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This is how much Access Bank saved for shareholders through early bond redemption

Access Bank Plc’s board of directors seem to be making all the right decisions going by the corporate actions the bank has been embarking on recently.



Access Bank Plc

Access Bank Plc‘s board of directors seem to be making all the right decisions going by the corporate actions the bank has been embarking on recently. Just very recently, the tier-1 bank notified the Nigeria Stock Exchange, its shareholders, and the general public of its intention to exercise its option to redeem the $400 million subordinated unsecured notes at a fixed rate of 9.25% which was due in 2021. According to the notice, the bank will exercise that option on June 24th 2019, after which date the notes will be deemed canceled and off the bank’s balance sheet.

How this affects the shareholders

Some shareholders may be wondering how this corporate action of early debt redemption will affect them. With no pun intended, shareholders are the “beast of burden” in the corporate hierarchy, meaning that they eat the crumbs that fall off of the table of higher-ranking stakeholders of a company. Before a stockholder gets paid, the government would have been paid first in the form of taxes, and so would the secured and unsecured creditors. In the same way, before declaring a profit and even dividends, which stockholders are entitled to, a company would have taken out the interest charges on its bond or notes, as well as other expenses like those noted above.

Therefore, by paying off its debt or notes early, Access Bank Plc has moved the shareholders a little higher in the hierarchy of corporate claims. By doing so, the bank has brightened the prospect for increased profit in the future and invariably the prospect for increased dividends. This is because, having liquidated the debt, interest expense relating to that debt will no longer be an item on the income statement of the bank.

How much savings in Naira?

I can hear you ask how much does all the above translate to in monetary terms. Well, assuming that the notes would mature on June 24, 2021, and they are being redeemed on June 24, 2019, (as stated in the notice), it means that the notes are being liquidated two years early and that means two years’ worth of interest expense is being saved. At 9.25% per annum, a principal of $400 million debt will attract an annual interest of $37 million and for two years, that is $74 million. Therefore, by repaying the notes two years early, the bank has saved its shareholders the sum of $74 million over a two-year period. At a conservative exchange rate of N360 to the dollar, that comes to N26.64 billion.

As a reality check, a look at the recently released unaudited financial statement of Access Bank Plc for March 31, 2019, indicates that the bank incurred interest expense of N50.547 billion in 2019 and N46.9 billion in 2018. Though not all the interest expense reported in the unaudited financial statement are related to the Notes being liquidated, there is no doubt that a chunk of it is, given the size of the Notes.

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Effect on the Bank’s Outlook

Not only will the decision to repay the debt save shareholders tons of Naira as noted above, but it will also brighten the future of the bank’s financial ratios and valuation which invariably will lead to higher prices per share and ultimately benefit shareholders through higher unrealized gains. The repayment will improve the bank’s gearing ratio, its debt to equity ratio, its leverage ratio, and its interest coverage ratio among others. As stated before, any improvement in those ratios translate to higher share prices, all other things remaining the same.

Alternative Use of Funds

It is often said that the best businesses are carried out with “other people’s money”, (OPM). That said, one would have thought that Access Bank Plc would have been better off holding the Notes to maturity while using it to generate revenues for its shareholders by investing the money rather than repaying the debt. That argument will hold if the alternative use of the money being used to repay the loan would yield a guaranteed 9.25% or more. By repaying the notes, the bank has saved its shareholders 9.25% on interest expense, so that is the minimum that an alternative use argument can generate to stand the test of time, before factoring in the exchange translation effects.

A possible alternative, however, would have been to use the money to buy back its shares in the stock market, which will lead to a reduction in future dividend expenses for the bank. Unfortunately, Nigerian corporate law and regulation do not permit companies to buy back their shares from the stock market at the moment. So, that route is out of the question. This is an area the SEC and NSE may want to take a deeper look at.

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Yet another alternative use would have been to pay it out as special dividends to shareholders. However, while this alternative would have made shareholders happy, its effect on the balance sheet of the bank would not be as positively beneficial.

Taking Advantage of failing Interest Rate

The interest rate had been on the decline for quite some time now. This is despite the fact that the US Fed began raising interest rates gradually over the last two or three quarters, a development that has caused interest rates to gradually inch up.

