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Nigeria’s Purchasing Manager’s Index keeps rising

The CBN disclosed yesterday that the country’s Purchasing Manager’s Index (PMI) stood at 58.5 index points in the month of January.

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Purchasing Managers' Index

The Central Bank of Nigeria, CBN, disclosed yesterday that the country’s Purchasing Manager’s Index (PMI) stood at 58.5 index points in the month of January.

This indicates that the Nigerian manufacturing sector has consistently expanded over the past twenty months.

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This development is in spite of the fact that the PMI grew at a slower rate in January compared to the month before, the CBN report said.

“The Manufacturing PMI in the month of January stood at 58.5 index points, indicating expansion in the manufacturing sector for the twentysecond consecutive month. The index grew at a slower rate when compared to the index in the previous month.” – CBN

The CBN said fourteen sub-sectors were surveyed for the PMI report, all of which indicated growth. Some of these sub-sectors include petroleum to pharmaceutical products, fabricated metal products, electrical equipment, food, beverages, textile, plastics & rubber, and more.

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Similarly, while the manufacturing sector’s production level index grew for the twenty-third consecutive month to 59.3 points in January, it was said to have grown at a slower pace compared to the preceding month.

However, the production level in twelve out of the fourteen manufacturing sub-sectors that were surveyed increased, while only two remained unchanged.

Moving on, the new orders index also grew to 58.9 index points in January, marking its twenty second month of consistent growth. While eleven sub-sectors grew, two remained unchanged while one contracted.

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Meanwhile, the CBN said the manufacturing supplier delivery time was slower in January. The index stood at 58.3 points.

Also in the same vein, the manufacturing sector’s inventories index grew at a slower pace to 59.9 index points, the CBN said.

“The Manufacturing sector inventories index grew for the twenty-second consecutive month in January 2019. At 59.9 points, the index grew at a slower rate when compared to its level in December 2018. Twelve of the 14 sub-sectors recorded growth, 1 recorded unchanged, while 1 reported declined raw material inventories in the review month.”

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Patricia

Emmanuel covers the financial services sector for Nairametrics. Do you have a scoop for him? Well then, contact him via his email- [email protected]

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Energy

DisCos seek CBN funding for massive roll-out of meters to consumers

This, it was said will help DisCos meet the 2024 deadline which they had committed to.

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NERC, electricity tariffs, hotels, bars,

A Central Bank-funded massive roll-out of meters would expedite the efforts to achieve the full take-off of the proposed Service Reflective Tariff (SRT), Electricity distribution companies (Discos) have suggested.

According to Mr Sunday Oduntan, the Executive Director in charge of research and advocacy at the Association of Nigerian Electricity Distributors (ANED), such funding would help ensure that all electricity customers are adequately metered under the Meter Asset Provider (MAP) regulation.

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Oduntan, who said this in a statement to NAN on Friday, also disclosed that it would assist the distribution companies to meet the 2024 deadline which they had committed to, for metering all electricity consumers.

He recalled that Mr Ernest Mupwaya, Managing Director of Abuja Electricity Distribution Company (AEDC), had spoken on behalf of the DisCos at the House of Representatives Public Hearing on the power sector on Thursday.

According to Mupwaya, the Capital Expenditure (CAPEX) provision in Nigeria’s electricity tariff was insufficient to cover the cost of metering customers.

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“Over the years, there has been insufficient investment in customer metering, due to inadequate Multi Tariff Order (MYTO) CAPEX and uneconomic tariff. The approved CAPEX for DisCos has never been adequate for comprehensive metering,” he said.

He added that the Discos were requesting CBN to provide funds for emergency mass metering projects since they no longer had a provision in their CAPEX for metering. If approved, the project would be completed within a period of 18 months.

Mupwaya added that the funding was even more necessary since no provisions had been made for metering in the event that the MAP regulation failed.

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The first quarter of 2020 had seen an average monthly growth of 75,000 new customers every month, moving the number of metered customers in Nigeria above 10 million, and decreasing the metering penetration from 45.5 percent in January 2017 down to 40.3 percent in March 2020.

“Plugging the metering gap that is in excess of six million meters has been slow because even the recently introduced MAP regulations incorporate inappropriate meter pricing and so, it is not working as NERC/DisCos expected.

“The twin effects of the sudden increase in import duties of 35 percent on meter and NERC’s wrong pricing frustrated the good intentions of MAP” he noted.

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He appealed to the government to grant full waivers on the 35 percent increased duty surcharged on meters, until mass metering was achieved, and to fix an appropriate and commercial price on meters.

He added that the cap on estimated billing had discouraged consumers from obtaining meters under the MAP regulation, and urged the NERC to allow Discos go ahead with estimated billing, introducing the capping only after the massive meter roll-out after 18 months.

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Corporate deals

Deals: Dangote Sugar acquires Savannah Sugar Company Limited 

Dangote Sugar Refinery will henceforth assume all legal proceedings.

