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The diaspora holds the key to improvement in Africa
The staggering revenues and the Human Capital bring to the table the value of the Diaspora to Nigeria.
A lot has been said about the value of “Diasporans”. A recent report by PwC on “Strength from Abroad” reported that over 1.24 million Nigerians lived abroad (2017) and these migrants’ remittances to the country accounted for 23.8 billion dollars in 2018. The Education USA – an initiative of the US Department of State Network Fact Sheet: Opportunity Funds Program noted that Nigeria ranked 13 among the nations sending students to study in the U.S. and the current students legally in US schools are over 12,673. This does not include Nigerian-Americans.
The staggering revenues and the Human Capital above bring to the table the value of the Diaspora to Nigeria. One area we are beginning to hear the voices of the Diaspora is the advancement of democracy. A number of them returned to serve in various areas of government at the State and National levels, but even more have begun to advocate for more transparency in the electoral process. This is true not only in Nigeria but in Africa.
Over the years, many African nations have struggled in many fields, particularly in the electoral area. This, in turn, has hindered many citizens from experiencing the process of free and fair elections as well as the true dividends of democracy. Cases of electoral malpractice, according to PRIF Blog, include ballot stuffing, violence during election, voting manipulation, inflation and illegal alteration of vote counts.
In order to harbour a safer election atmosphere for people, there have been plans made by certain individuals to ensure an improvement in the electoral system. For instance, in Nigeria, there has been an establishment of a new initiative called Restore Naija. The main purpose of this stratagem is to look at ways to revamp the electoral process in Nigeria through exploring newer technologies like the Blockchain.
I had the opportunity of speaking to the co-founder of Restore Naija, Christian Emele, over the phone last week. The organization just wrapped up the first-ever Digital Voting Summit last Monday in Abuja, where a clear idea and a strategy was developed to take Nigeria’s electoral system to the next level.
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He explained to me that the reformation of the Nigerian electoral system would not only involve Nigerians in Nigeria but also Nigerians living abroad. In fact, the electoral advocacy plans for Restore Naija in 2020 has scheduled to hold town hall meetings across Nigeria and in the diaspora, mainly in the United Kingdom and the United States.
Emele and a lot of others like him believe that the extensive focus and inclusion of the diaspora in African affairs, especially in Nigerian elections, would be beneficial to the growth of Nigeria as a nation. This is especially because the youth in the diaspora often have a strong financial background which could be utilized towards the development of the continent.
Indeed, Emele’s analysis and assertions about the diaspora are correct. According to a report by the Brookings Institution, members of the diaspora are not only educated but also have significantly higher incomes and large amounts of money in foreign banks, compared to their counterparts in Africa.
The Migration Policy Institute also reported that the African diaspora was key in sending an estimated amount of $40 billion to their mother countries in 2010. In addition, the International Monetary Fund highlighted that the worldwide African diaspora saves an estimated amount of $53 billion annually.
The IMF emphasized that if 10 members of the diaspora could invest $1,000 in countries of origin then the African continent could raise almost $3 billion a year for development financing.
Members of the African diaspora have also set up businesses in their countries. Mr. Azuka Okafor, a Nigerian immigrant currently based in Cincinnati, Ohio, is one of them. He has established a construction and properties Company, as well as a technology Company in his home country. Mr. Joe Ogbechie the convener of “Hands on Deck” has been working to empower youth since 2018. Nneka Mobisson, a Nigerian-American set up MDoc, a mobile platform that “provides people living with chronic disease with 24/7 access to virtual healthcare providers”. The list is endless.
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It is without a doubt then that there is a need for African countries to reach out to their brothers and sisters in the diaspora because there is a lot of access to excess finance and human capital, which could be used constructively to develop the African society either in the field of the health sector or even the electoral process for examples.
Africa!! This is a callout – leverage our brothers and sisters in the diaspora eagerly waiting to work for progressive change.
Paul Olele Jnr writes from Washington DC. He is a 2019 graduate of George Washington University and currently works as graduate Media and Research Intern at the Initiative for Global Development.
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Analysis: Total Nigeria needs a financial overhaul
Total Nigeria’s Q1’20 results are a testament that some might have it worse than others as it recorded a revenue drop of 9.3% to N70.2 billion
The Oil Industry has had a particularly tough year, owing primarily to the novel pandemic. The International Energy Agency (IEA) predicts that the global oil demand is expected to further decline this year as Covid-19 spreads around the world, constraining travel as well as other economic activities.
Organizations like Total depending on international trade will be forced to scale down operations until restrictions ease off. However, Total Nigeria’s Q1’20 results are a testament that some might have it worse than others.
The period recorded a revenue drop of 9.3% to N70.2 billion in the first quarter of this year compared to Q1 2019. Total earns its revenue from three main sectors namely: Networks, General Trade, and Aviation. Revenue from Aviation fell by 39.5%. The decline in Networks is attributed to the reduced demand as a result of the enforced lockdown and restriction on travel across the nation.
