Business News
Lagos debt hits N39.6 billion, to borrow N97 billion more
Lagos State Commissioner for Finance, Rabiu Olowo, has said that although the state’s debt has risen to N39.692 billion, there’s no cause for alarm.
The Lagos State government has admitted that its debt, which stands at N39.69 billion, i quite high but assured that there is no cause for alarm.
The Commissioner for Finance, Rabiu Olowo, explained that the state’s debt profile is mostly overwhelmed by internal debt.
Details: State’s external debt is N4.9 billion, internal debt is pegged at N29.7 billion, while charges on the bond are N5 billion. This makes the total debt profile of the Lagos State Government N39.692 billion.
Among the States and FCT in Nigeria, Lagos has the highest foreign debt profile in Nigeria, accounting for 5.64% while Edo accounts for 1.095%, Kaduna follows with 0.90% and Cross River reportedly accounts for 0.75%.
[READ ALSO:Lagos Govt debunks new charges for number plates and vehicle registration(Opens in a new browser tab)]
While for domestic debt, Lagos State also leads the table with 3.19%of the total domestic debt stock while Yobe State has the least debt, accounting for 0.17% in this category. The revelation comes amidst the N1.168 trillion set for the 2020 budget which is an increase compared to last year’s budget of the State government.
[READ MORE: Debt profile: Bankruptcy looms, Obasanjo warns FG)
Lagos debt level not alarming: According to Olowo, the state government has the capacity to sustain and finance its debt profile. He said Lagos State Government’s sustainability figures are in line with international and local benchmarks, stating that the state finished 2019 at 29% which is below 30% benchmark.
He said despite the debt profile of the State, Lagos remains Nigeria’s economic hub and one of the leading economies in Africa.
“Our professional position on debt issuance by Lagos State Government, there are two questions when debt is being considered, they are utilization and sustainability figures.
“For debt utilization alone, with fiscal Responsibility Act, 100% of our debts are targeted towards capital projects.
“If you look at sustainability figures we are very much in line with international and local benchmarks.”
He added that “Currently, we finished 2019 at 29%, which is below 30% benchmark. Going forward into medium-term by 2021, 2022, debt figure will come down to 25 per cent meaning that we will be able to manage our debts into the future with increasing revenue in the coming years.
“For Lagos debt charges, our External debt charges stand at N4.9 billion, internal debt charges is N29.7 billion, while charges on the bond are N5 billion. In totality, it amounts to N39.692 billion.
“Also, the deficit financing of the budget is in a total of N97 billion. The breakdown is External loan, N34 billion, while an internal loan is N63 billion.”
Coronavirus
COVID-19: WHO warns there may never be an immediate solution to the virus
WHO urged governments and citizens to focus on known basic steps to contain the pandemic.
The World Health Organization (WHO) has warned that there might not be an immediate solution or cure to the COVID-19 pandemic despite the positive outcomes at the different levels of trials of vaccines for the virus.
The WHO said that despite strong hopes for a vaccine, there might never be a silver bullet for COVID-19, and the road to normality would be long.
According to the latest data, the coronavirus pandemic has infected over 18.1 million people with more than 690,000 fatalities globally since late January, when the virus was first reported. This is just as some countries that thought they worst was over for them started experiencing a second wave of outbreak.
The Director-General of the WHO, Tedros Adhanom Ghebreyesus, and Mike Ryan, WHO head of emergencies, urged governments and citizens to focus on known basic steps to contain the pandemic such as testing, contact tracing, maintaining physical distance and putting on a mask.
Tedros in a virtual news briefing in Geneva, said, ‘’The message to people and governments is clear, Do it all. He said face masks should become a symbol of solidarity around the world. A number of vaccines are now in phase three clinical trials and we all hope to have a number of effective vaccines that can help prevent people from infection. However, there’s no silver bullet at the moment, and there might never be.’’
Chinese Investigation
The WHO officials revealed that an advanced investigation team that was sent to China where the virus started, are not yet back. The UN health agency sent an epidemiologist and an animal health specialist to China on July 10 to lay the groundwork for a probe aimed at identifying how the virus entered the human species.