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Dangote Sugar Refinery to merge with Savannah Sugar, Dangote was $4.3 billion richer in 2019, Dangote Sugar announces closed period, ban insider shareholders from trading , Dangote Cement: Weak revenue performance, elevated OPEX weigh on earnings

Dangote Sugar Refinery has been authorised to receive all the assets, liabilities and business undertakings, and property rights of Savannah Sugar Company Limited (SSCL) 

This was one of the resolutions passed at the court-ordered meeting of the members of Dangote Sugar Refinery Plc held on Thursday at the Eko Hotel & Suites, Victoria Island, Lagos 

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According to the notice of the proceedings sent to the Nigeria Stock Exchange, and seen by Nairametrics, Dangote Sugar Refinery is hereby authorised to receive all the assets ((including all tax attributes, unutilized capital allowances, tax losses, withholding tax credits and any other tax refunds available subject to the approval of the FIRS), liabilities and business undertakings, including real property and intellectual property rights of Savannah Sugar Company Limited (“SSCL”) transferred by SSCL to the Company (pursuant to the Scheme of Arrangement between SSCL and its shareholders) upon the terms and subject to the conditions set out in the Scheme of Arrangement without any further act or deed”.  

Dangote Sugar Refinery will henceforth assume all legal proceedings, claims and litigation matters pending or contemplated by or against Savannah Sugar. 

In view of this acquisition, the court also ordered Dangote Sugar Refinery to issue and allot to the shareholders of Savannah sugar, 146,878,241 ordinary shares of N0.50 each in the share capital, for the 162,756,968 ordinary shares held by the Scheme Shareholders in SSCL 

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The Scheme Document dated Friday, May 29, 2020, was also approved at the meeting, and Directors of DSR were authorised to consent to any modifications that the Securities and Exchange Commission may deem fit, and give effect to the scheme.  

Dangote Sugar Refinery had earlier sent a disclosure notice to the NSE, announcing its plans to acquire Savannah Sugar Company Limited, subject to the approval of both company shareholders.  

Dangote industries recently sold its flour subsidiary, and this acquisition is part of an expansion strategy for Dangote Sugar Refinery, and the next stage of its backward integration plan to revolutionize the sugar sub-sector of Nigeria’s economy. 

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Corporate deals

Fairfax Africa Holdings enters purchase agreement with Helios Holdings Ltd 

Fairfax Africa Holdings Corp. agreed to merge with Helios Holdings Ltd.

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Fairfax

Canada-based Fairfax Africa Holdings Corporation has reached an agreement to merge with Helios Holdings limited, the Africa-focused private equity firm which was co-founded by Tope Lawani and Babatunde Soyoye. The purpose of the merger is to create a truly pan-African investment firm.

A statement made available by Fairfax, as seen by Nairametrics, noted that when the deal is finalised, Fairfax Africa Holdings Corporation will be renamed Helios Fairfax Partners Corporation. The company will remain listed on the Toronto Stock Exchange and the Helios co-founders will be joint Chief Executives of the new company. 

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The terms of the deal will also require Helios to exchange 45.6% of equity and voting interest in the new company. Helios will contribute its performance and management fees through its present and future holdings under the Helios funds, thereby making Helios Fairfax Partners Corporation one of the biggest Africa-focused asset management firms by complementing the experiences and funds of both companies under one umbrella. 

The new company will also have a larger capital base for diversified investment inflows to the continent through years of experience in third-party investment management operations and the support of longer-term institutional shareholders. 

The main objectives of this deal are summarised below:

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  • Helios Fairfax Partners Corporation to become the leading pan-Africa focused listed alternative asset manager with unique capabilities to invest across the continent
  • Creates a diversified investment platform combining best in class third-party investment management capabilities with the strength of long-term shareholders in a permanent capital vehicle
  • Provides an enlarged capital base, increasing capacity to invest as well as to launch additional and differentiated Africa focused asset management strategies and initiatives
  • Reinforces the parties’ shared long-term commitment to be a consistent and trusted provider of capital to growing African businesses across market cycles
  • Tope Lawani and Babatunde Soyoye, the co-founders and Managing Partners of Helios Investment Partners LLP, will become joint CEOs of the combined holding company, enabling the company to build on the track record they have established over the last 15 years

In his remarks, Tope Lawani disclosed that the deal will offer emerging market investors the opportunity to gain exposure to the continent through their portfolio.

“We take a long-term view on our investments, and many have proved resilient even in this pandemic with a number of our investments in sectors such as telecommunications, payments, and food,” Lawani said. 

He added that the transaction will offer Helios access to permanent capital from equity markets that can be used to accelerate its product and growth strategy.

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Helios, which was founded in 2004, has raised third party private capital for the past 15 years investing in Africa companies including First City Monument Bank (exiting in 2013), Interswitch, Vivo Energy and Helios Towers Plc. 

Fairfax was founded by Canadian Billionaire Prem Watsa and will own 45.6% of the Helios Fairfax Partners Corporation. Before the merger, Helios was raising $1.25 billion for its Africa focused fund and had landed a commitment of $100 million from the U.K’s CDC Group. 


You may read the full statement by Fairfax by clicking here.

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