fuel subsidy from its books. Fuel subsidy is currently being borne by the NNPC.
The Controversies: Last year, the federal government under President Muhammadu Buhari was accused of mismanaging the country’s Excess Crude Account especially the $1 billion reportedly spent on military equipment.
- The National Security Adviser (NSA) retired Major General Babagana Monguno Gen. Babagana was quoted to have disclosed that he was not aware of the whereabouts or disbursement of the $1billion drawn from the ECA by the Buhari presidency in 2017 for security purposes.
- While controversies trail the statement credited to the NSA, with many describing it as diversion of public funds, the Presidency provided some explanations.
- Responding to the allegations, Senior Special Assistant on Media and Publicity, Garba Shehu, disclosed that various procurements had been made for the purchase of critical equipment for the Nigerian Army, the Nigerian Navy, and the Air Force, contrary to the allegations.
Nigeria’s ECA in retrospect: In Nigeria, there are two Sovereign Wealth Funds: the Excess Crude Account and the Nigeria Sovereign Investment Authority (NSIA). Note that these two are funded by the savings earned when oil prices are at peak.
- Hence, as a larger chunk of revenue is appropriated for ECA and NSIA, the country’s external reserves are likely to fall.
- Note that the sovereign wealth fund was established to address the controversies surrounding the Excess Crude Account.
- The fund is usually expected to generate revenue to meet budget shortfalls in the future, provide dedicated funding for the development of infrastructure and saves for future generations.
ECA depleted by 98% in 5 years: A closer look at the various annual reports of the Central Bank of Nigeria shows that Nigeria’s excess crude account has now fallen by a whopping 98% in just 5 years.
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