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Some NSE’s oldest firms

In the spirit of the celebration, it is good to take a lot at some of the firms which have been in existence since the country’s independence.

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Behold! Some NSE’s oldest firms, A look at the secret behind Chinese companies’ success in Nigeria, These are the best Nigerian companies to work for according to Jobberman , How the Chinese are taking over Nigeria’s economy 

It is another Independence celebration for Nigeria, and this year, the most populous country in Africa is celebrating her 59th Independence Anniversary.

In the spirit of the celebration, Nairametrics is highlighting some of the companies that have been existing before the country’s independence, and are still existing.

Over the years, these companies, most of which have foreign and domestic investments, have experienced different challenges. Some of them have stood the test of time, while some are no longer in existence due to economic challenges, mismanagement, amongst others. 

 

[READ MORE: The sad reasons many previously-listed companies are no more]

Companies that existed before independence and are still existing 

UACN 

The United Africa Company of Nigeria (UACN) is a leading diversified Company, operating in the Food and Beverage, Real Estate, Paint and Logistics sectors of the economy. 

UAC has been a participant in the Nigerian economy since 1879, about 8 decades before independence. 

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The Company’s brand portfolio includes leading brands such as Gala Sausage Roll, Mr Bigg’s, Funtime Coconut Chips, Supreme Ice Cream, Swan Natural Spring Water, Dulux Paint, Grand Soya Oil, Vital Feeds, Binggo Dog Food, Livestock Feeds, Grand Cornflakes and Sandtex Paints. 

UAC is a Holding Company with a number of subsidiaries, sub-subsidiaries and Joint Venture Companies. It is also involved in some strong regional and international partnerships in a bid to enhance sustainable growth.

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Companies that existed before independence and are still existing  

Unilever Nigeria Plc 

Under the name Lever Brothers (West Africa) Ltd, Unilever’s operation in Nigeria dates to 1923. 

The firm was primarily engaged in trading of soap and in 1924, the name was changed to West African Soap Company. Sensing opportunity in the country, the firm opened a soap factory in Apapa in 1925. 

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The company later expanded into the production of food products; it opened a new soap factory in Aba in 1958 and changed its name to Lever Brothers Nigeria Limited in 1955. In 1960, Lever Bros introduced Omo detergent into the market, the product gained traction among buyers, prompting the firm to commission a factory to manufacture Omo detergents in 1964.  

In compliance with the indigenisation decree of 1972, Unilever became a publicly listed company in 1973, selling 60% of its shares to the Nigerian public. The company became majorly Nigerian-owned. In 1982, the firm began producing edible products such as Royco, blue band and treetop in Agbara, Ogun State. 

In addition, the company went through a period of mergers and acquisition; firstly, acquiring Lipton Nigeria in 1985 and later merging with Vaseline manufacturer, Chesebrough Products Industries in 1988. During this period, the company embarked on a backward integration scheme in order to source its raw materials locally.  

In 1995, the 40% owned by Unilever merged with Unilever Nigeria Limited, a subsidiary of the Unilever United Kingdom. In 2001, the company changed its name to Unilever Nigeria Plc, which it still bears till date. 

Companies that existed before independence and are still existing 

AG Leventis 

Established in 1937, A.G. Leventis Nigeria Plc is a large Nigeria-based conglomerate. The company provides its customers with a variety of products and services, in several various industries, such as power and gas products, consumer food pastry and bakery products, real estate properties, hotel accommodation services, commercial vehicle, sales and after-sales services, and Printer ink supplies. 

The company operates through numerous subsidiaries and affiliated companies, including Leventis Foods Ltd, Leventis Motors, Abuja (Capital Motors) Ltd, Mainland hotel, Leventis Real Estate, Druckfarben Nigeria Ltd, and Chrisstahl Nigeria Ltd. 

Nigerian Breweries  

Nigerian Breweries, which began doing business in Nigeria in 1946, has a growing export business which covers global sales and marketing of the brands. The products are available in over thirteen countries, across the United Kingdom, South Africa, Middle-East, West Africa and the United States of America. 

The company produces alcoholic drinks such as GulderHeneiken, Legend Extra stout, Goldberg lager, Star lite lager and so on. They also have non-alcoholic drinks such as Maltina, Malta gold, Amstel Malta and fayrouz. 

