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Report suggests ECOWAS region may never achieve a single currency

The latest report on Africa by SB Morgan Intelligence has revealed that despite the merits embedded in establishing a single currency, the possibility of West African countries having a single currency is increasingly becoming bleak.



How Nigeria can benefit from ECOWAS' intended single currency, ecowas new currency

As Leaders of West African countries converge for the highly anticipated Economic Community of West African States (ECOWAS) summit today, 29th June in Abuja, the recommendation for the single regional currency is expected to be approved. However, huge obstacles are in the way to halt any chance of a single currency agreement among the countries.

The latest report on the ECOWAS region by SB Morgen Intelligence has revealed that despite the merits embedded in establishing a single currency, the possibility of West African countries having a single currency is increasingly becoming bleak.

This is due to the key economic fundamentals prevailing in Nigeria and other African countries.

ECOWAS Single Currency: Basically, the intent of a single West African currency is to leverage the fairly robust terms of political cooperation that exist among the bloc’s members by promoting greater intra-bloc trade relationships that have so far been impeded, in part, by the cost of doing business across multiple currencies.

The single currency that was proposed by ECOWAS (known as Eco) was first planned to take effect in 2003 but was later postponed several times between 2005 and 2015.

However, the report has revealed that despite the efficiencies that would be gained from conducting trade using a single currency, (as opposed to the nine different currencies that the region currently trades with), several factors are poised to prevent the single currency within the region from seeing the light of the day.  Some of these factors include:

  • The fear of losing sovereignty
  • The implications of the move on the economies of individual countries; and
  • The fear of empowering an intra-bloc hegemon

Loss of economic and political powers: According to SB Morgen, Unified currency has several shortcomings. For instance, the inability of individual European nations (in case of Euro) to control an economic shock is fundamental. Some highlights of economic and political concerns raised include:

  • With the utilization of a single currency, macroeconomic fluctuations will no longer be controlled by individual nations
  • National governments cannot adjust interest rates and exchange rates to encourage investments. For instance, in the Eurozone, interest rates are controlled by the European Central Bank (ECB).
  • The sovereign ability of individual countries to adjust their currency’s exchange rate, and notably devalue their currency in case of the economic downturn is lost.
  • Loss of political power may become inevitable due to the inability to have a single voice may may trigger tension among countries.

ECOWAS’ big challenges: While trying to highlight some big challenges standing in the way of a single currency in West Africa, the report emphasized that some West African countries have not freed themselves from the binding economic agreement of the colonial masters which will further frustrate the single currency agenda.

For instance, a critical look into the role of France in underwriting the CFA franc used by most of its former colonies in West Africa reveals that all the eight countries who make up the African Economic and Monetary Union present a major challenge to the single currency agenda in the region.

  • Despite the merits of the French-backed CFA franc through leveraging on multiple national economies to achieve currency stability and strength, many observers see it as a relic of the colonial era
  • Countries like Benin, Burkina Faso, Niger and so on which are colonies to Portugal all signed monetary cooperation agreements preserving a dependency with Paris.
  • The implication of such agreements includes a guaranty of the convertibility of the CFA franc to the French franc and a peg between CFA franc and the French franc.
  • Hence, the eight ECOWAS countries moored to the single European-backed currency is regarded as a stumbling block for the realisation of the West Africa single currency.
  • Also, one of the conditions set for the implementation for the single in West Africa is such that member countries must achieve single digit inflation of 5%. Unfortunately, inflation in Africa’s biggest economy, Nigeria was averaged 11.92% between 2003-2016, while Ghana was averaged 16.92%.

More critical downsides: The report further revealed that West African countries pursuing the single currency are grossly not prepared to overcome their challenges. Another instance cited is how the action of small states, say the Gambia, could affect a much larger state like Nigeria.

  • Being under a sing currency agreement will make it impossible for a country like Nigeria to fully be in control of managing economic recovery. For instance, the adjustments Nigeria was able to make to its FX regime during the 2016 economic recession, for example, would have been impossible
  • Another critical issue facing the West African single currency is the unwillingness of francophone West African countries to cede monetary policy to Nigeria. Also, the Nigerian Government may not be willing to cede monetary policy to a neighbouring government smaller than several of its internal governments.

Way Forward: According to SB Morgen, while it is unlikely to have a regional single currency, other compelling solutions for facilitating greater intra-block trade which has a far lower risk to sovereignty include addressing structural issues such as inadequate supply chain infrastructure, arbitrary border tariffs and non-tariff barriers, abysmal corruption, and wide-area insecurity.

Samuel is an Analyst with over 5 years experience. Connect with him via his twitter handle

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Nigerian Breweries to pay Heineken BV mega dividend of N2.9 billion

The parent company of Nigerian Breweries Plc, Heineken B.V., is set to earn N2.9 billion in dividends for the financial year ended December 2020



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The parent company of Nigerian Breweries Plc, Heineken B.V., is set to earn a mega N2.9 billion in dividend for the financial year ended December 2020.