READ ALSO: Analysis: MTN’s blow out Q1 profit vs Covid-19 headwinds
Yet, it is clear that the company had its own challenges pre-COVID-19. In the quarter, it attained a loss after tax of N163 million which was 65.6% better than the loss after tax of the comparative quarter; it is overwhelmed by a myriad of distinct issues.
First off, its revenue has experienced a steady fall over the years; reasons for this is tied largely to its lack of importation of petroleum products.
It is also burdened by inefficiencies in its operations evident in its high operational and direct expenses, as well as its high debt over the past years. The company has carried on huge loans and borrowings in its books: N40.6 billion in 2019 and only a marginal reduction of N2.2 billion in the current year.
(READ MORE:Nigeria’s Bonga crude oil export terminal shut down)
Even higher are its expenses after an 8.38% reduction in the just-released results, it arrived at N69.7 billion for Q1 2020. Amongst its high operational expenses is the high and increasing technical fees it pays to its parent company. From N251 million in the first quarter of last year, it incurred around N700m in the year under review. It also has cash flow issues with about N22b in negative cash and cash equivalents. In its 2019 report, it revealed that the year had been tough with its cost of doing business rising exponentially as evident in its interest expense, 395% higher than the previous year as a result of repayment for products and a high level of borrowing.
The company, in its last full year annual report, noted that to make significant savings to both operational and capital expenditure costs, a series of initiatives relating to cost efficiency, process optimization, and significant reduction of working capital requirement and finance costs, were put in place and are in motion for this year.
READ ALSO: STERLING BANK: Reduced fee income, weak operating efficiency drives steep decline in pre-tax profit
As Dr. Fatih Birol, IEA’s Executive Director put it “The coronavirus crisis is affecting a wide range of energy markets – including coal, gas, and renewables – but its impact on oil markets is particularly severe because it is stopping people and goods from moving around, dealing a heavy blow to demand transport fuels.”
However, Total’s position goes beyond the impact of the pandemic. Its rebound rests on its ability to carry on with cost control and lower debt commitments, together with the speed of the containment of the virus. That said, the company might need to raise capital soon while also coming up with formidable strategies to strengthen its business model.
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Merger, Tax incentive boosts BUA Cement FY 2019 result
BUA Cement Plc recently released financials reveal a 47.5% increase in revenues of N175.52 billion up from N119 billion in 2018.
One of the industries set to experience the downsides of the Covid-19 pandemic is the construction industry. Given the slowdown in construction activities as a result of the lockdowns and constrained economic activities, the reasons are not farfetched.
Prior to the outbreak of the pandemic, Globe Newswire had predicted an accelerated growth pace of the global construction industry from 2.6% in 2019 to 3.1% in 2020. This growth has now been revised to 0.5%. What is even more daunting is that the revised growth rate is based on the assumption that the outbreak will be contained across all major markets by the end of the second quarter of 2020.
It is only after that (including freedom of movement in H2 2020) that events could facilitate reverting to the normal course of activities to foster businesses in the industry like BUA Cement or those that depend on it to restart activities.
Nigeria’s third-largest cement company, BUA Cement Plc, however, still has its 2019 victories in order. Involved in the manufacturing and sales of cement, BUA Cement has 3 major subsidiaries and plants in Northern and Southern Nigeria.
(READ MORE:Update: BUA Cement Plc lists N1.18 trillion shares on NSE)
With a market capitalisation of N1.18 trillion ($3.3 billion), BUA is the third most capitalised company on the NSE. Its recently released financials reveal a 47.5% increase in revenues of N175.52 billion up from N119 billion in 2018.
The company’s profits also increased by 69.1% from N39.17 billion in 2018 to N66.24 billion in 2019. Core operating performance was strong, and this was supported by strong cement sales in the domestic market, impairment writes back, and other income.
The main reason for the company’s increased earnings is from the cost synergy and increased revenue as a result of the merger that took place between CCNN Plc and Obu Cement Company Limited.
There was also a striking jump in its income statement on its tax for the year. For FY 2019, it incurred a tax expense of N5.6 billion, in comparison to the N24.9 billion tax credit it received in FY 2018.
This was as a result of a reversal of previous tax provision made on Obu Line 1; it received approvals for an extension of the company’s pioneer status on Obu line-1 and Kalambaina line-2 in February 2020, to leave effective tax rate at just over 8% in 2019. The pioneer status will help the company save funds that will otherwise have been spent on higher taxes.
(READ MORE:Dangote Cement to access more debt funding)
BUA reported an impressive FY’19 result. Its performance shows the growing strength of the company and its increasing market share. On the back of the strong performance, management declared an N1.75 dividend per share that translates to a dividend yield of 5.5% on current prices.
Cash flow position was also robust with a strong closing cash balance – from N2.8 billion in 2018 to N15.6 billion as at year ended 2019. The company’s growth, as well as the impact of its merger, present a great buy opportunity of the highly capitalized, low-cost stock. As of today when the market closed (21st May) its share price stood at N35.60 from a 52-week range of N27.6 and N41.