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Nigerian Breweries is the pioneer and largest brewing company in Nigeria. It serves the Nigerian market and exports to other parts of West Africa. 

[READ ALSO: Nigeria @59: Rise, fall & rise of Nigerian stock market]

Behold! Some NSE’s oldest firms

Berger Paints 

Berger Paints Nigeria commenced operation in 1959. The manufacturing company has since grown to be a leader in the Coating and Allied Industry in Nigeria.  

Berger Paints has a reputation for being the first in setting standards in the paint industry in Nigeria.  

It operates in 5 business segments which include Decorative/Architectural finishes, Industrial coatings, Marine & Protective coatings, Automotive/Vehicle refinishes, Wood Finishing and Preservers. 

 

 

Chidinma holds a degree in Mass communication from Caleb University Lagos and a Masters in view in Public Relations. She strongly believes in self development which has made her volunteer with an NGO on girl child development. She loves writing, reading and travelling. You may contact her via - [email protected]

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Central Banks Digital Currencies (CBDCs) – a Gift or a Curse?

Should we expect a CBN announcement on e-Naira soon?

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China recently became the first MAJOR economy to create its Central Bank Digital Currency (CBDC).

Specifically, China’s CBDC has gone from the testing phase to actual implementation. Such that the digital yuan is now ready for use in regular transactions. The expectations are that by the time athletes gather for the upcoming Winter Olympics, visitors to the country can pay for a wide range of goods and services using the Digital Yuan. (Think about using government digital currency to settle Hotel and Restaurant bills, Taxi rides, etc.).

Across the world, Central Banks are racing to implement Central Bank Digital Currency (CBDC). The latest BIS 2021 survey identified that 86% of Central banks are engaged in developing a CBDC.

In this article, we ask the question: What exactly are Central Bank Digital Currencies (CBDCs), and why are so many central banks are working towards their implementation?

READ: Very few nations permitted to issue their Crypto – IMF

What is a Central Bank Digital Currency (CBDC)?

Specifically, CBDCs are legal tenders issued by a country’s central bank which will only ever be available in digital format AND will be acceptable from day one for payments of goods and services once implemented.

Fund settlement will be facilitated by the issuing Central bank who may / may not choose to partner with an approved list of institutional counterparties. The Bank of International Settlements (BIS) has a more technical definition here.

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READ: U.S Central Bank leader says no rush into crypto dollar

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For the avoidance of doubt, CBDCs are neither the same as Electronic Funds Transfers (EFTs) nor are they Cryptocurrencies. Despite many similarities such as contactless settlement between counterparties, key differences are that Central Bank Digital currencies are legal tender AND represent a direct claim on a central bank by end-users.

  • So, if you are one of those people who likes to “spray” very crispy notes at Owambe… better be prepared as with digital currency, you will never see any physical notes to “spray”.

READ: Leader of world’s most powerful central bank says Crypto unreliable for wealth preservation

Which countries have CBDCs on the horizon?

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The latest BIS 2021 survey of 65 central banks identified that 86% of Central Banks are engaged in developing digital currencies. Out of which 60% of central banks have begun research work whilst 14% of central banks are already in the pilot and proof of concept phase.

For a list of countries at various stages of CBDCs implementation, you can click here and here or view the image below.

READ: U.S. dollar share of global currency reserves rose to 61.9% in Q1 2020 – IMF

How will the CBDCs work?

For now, each Central Bank is determining its own scope and CBDC functionality as there is no standard global framework regarding infrastructure requirements and functionality scope (e.g. some central banks simply want to focus on domestic payments whilst others want both domestic and international payments focus).

However, having said that, the underlying workflow will likely be similar across the world, in the sense that workflow will include solutions on distribution and utilization.

READ: Computers might steal Satoshi Nakamoto’s Bitcoin fortune

  • Distribution: Central Banks will create the digital currency and permit a list of commercial banks to access to the central payment network for onward distribution to end customers. Given that CBDCs are digital, the Central Banks will be able to track exactly who is holding how much of their currency and how exactly their currency is being spent.
  • Utilization: End-users will have a tool (e.g. digital wallets) to help them be aware of their CBDCs balances. Further, these wallets can be presented (i.e. scanned) at participating locations for transaction settlements (think QR codes on a phone app).

