GTBank Plc, Zenith Bank, Access Bank, First Bank of Nigeria (FBN), United Bank of Africa (UBA) and 10 others spent over N8 billion on their Corporate Social Responsibilities in 2018.
While Zenith Bank Plc spent N3.06 billion, UBA spent N1.04 billion, GTBank spent N928.07 million, FBN spent N831 million, Access Bank (N376.75 million), FCMB (N315.80), Sterling Bank (N299.01 million), Stanbic IBTC (N233.40 million), Fidelity (N158.36 million), Wema Bank (N34.62 million), Union Bank (N30.20 million) and Unity Bank (N13.38 million).
- Arts – N49.70 million
- The bank initiated Painting the future for tomorrow’s leaders when it engaged children with a 4-week Art635 Summer programme where they explored and harnessed their creativity through painting, sketching and photography. It also promoted creative expressions through writing, harnessed art for economic development, conducted capacity building for female photographers, and preserved historical artefacts and monuments among others.
- Community Development – N326.61 million
- It launched a nationwide campaign, tagged “#SimpleChangeBigImpact” through which it collaborated with individuals and groups to invest in the social infrastructure of 20 communities nationwide.
- Education – N544,964,714
- Having transformed the Herbert Macaulay Library into a vibrant centre for personal learning and group interactions, GTBank also promoted innovation and academic excellence as it empowered four outstanding Junior Secondary School students; Mordi Menashi, Gbemi Famobiwo, Afolabi Williams and Osagumwenro Ugbo, who created a Virtual Farm Application that helps farmers manage their farm and connect with their target market.
- Environment – N905,118
- Others- N5,888,289
The financial institution spent N3.06 billion on various states governments’ security funds (N1.57 billion). Others are:
- sports organisations (N363 million);
- seed contribution to private health sector alliance (N305 million);
- financial inclusion project (N200 million),
- medical assistance to the underprivileged (N158 million);
- educational support to Nigerian schools (N131 million);
- Information Communication Technology (ICT) centres for educational firms (N85 million);
- economic summit (N81 million);
- Delta State principal Cup second edition (N43 million);
- CFA Society of Nigeria, Musical Society of Nigeria, Centre for Value in leadership youth empowerment and Louisville girls high school among others.
The Bank identifies with the aspirations of the communities and the environments in which it operates. It made contributions to charitable and non-charitable organisations amounting to N376.7 million, lower than the N567.02 million it spent in 2017.
- The financial institution spent N100 million on its contribution towards deepening financial inclusion in Nigeria;
- Lagos State Security Trust Fund (N100 million);
- National MSME clinics in Nigeria (N40 million);
- Donations to 2018 Brains Initiative (N14.7 million); and
- Sponsorship of Capacity Building Programme for the Association of Senior Staff of Banks Insurance & Financial Institutions (N10 million).
Others are sponsorship of the 2018 International Press Institute Conference (N10 million), supporting 2018 World Mosquito Day (N10,000); contribution towards commemoration of World Malaria Day 2018 (N6.03 million), sponsorship of the African Women Business Initiative (N5.50 million) and contribution to NSE for its Essay Competition (N5 million) among others.
FBN’s Corporate Responsibility and Sustainability (CR&S) involves meeting the needs of its current stakeholders now and in the future. It goes beyond financing economic activity in a responsible way to ensuring an inclusive, positive impact on our communities. It is about creating long-term stakeholder value by adopting the opportunities and managing the associated environmental, social and governance risks. It concentrated on areas like:
- Deepening Wealth Creation for Women across the Nation: Through FirstGem, its passion and drive to increase the number of women who take pride of place in business and wealth creation intensified. FirstGem is a bespoke solution to foster women empowerment across all socio-economic strata.
- Supporting SMEs in Growing the Nation’s GDP: The Bank organised several empowerment programs for SMEs tagged ‘SME Connect Series’. This initiative provides 360 degrees support to startups and scale-ups, offering practical and realistic solutions to numerous business challenges encountered.
- Youth Empowerment Series: This is a program designed to sensitise children and young adults on issues relating to financial literacy with focus on financial discipline, savings, investment and career guidance. In 2018, children between the ages of 10 to 24 years were hosted at the 2nd edition of the Youth Empowerment Series which attracted about 1,350 youths across the Lagos metropolis.