In a declining interest rate environment, it makes prudent and economic sense to pay off high-interest debts by replacing them with debts that have lower rates. Even personal financial planners and advisers often time urge their clients to always pay off high interest-bearing credit cards as a way to manage their credit card interest burden. It is not clear if this is what Access Bank Plc plans to do. However, doing that will save shareholders a lot in interest expense, although not as much as would result from outright payoff without a replacement debt.


Conclusion: It is all kudos to the board of directors of Access Bank Plc for doing all the right things for their shareholders.

Uchenna Ndimele is the President of Quantitative Financial Analytics Ltd. and (both Quantitative Financial Analytics company website) is a leader in supplying mutual fund information, analysis, and commentary on African mutual funds. We provide reliable fund data; and ratings information that will add value to fund managers, the media, individual investors and investment clubs.

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Official: Imo State is unemployment capital of Nigeria

According to NBS, 75.1% of the total employable people in Imo State are either underemployed or unemployed.



Ogun, Imo States give free hand sanitizers

Data from the National Bureau of Statistics reveal Imo State, located in the South-Eastern part of Nigeria has the highest unemployment rate in the country.

In contrast, Anambra State is the state with the least unemployment in the country with 13.1% unemployment rate. The national average for the unemployment rate is 27.1%

Imo State has an unemployment rate of 48.7% as at the second quarter of 2020, by far the highest when compared to any other state in the country.

According to the data, 75.1% of the total employable people in the state are either underemployed or unemployed.

READ MORE: Nigerians react as Anambra lawmakers reject Prado SUVs for Innoson SUVs

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See highlights

  • Total number of employable people – 2.48 million
  • Fully employed people – 618, 481
  • Unemployed people in the state – 593. 347
  • Underemployed – 656, 394

Imo State is largely a civil service town and has been unlucky with state governors over the last 20 years. Private sector jobs are hard to come by in the serene state with most industries setting up show in nearby cities like Aba, Port Harcourt, and Onitsha.

The city was once notorious for ritual motivated murders and kidnappings but has since overcome these challenges.

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States Unemployment Rates – Q2 2020

Other States

Akwa Ibom State is next on the list with an unemployment rate of 1.14 million people. The state’s underemployed population is about 551k people while the unemployment and underemployment rates combined is 66.9%.


The best: The state with the lowest unemployment rate in Nigeria is Anambra State with 13.1% out of the total working population of 2.25 million people. The state was 37 out of 37 states in the ranking of unemployment by state. About 1.9 million people in Anambra State are either fully employed (1.57 million) or under-employed (384k) in the state.

READ ALSO: Ekeh, Zinox boss, intervenes in Imo State with N1 billion

Lagos State, Nigeria’s commercial capital and where most graduates rush to for jobs currently has an unemployment rate of 19.5% and sits at 27 in the state by state unemployment ladder. The data shows about 6.8 million people make up the labour force population in Lagos State out of which 3.99 million people are fully employed and another 1.5 million people are underemployed. About 870k Lagosians who are employable did absolutely nothing.

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Concentration: In terms of the concentration of unemployed people, Rivers State came first with a whopping 1.7 million people out of jobs in the state. The state as a working population of 3.9 million. Rivers State unemployment rate is 43.7 and ranks third as the worst. 21.7 million Nigerians are unemployed.

Lagos State had the most employed persona with about 3.99 million people out of a total of 35.5 million.

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Economy & Politics

Nigeria’s unemployment rate jumps to 27.1% as at 2020 Q2

Nigeria’s unemployment rate as at the second quarter of 2020 is 27.1% meaning about 21.7 million Nigerians remain unemployed.




Nigeria’s unemployment rate as at the second quarter of 2020 is 27.1% indicating that about  21,764,614 (21.7 million) Nigerians remain unemployed.

Nigeria’s unemployment and underemployment rate (28.6%) is a combined 55.7%. This means the total number of Nigerians who are unemployed or underemployed as at 2020 Q2.