In other words, as a CBDC end-user, you only need access to the internet and electricity for spending. Intermediaries such as SWIFT will be bypassed. (You can read more about how the digital yuan will work here).

READ: Former Access Bank CEO, Aigboje Aig-Imoukhuede, launches new book, Leaving the Tarmac: Buying a Bank in Africa

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Why are so many Central Banks rushing into CBDCs?

Firstly, faster cross-border trade settlements / International Trade ambitions:

The widely accepted use of CBDCs will facilitate faster cross-border settlements between participating counterparties. Regardless of your location, there will be less need to convert from local currencies into reserve currencies such as USD, GBP, EUR, and vice versa via financial intermediaries.

Additionally, for a country such as China which has long sought to expand its global reach in international trade, the digital yuan provides mouth-watering opportunities.

  • As a simple example, for international trade facilitation, end-users of smartphones built by Chinese-owned phone companies can potentially be enabled to access the Digital-Yuan, and that digital yuan can be spent with Chinese-owned firms across the world. These payment transactions can take place on the People’s Bank of China (PBOC) controlled network and bypass any existing financial intermediary (you can read more about digital yuan opportunities here).

Secondly, from a domestic perspective, CBDCs will be a potential game-changing macro-economic tool.

For countries not interested in global trade dominance, digital currencies offer Central banks an exciting opportunity to transform monetary policies. Specifically with regards to financial relationships and money transmission mechanisms (too much grammar but we have all heard of stimulus and intervention funds!!)

Under the current state, when a Central Bank wants to increase or decrease money going into the hands of consumers, it does so via a range of tools (i.e. alter interest rates, set reserve ratios, buy/sell short-term instruments, etc.). Unfortunately, this current approach has some limitations which include:

  • Transmission mechanisms: Despite all the tools available to Central Banks, they ultimately rely on financial intermediaries (i.e. banks). Existing monetary policy tools simply aim to influence commercial banks to increase or decrease the amount of money/funds available for onward lending to end consumers.
  • These tools, as well as, associated end-user responses may not often work as fast as Central Banks would like. As an example, most bank customers will tell you that loan application processes can be extremely cumbersome and sometimes subjective.
  • Also, think about folks in remote areas who truly need credit for their business expansion but are not financially included or are not able to complete the plethora of loan application forms or are missing IDs for authentication, etc.
  • All these limitations create latency challenges for Central Banks looking to influence macroeconomic indicators quickly.
  • Monitoring: Under the current approach, it is cumbersome for Central Banks to continually track existing money in circulation and utilization purposes. Think about CBN intervention funds and how difficult it is for the CBN to know exactly how its intervention funds are being spent once the funds are disbursed to applicants.

Fortunately, with digital currencies, given that they leave digital footprints, Economic Surveillance is facilitated (i.e. Central banks can monitor exactly who owns how much and what it is being used for); arguably giving Central Banks an opportunity to better direct funds to parts of the economy requiring support.

Thirdly, Technology advances driving the growth of the Digital Economy and lowering operating cost dynamics.

  • The unrelenting growth of the Digital Economy: The use of physical cash continues to decline driven by the exponential growth of contactless services such as e-commerce (Amazon, Alibaba, eBay), contactless interaction (Zoom, Facebook-Portal, Google-Nest), etc.
  • Global eCommerce is now projected to be over 25% of total retail sales across the world and the US estimates that Digital Economy accounted for 6.9% of 2017 GDP which made it the seventh (7th) largest component of GDP and still growing.
  • Given that no one needs physical cash for transactions in the digital economy, Central banks are warming up to the need to implement CBDCs for transactions in this emerging digital economy.
  • Changing unit cost dynamics: From a central bank perspective, there are significant costs incurred for maintaining oversight of existing payments and settlement systems. Furthermore, there are additional costs for creating cash, transporting, storing, and securing existing stock of physical cash. As existing systems become outdated and population growth continues apace, there will be an inflection point for when it will simply be cheaper to create digital currencies to drive financial inclusion. Especially as cloud computing processing capacity continues to expand at a cheaper unit cost.

Are there risks/issues to be concerned about with Digital Currencies?