- Employee Giving and Volunteering: Its Employee Giving and Volunteering programme was set up to encourage employees to give back to the community and instil the integral corporate culture of giving.
- Renovation of classrooms and donation of Boreholes: The Company renovated two blocks of classrooms at a primary school and also donated boreholes to both the primary school and the neighbouring secondary school located in a village near Abraka, Delta State among others.
The bank engaged in various community development initiatives either directly through UBA Foundation, its special purpose vehicle for Corporate Social Responsibility, or in partnership with credible non-governmental organisations and public institutions. They are:
- Financial Inclusion and Public Enlightenment Project (N400 million);
- Akwa Ibom State Government Security Project (N177.25 million);
- Ambrose Ali University, Edo State (N93.72million);
- Taraba State Government Security Project (N84 million);
- Abia State Government Security Project (N65.86 million);
- Plateau State Specialist Hospital (N37 million);
- Benue State Financial Management System (N32.88 million);
- Taraba State University (N30 million);
- National Youth Service Corps (N27.76 million); and
- Chartered Institute of Bankers of Nigeria (N15.50 million).
Others are Delta State African Senior Athletics Competition (N10 million), Flood Victims of Jibia Local Government Area, Katsina State (N10 million), Augustine University, Lagos State (N10 million), Ibrahim Badamosi Babangida University, and Niger State (N10 million) among others.
CBN “Naira 4 Dollar Scheme” Explained
What the CBN’s Naira 4 Dollar scheme means for your money.
In what appears to be an attempt to incentivize dollar remittances by all means possible, the Central Bank of Nigeria (CBN) released a circular to Deposit Money Banks (DMBs), International Money Transfer Operators (IMTO), and the General Public, advising that remittances paid into a bank account will attract an additional credit alert for every USD$1 received!
Yes, you read that correctly. The CBN will facilitate a special additional credit alert of N5 for every USD$1 received. In other words,
- if someone sends you $10,000, you get an additional special credit alert for N50,000.
- If someone sends you $100,000, you get an additional special credit alert for N500,000.
Who is eligible?
To be eligible, the diaspora remittances need to be processed and received from one of the registered IMTOs and funds received into a Bank account operated by the DMBs. (So, if you are receiving funds via Crypto sorry you are not eligible).
Additionally, the circular says this “incentive runs from Monday 8th March 2021 to Saturday 8th May 2021″. So, if you have plans to receive dollars, you can plan accordingly.
The circular is not clear how exactly the commercial banks will know which account to pay the extra special credits into. Although, that may be a question diaspora funds recipients will need to ask their DMB accounts officers to clarify for them.
How will this be funded?
The circular notes that the “CBN shall through commercial banks, pay to recipients the N5 incentive for every USD$1”. In other words, it is the CBN funding the cost of this special extra credit.
- One would argue that given the costs of alternative incentives to attract dollars such as the special OMO window for FPI, this may be a cheaper alternative for the CBN.
- But we will need to see the volume of expected remittance to be certain of that. Nigeria attracts about $5billion per quarter in remittances and only trails oil in terms of foreign earnings.
Why this matter to Nigerians?
Following the collapse of US Dollar inflows into the country, the CBN initially tried to balance its current account deficits and avoid an official devaluation by tackling FOREX demand (Think ban of 41 items, etc).
- However, in recent times, CBN is now trying to address the challenge of FOREX supply. In 2019, CBN restricted OMO bills for FPIs, and this year, CBN directed all IMTOs to discontinue the practice of not remitting dollars into the country but keeping it overseas and sending Naira.
- Also, the IEFX rate has been allowed to continually diverge from the official rate. As at close of business on Friday 5th March 2021, the IEFX rate of N412.50 is 8.8% premium to the official rate of N379.
- Some may point out that, if the CBN is looking to have ordinary Nigerians enjoy some benefits from its ongoing FX subsidy largesse then maybe that is “arguably” more palatable than the prior focus on FPIs.