READ ALSO: COVID-19: Best and worst case scenarios for the Nigerian economy
What we see is a great growth stock further heightened by the population expansion and increased urbanization. However, we expect the impact of the Covid-19 pandemic to be felt from the Q1 results of the company.
The industry could slow down for the year as the level of commercial construction also slows down. Yet the best part of holding stocks like this is that even with stalled operations for a period, a resurgence will always emerge.
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Analysis: Airtel Nigeria is winning where it matters
Airtel has left no stones unturned in ensuring that its provisions are top-shelf – subscribers to the network, of course will have their own ideas.
Airtel might have won our hearts over with internet-war adverts starring our favourite tribal in-laws, but its fundamentals are what will make us the bucks that keep us happy. Airtel Africa Ltd is a subsidiary of Indian telecoms group, Bharti Airtel Ltd; the group has left no stones unturned in ensuring that its provision of prepaid plans, credit transfers, mobile internet services, messaging, roaming facilities and more, are top-shelf – subscribers to the network, of course, will have their own ideas.
Since last year when Airtel Nigeria became the second telecommunication company in Nigeria listed on the NSE, the company has experienced a steady level of growth. With a presence in 14 African countries, the group’s strength lies in its diversity with stronger companies mitigating the poor performances of others.
Performance Overview: Airtel Africa
Airtel Africa’s report for the year ended March 2020, revenue jumped by 10.9% from $3.1 billion at the year ended 2019 to $3.4 billion in 2020. The consolidated profit before tax also jumped by 71.8% from $348 million in 2019 to $598 million in 2020. However, profit for the period dropped by 4.23% with earnings of $408 million in 2020 from the $426 million it had earned in 2019. A reason for this is the tax figure that moved from a credit of $78 million in 2019 to tax payments as high as $190 million in 2020. Total assets also jumped by 2.41% from 2019’s value of $9.1 billion to $9.3 billion in 2020 primarily as a result of their acquisition of more property, plant, and equipment (PPE). The total customer base grew by 9.3% to 99.7 million for the year ended.
Full Report here.
Revenue growth of 10.9% was driven by double-digit growth in Nigeria and East Africa. However, the rest of its African operations experienced a decline in revenue. Its success in Nigeria is especially commendable, considering the fact that the company lost more than 100,000 subscribers in Nigeria between December 2019 and January 2020. Raghunath Mandava, Chief Executive Officer, remarked that the results which were in line with the group’s expectations, “are clear evidence of the effectiveness of our strategy across Voice, Data and Mobile Money.”
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Behind The Numbers – Nigeria
Airtel Nigeria’s performance indicates the company is making the right calls in a very competitive industry. Nigerians are fickle when it comes to data and voice but will spend if the service is right. The company grew its data revenue by a whopping 58% to $435 million a sign that its strategy to focus on data is working. Voice Revenues for the year was up 15% to $850 million. In total, Airtel Nigeria’s revenue was up 24.4% to $1.37 billion. Ebitda margin, a number closely watched by foreign investors 54.2% from 49% a year earlier. Operating profit for the year ended also jumped by 52.6% for the year from 2019 and 32.4% from Q1 2019. Total customer base in Nigeria also grew by 12.5%.
Nigeria is surely critical to Airtel Africa’s future seeing that it contributes about one-third of its revenue. Recent results thus indicate it is winning where it matters most and it must continue to stay this way if it desires to survive a brutal post-COVID-19 2020. Telcos are expected to be among the winners as Nigerians rely more on data to work remotely but there are other players in this game. Concerning the impact of the pandemic, he explained that at the time of the approval of the Group Financial Statements, the group has not experienced any material impact arising from the impact of COVID-19 on its business.
On cash flows…
The group has also taken measures to enhance its liquidity. The CEO explained that it is moving its focus to enhance liquidity towards meeting possible contingencies.
“Having considered business performance, free cash flows, liquidity expectation for the next 12 months together with its other existing drawn and undrawn facilities, the group cancelled the remaining USD 1.2 billion New Airtel Africa Facility. As part of this evaluation, the group has further considered committed facilities of USD 814 million as of date authorisation of financial statements, which should take care of the group’s cash flow requirement under both base and reasonable worst-case scenarios.”
To this end, they have put in the required strategies to preserve its cash as its cash and cash equivalents, consequently, jumped by 19.1%.
(READ MORE: COVID-19: MTN says it has put strict measures in place to preserve resources)
Buying opportunity
Investors looking at this impressive result will be wondering if this portends a buying opportunity. Airtel Nigeria closed at N298 on Friday and has remained at this price for about a month. The stock is quite illiquid and is not readily available to buy.
It’s the price to earnings ratio of 4.56x makes it quite attractive. Further highlighting this opportunity is its price-to-book ratio which is as low as 0.5273, suggesting that the stock could be undervalued. Whether it is available to be bought, is anyone’s guess.
Daramola Olufemi Solomon
November 29, 2019 at 6:14 am
This would go a long way in lifting Africa from developing continent status to a well technological and advance economy to recon with in the comity of nations.