The multinational brewing company, headquartered in the Netherlands is the single majority shareholder of Nigerian Breweries, with 3,034,100,564 units of the total issued shares of its subsidiary.

This puts the ownership stake of the Dutch multinational at 37.94%, ahead of Distilled Trading International B.V. and Stanbic IBTC Nominees Limited with 15.47% and 11.37% ownership stake respectively.

In case you missed it

Recall that the Board of Directors of Nigerian Breweries Plc a in a statement released via the Nigerian Stock Exchange proposed a final dividend of 69kobo per share. This puts the total dividend payout of the company at N94 per share for the financial year 2020 (interim: 25kobo). When converted to dollars, the dividend amounts to about $6.93 million based on an exchange rate of N411.88/$1.

Despite the headwinds the company suffered in 2020, the brewer was able to maintain its tradition of dividend payment to shareholders in 2020, despite taking a major shock in its profit during the year (54%).

  • Nigerian Breweries in 2020 delivered a consistent result in terms of revenue, amidst the ongoing COVID-19 pandemic which disrupted supply chains globally.
  • The net revenue of the leading brewing company increased by 4.3% in 2020 (N337 billion), compared to FY’19 figures (N323 billion).
  • The increase in Nigerian Breweries’ costs of goods sold, as reported in its audited financial results, as well as the increase in its finance cost pressured the brewer’s profit in 2020.
  • The increase in Nigerian Breweries’ cost of goods sold can be attributed to currency devaluation spiked by foreign exchange scarcity, this exerted upward pressures on the costs of imported input materials such as sorghum and sugar – which are not fully produced locally.

What you should know

  • Nigerian Breweries Plc, a company formed out of a contract for incorporation signed by UAC and Heineken in November 1946, has grown to become the largest brewer in Nigeria in terms of market size.
  • Thanks to the merger between NB and Consolidated Breweries in 2014, it has nine fully operational breweries from which its products are produced and distributed to all parts of Nigeria, with additional two malting plants in Aba and Kaduna – taking its total operation in Nigeria to the 11.
  • The Merger also increased the company’s brand portfolio to 19 brands, while its Stock Keeping Units -SKU’s- increased to 59.
  • Aside from producing to satisfy and meet local consumption and demand, the Company has an export business that dates back to 1986.

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Lafarge Africa gains N71 billion in market value in three trading sessions

The market capitalization of Lafarge Africa Plc has gained N70.87 billion in the past three trading sessions on NSE.



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Lafarge Africa Plc, one of the leading cement manufacturers in Nigeria, has gained almost N71 billion in the past three trading sessions on NSE, pushing the market capitalization of the cement manufacturer to N384.98 billion.

Lafarge whose shares peaked at N30.3 this year, saw its share price increase from N19.5 on the 3rd of March 2021 to N23.90 at the close of trading activities on March 8 2021 after enduring a massive sell down in recent weeks.

According to data tracked on the NSE website, this move led to a N70.87 billion gain in the market capitalization of Lafarge Africa in three trading sessions on the local bourse.

This impressive gains in Lafarge’s shares and market value were triggered by buying pressures from bargain hunters who took position in the company after its share price slumped to N19.5 per share.

  • At the time of writing this report, Lafarge was the tenth most capitalized company on NSE with a market capitalization of N384.98 billion, behind Nigerian Breweries with a market capitalization of N395.85 billion.
  • A total of 5,380,311 units of Lafarge ordinary shares worth N129,602,973.90, were exchanged on the bourse in 185 deals on Monday 8th March 2021.
  • The shares of the cement manufacturer gaining a total 7.66% or N1.7 to close higher at N23.9 on the 8th of March 2021.

What you should know

  • Lafarge Africa Plc, a subsidiary of LafargeHolcim, a world leader in building materials, is a leading cement manufacturing company in Sub-Saharan Africa with a current installed cement production capacity of 10.5Mtpa.
  • The cement manufacturer has a wide operational footprint in Nigeria strategically positioned in three Geo-political zones in the country which include; the South West (Ewekoro and Sagamu in Ogun State), North East (Ashaka, in Gombe State), South East (Mfamosing, Cross Rivers State).
  • The company also has a ready-mix operation in Lagos, Abuja and Port Harcourt.

In an effort to cut down on deadweight cost, the Board of Lafarge Africa Plc has resolved to sell off its 35% stake in Continental Blue Investment Ghana Limited – a move that will see the company cut down on costs impacting the Group’s profit.

This is not the first time the company has had to sell off an unproductive investment, in August 2019, Lafarge Africa sold off all its stakes in Lafarge South Africa Holdings (LSAH).

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