The answer is yes, whilst there are benefits, there are also some risks and concerns such as the risk of excessive Economic Surveillance, Privacy concerns, ease of implementing, and Negative Interest (aka financial wealth tax).

Economic Surveillance can easily be a double-edged sword especially in the hands of an authoritarian regime, as an increased level of economic oversight can easily lead to financial repression or targeting opponents. However, just like with CCTVs, the risk of misuse cannot be a unilateral reason to discredit the opportunities available with CBDCs. (You can read more about concerns here)

So, what about Nigeria?

The Central Bank of Nigeria (CBN) was not included in the BIS 2021 survey, additionally, the CBN has not formally outlined its position on whether it plans to implement a Central Bank Digital Currency in the future (e-Naira).

However in February 2021, (as part of its explanation of its regulatory directive on Cryptocurrencies), the CBN acknowledged the emerging trend of Central Banks’ ability to issue legal tender digital currencies.

Nairametrics founder, Ugodre mentioned on his Twitter Spaces show “OnTheMoney” that a senior official at the CBN informed him that the Apex bank was seriously considering digital currency and had put together a team to explore its possibilities.

So, should Nigerians expect an e-Naira soon?

Firstly, with regards to innovation, the Nigerian payments landscape continues to evolve rapidly as the CBN drives innovation as part of its National Financial Inclusion Strategy (NFIS). Thus far, this strategy has resulted in the deployment of new products in the Nigerian payments space such as Money Market Operators (MMOs), Payment Solutions Service Providers (PSSPs), Agent/Super Agents, Payment Service Banks (PSBs), etc.

Furthermore, the CBN is keen to leverage its regulatory sandbox for more innovations and has very recently in 2021 issued new guidelines on open banking, as well as, QR codes.

Consequently, having a digital Naira should not be ruled out as an additional tool to drive financial inclusion in Nigeria,

Secondly, based on industry statistics, Nigerians are quick to adopt technology that facilitates convenience at minimal cost to end-users.

  • Specifically, CBN payments statistics reports show that the use of cash and ATMs in Nigeria continues to decline rapidly. The latest annual report shows Cash/ATM usage has declined from 18% of transactions in 2015 to 6% of transactions in 2019. In other words, 93% of activity was done electronically (across platforms NIP, REMITA, MMO, etc).
  • Furthermore, NCC reports show high penetration rates for mobile technology with over 195 million active mobile phone subscribers (95% penetration) and 150 million internet subscribers (73% penetration rate).

These reports lend credence to the perception that Nigerians are quick adopters of new technology where the technology enhances convenience at minimal cost to end-users.

Consequently, a digital Naira will likely have high adoption rates to the extent that end-users do not expect to incur additional onerous charges.

Finally, from a CBN perspective, we already know that the APEX bank prefers direct interventions as part of its macroeconomic toolkit. Arguably having a digital Naira (e-Naira) allows the CBN to better facilitate direct transmission to target beneficiaries in key sectors, whilst monitoring the use of the funds disbursed, and expedite recovery when funds are due for repayment.

So, should we expect a CBN announcement on e-Naira soon? Your guess is as good as mine.

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Why SEC should support democratization of sale of foreign securities

In the spirit of progressive engagement and dialogue, many voices now suggest that the SEC take a fresh look at its latest position.

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The directive of the Nigerian Securities and Exchange Commission (SEC), issued 8th of April 2021, has been met with consternation and a straightforward (but hopefully simplistic) interpretation that; “the government is out to stifle innovators, again.”

These perspectives aren’t unfounded, as innovators of all shades have taken a heavy beating lately due to a number of direct government policies or interpretations of these policies – irrespective of how well-intentioned these policies may be. On the contrary, micro-investment platforms deserve a fair shot within Nigeria’s capital market.

This is especially true considering that the recent regulatory fervour coincides with a period where the innovation ecosystem is recording new milestones and gaining traction, solving problems for users in all walks of life, democratizing wealth creation, and creating high-value jobs, all of which Nigeria desperately needs.

READ: Crypto market surges above $2 trillion, as Bitcoin stages a huge comeback above $60,500

In the last six months alone, Nigerian startups have gained the confidence of some of the best investors locally and globally, leading to never-before-seen innovations, acquisitions, and investments into the economy. This promotes interest in the Nigerian innovation ecosystem from foreign market actors and increases its relevance as a high-value job creator. Some now wonder if our regulators want more or less of this positive momentum.