This is contained in a recently released unemployment data report published by the National Bureau of Statistics. Nigeria’s unemployment rate was 23.1% in Q3 2018 confirming it increased by 4% points between then and the second quarter of 2020.

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Key highlights

  • The number of persons in the economically active or working-age population (15 – 64 years of age) during the reference period of the survey, Q2, 2020 was 116,871,186.
  • The number of persons in the labour force (i.e. people within ages 15 -64, who are able and willing to work) was estimated to be 80,291,894. This was 11.3% less than the number persons in Q3, 2018. Of this number, those within the age bracket of 25-34 were highest, with 23,328,460 or 29.1% of the labour force.
  • The total number of people in employment (i.e. people with jobs) during the reference period was dwellers, it rose to 31.5% from 22.8%, while the rate among urban dwellers rose to 23.2% from 58,527,276.
  • Of this number, 35,585,274 were full-time employed (i.e. worked 40+ hours per week), while 22,942,003 were under-employed (i.e. working between 20-29 hours per week). This figure is 15.8% less than the people in employment in Q3, 2020
  • The unemployment rate during the reference period, Q2, 2020 was 27.1%, up from the 23.1% recorded in Q3, 2018. The underemployment rate increased from 20.1% in Q3, 2018 to 28.6%.
  • For the period under review, Q2, 2020, the unemployment rate among young people (15-34years) was 34.9%, up from 29.7%, while the rate of underemployment for the same age group rose to 28.2% from 25.7% in Q3, 2018. These rates were the highest when compared to other age groupings.

The data is coming after nearly two years when the last data was published. The bureau last published jobs data in the third quarter of 2018 citing funding as a major challenge.

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READ MORE: Dangote moves to reduce unemployment rate with investments in agriculture 

Key Take-aways

  • Nigeria’s youth remain the hardest hit by unemployment with over 13.9 million people aged between 15 and 34 years unemployed.
  • The data also shows 7.6 million of this subset did nothing.
  • Women also continue to bear the brunch of bad economy with about 12.2 million out of jobs from the 27 million currently unemployed.
  • Graduates and post graduates combined made up about 2.9 million of the total Nigerians that are unemployed.
  • In a surpising data, out of the 35.5 million Nigerians that are fully employed, 28.8 million of them never attended school (6.29 million) or did not have a tertiary education (22.5).
  • In fact, most fully employed people in Nigeria with SSS (Senior Secondary School certificates) are a whopping 13.2 million.

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COVID-19: Nigeria, 6 other African countries to start antibodies tests next week

These countries are the first set of countries to commit to the testing.



COVID-19: Nigeria, 6 other African countries to start antibodies tests next week

Nigeria and 6 other African countries will start conducting coronavirus antibodies tests as early as next week, as part of efforts to understand the extent of the outbreak on the continent.

Apart from Nigeria, the other African countries that will benefit from this include Sierra Leone, Zambia, Zimbabwe, Cameroon, and Morocco.

While making the disclosure in Addis Ababa, the head of the African Centres for Disease Control and Prevention, John Nkengasong, said that these countries are the first set of countries to commit to it.

READ MORE: British Airways pilots accept 20% pay cut to end job losses dispute

Western countries have been using antibody tests to discover how many of their citizens have been infected by the coronavirus disease, with the expectation that will help them reopen their economies.

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This new development is coming some days after the Nigerian Government started negotiations with prospective COVID-19 vaccine distributors to the country ahead of their availability.

READ ALSO: FG: Why there is no hurry to resume train operation, Lagos blue rail line ready 2022 

The Vice President, Yemi Osinbajo, who kick-started the negotiation on behalf of the Federal Government, in a virtual meeting with representatives of the vaccine candidate, told the co-discussants that Nigeria must be given priority when COVID-19 vaccine is ready for distribution.

Nkengasong said that Africa has so far conducted 9.4 million coronavirus tests, a 10% increase over last week. These tests show whether people currently have the coronavirus disease.

Experts said that the low levels of testing in many countries mean that Africa’s infection rates could be higher than being reported.

He said that 25 African countries still have full border closures, with 23 imposing tests at entry points. He also stressed on the need to harmonize border testing and recognize certificates in order to facilitate travel.


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