Finally, this short-term Naira-4-Dollar scheme will not be called an official Naira Devaluation. But a question is what do we call the new short-term price of N412.50 + N5.00? Maybe we can call it Naira Modulation.
Nigerian Breweries leveraging, but stacking cash through rising input costs
The marathon continues for Nigerian Breweries with its 2020 financials.
Humanity might need more booze to survive the increasingly daunting intricacies of life, but Nigerian Breweries 2020 financial statement is proof that even the best can get caught up in the reality of changing business lifecycles.
Nigerian Breweries Plc had floored the market providing both alcoholic and non-alcoholic premium quality beverages across the nation. But with brands like Star lager beer launched as far back as 1949, Gulder lager beer launched in 1970, and even the family-friendly Maltina introduced as far back as 1976, it is only natural that both the old and new generation competition gives them a run for their market share.
Much like other old money companies, Nigerian Breweries has done its bit to remain relevant in the industry from creating new variants of existing favoured brands to paying dividends consistently annually for the past few years. Yet within the same period, the company’s financial statements have been a testament to its streamlined market share and reducing profits. The marathon continues with its 2020 financials. The industry giant may as well be setting itself up for a debt quagmire peradventure its projections do not match the true reality of events.
2020 financials: A tale of higher costs & larger debts
2020’s unfavourable financial/ business environment led to the increase in the prices of raw materials and disruptions in logistics for many Nigerian-domiciled businesses including Nigerian Breweries. Raw materials and consumables witnessed a 17% increase despite the marginal growth in revenue.
While the group’s 2020 results revealed a 4.35% increase in revenue from N323 billion in the prior year to around N337 billion, these gains were curtailed by a higher-than-par increase in cost of sales which had risen by 13.9%, from the N191.8 billion expended in 2019 to N218.4 billion as its 2020 financials reveal and interest rates going way up.
The company’s lower operating expenses were not enough to salvage the disruption caused by the raging interest expense following increased charges paid on bank loans and overdraft facilities as well as the significant increase in overall debt. Between 2019 and 2020 alone, long term loans and borrowings increased by 974% from N4.8 billion to as much as N51.8 billion. Even trade and other long term payables increased by 35%.
In its financials, the company noted that it has revolving credit facilities with five Nigerian banks to finance its working capital. The approved limit of the loan with each of the banks range from ₦6 billion to ₦15 billion (total of ₦66 billion) and each of the agreements had been signed in 2016 with a tenor of five years. The Company had also obtained Capital and Working capital finance from the BoI in 2019.
It is no news that the company is involved in diversified lease arrangements. Following reclassifications made in 2019 to some of its lease assets, the 2020 asset base also witnessed significant increase in Right of Use Assets which increased by 288%% from N11.1 billion to N42.9 billion. Yet, the fact that in one year, interest expense on Lease Liabilities rose from N19.7 million in 2019 and to a whopping N4.171 billion shows that the company is taking way more debt than its books require.
But what’s it using all the cash for?
Beyond rising material costs, borrowing costs have been huge and the annual interest payment by virtue of these loans make the possibility of higher profits for the company a mirage. That said, the overall increase in total liabilities might not have been such a bad idea if the funds were being used to increase revenue and profits. But having a huge chunk of all that money in cash creates a different kind of challenge. Cash and bank values in its statement of financial position significantly increased by 377% from N6.4 billion in 2019 to N30.4 billion in 2020.
Is the cash being held to mitigate possible challenges of the volatile economy or are they being used to pay dividends? Even at a share price of N52 per share, the company’s price-to-book value sits at 2.5816, testament of its dire overvaluation. Consequently, there is an ardent need for the company to come up with newer ways to attract the wider market and keep its book in the green with a little less external funding.
Nairametrics | Company Earnings
Access our Live Feed portal for the latest company earnings as they drop.
- Seplat falls into a loss in FY 2020
- 2020 FY Results: Cornerstone Insurance Plc reports a 61.1% decline in profit
- Ellah Lakes increases operating expenses by 33.36% in HY 2020
- 2020 FY Results: Nigerian Breweries reports a 54.3% decline in profits in 2020
- Abbey Mortgage Bank projects N51.08 million profit in Q2 2020.