This latest notice from the SEC warned Capital Market Operators (CMOs) to desist from selling securities not quoted or registered, as only registered securities in Nigeria can be issued, sold, or offered for sale. Ostensibly, the directive requires CMOs registered with the SEC to offer only securities listed on any exchange in Nigeria to the public.

READ: XRP posts a big bang, as legal tussle with SEC lingers

The challenge here is that High Net worth Nigerians (HNIs) have always had access to foreign securities offered or acquired through registered CMOs for the apparent benefit of the upside available in markets such as the United States. This should be democratized to allow Nigerians with smaller incomes to have access to valuable global stocks within fair rules, and this is what the likes of Trove, Chaka, Bamboo, and Risevest have done. In fact, this democratization should be applauded as one of the outputs of a thriving innovation ecosystem that provides practical
palliatives for the stifling inflation and erosion of value we have all experienced as Nigerians.

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After all, what is suitable for Dangote should also be good for Musa, who earns NGN50,000.00, and thanks to any of the apps mentioned above, can today invest in shares of Dangote sugar while also adding a quarter of a Google stock to his portfolio every month. This “magic” of innovation is a poverty alleviator that should be encouraged and nurtured while ensuring that the public is protected from any harmful financial practices.

READ: Flour Mills shares surge by 6.9%, lifting the miller’s capitalization by N8.2 billion

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It is important to acknowledge at this point that the SEC has been a positively progressive regulator, generally engaging its public fairly. The issuance of the guidelines for crowdfunding and accommodation of FinTechs within the capital market was encompassing and engaged stakeholders of all hues. This should be commended. The SEC’s position classifying crypto as an asset class is also fair, refreshing, and proactive. We need more of this and not less.

At a time when we are exploring how the Nigerian capital markets can become a viable option for listing tech startups, this latest body language of the SEC, and the Nigerian government as a whole can be further misinterpreted.

In the spirit of progressive engagement and dialogue, many voices now suggest that the SEC take a fresh look at its latest position, as these innovations are widespread, publicly accepted, and valuable. Furthermore, these innovations support some of the registered and regulated CMOs by offering white-label solutions that are accelerating the ability of these legacy CMOs to better serve their HNI customer base, with local and foreign securities. The emergence of these innovative micro-investing platforms has triggered investments into local Nigerian securities in multiple folds. The volumes these innovative platforms channel into Nigerian stocks are arguably the most significant development in Nigeria’s capital market in a decade.

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By virtue of the existence of these innovators, their combined strength has introduced over 150,000 new market participants who are primarily millennials: a majority of whom purchased their first set of stocks through these platforms. Before now, they had no active interaction with the capital market. These new entrants are now trading in excess of NGN10,000,000,000 (Ten Billion Naira) monthly through these apps. Note that a good chunk of the highlighted trade volume is routed through local CMOs to purchase Nigerian securities on the Nigerian Stock Exchange(NSE). Long term, these innovations would also serve as a channel to offer Nigerian guarantees to a global audience which would be a massive positive for the economy.

The quest for diversification of portfolios to include foreign securities can only be good overall. It underscores the global trend in cross-border trade in securities as disintermediated by technology and the need to enhance portfolios’ value globally.

Rather than curbing the practice of offering Nigerian and international stocks in a basket, this micro-investing trend should be allowed to flourish within reasonable regulatory frameworks. These platforms make investments attractive, easier, and affordable. Micro investing will curb the menace of pyramid and Ponzi schemes while introducing a new generation into Nigeria’s securities market in parallel with their appetite for global securities. Regardless of what we decide, the world has gotten smaller, and information that enables people to easily seek the best economic outcomes is readily available. While other nations gain from micro-investing, shouldn’t our people do too?

The ultimate beneficiary of increased wealth for Nigerians is the Nigerian economy. Rather than shutting Nigerians off from the rest of the world, we should be accelerating global access for our millions of people; hence this is the time for dialogue, not shutdowns.

 

Kola Aina is the Founding Partner at Ventures Platform and writes from Lagos, Nigeria.

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