Tedros said WHO and Chinese experts had agreed on the terms of reference and a programme of work for a WHO-led international team of scientists and researchers from around the world. They are to study the origins of the virus in the city of Wuhan.
The WHO boss encouraged mothers to continue breastfeeding even if they had COVID-19, as the benefits outweigh the risks associated with infection.
Tedros also said the international hunt for a vaccine has been historic against the backdrop of the coronavirus disease being the biggest global health emergency since the early 20th century.
Tedros said, ‘’There are many vaccines under trial, a couple in the final stage of clinical trials – and there is hope. It does not mean that we will have the vaccine, but at least the speed with which we reached the level we reached now is unprecedented.”
“There are concerns that we may not have a vaccine that may work or its protection could be for just a few months, not more. But until we finish the clinical trials, we will not know.”
Business
Shoprite Nigeria is worth at least N25 billion
N25.6 billion price tag is only reflective of what Shoprite Nigeria’s operations is worth on paper.
Africa’s largest retail chain, Shoprite, announced on Monday that it is has decided to divest from its Nigerian retail entity, Retail Supermarkets Nigeria, the owners of Shoprite Supermarket Nigeria.
Going by several media reports and social media accounts, the sale is close to being consummated and a buyer is already in line to purchase the company. Getting information on the purchase consideration for this deal can be difficult especially if there are non-disclosure clauses.
For example, then Zinnox purchased Konga from Naspers (another South African firm) and AB Kinnevik two years ago, though the purchase consideration was not disclosed. However, we do not know what Shoprite Nigeria is worth on paper.
What is it worth on paper? Going by the company’s most recent annual report published in June 2019, Shoprite values its equity in its Nigerian subsidiary, Retail Supermarkets Nigeria Ltd at R 1.164 billion (1.1 billion rands). This translates to about N25.6 billion using the official exchange rate. This is also an equivalent of $67.7 million. The exchange rates are modest and will certainly be higher if the transaction was to be at this valuation.
However, the N25.6 billion price tag is only reflective of what Shoprite Nigeria’s operations is worth on paper, what accountant’s callbook value. It could be more or even less depending on how the negotiation goes.
Shoprite Nigeria business is also its second-largest, based on book value and next only to Angola.
How will it be funded? The potential investors will likely fund this transaction via debt or equity or a combination of both. Deals like this also take time to be completed even if an agreement is announced and will also be approved by the Securities and Exchange Commission of Nigeria and possibly South Africa.
We will keep you updated as we get more information.
Business
Social clubs, recreational centres to reopen August 14
The closure of all spas, bars, lounges, night clubs, cinemas, and game arcades remains in place.
The Lagos State Government has announced that social clubs and recreational centres will be allowed to reopen operations starting from Friday 14 August 2020.
Earlier today, the government released a statement via its official Twitter handle, in which Governor Babajide Sanwo-Olu was quoted to have said that the reopening would be subject to clearance and possession of the Provisional Safety Compliance Certificate. This clearance certification can be gotten right here.
The Governor also added that at the moment, the safety clearance certificates are only being issued to social clubs with registered trustees.
READ MORE: Update: Lagos to reopen worship centres on August 7
*COVID-19* : Measures announced by the Lagos State Government to further relax the lockdown. @jidesanwoolu @drobafemihamzat #LASG #LagosAgainstCovid19 #CovidLASG #ForAGreaterLagos pic.twitter.com/3Mqz1o9dC7
— The Lagos State Govt (@followlasg) August 3, 2020
READ: EPL clubs to be fined £37 million each over suspension of matches
In the meantime, however, the closure of all spas, bars, lounges, night clubs, cinemas, and game arcades remains in place. Any of the listed businesses that reopen prior to the set date and without meeting the set guidelines will be shut down. A monitoring and enforcement team will be at work to ensure that the “guidelines and directives are complied with to the letter”.
The Backstory
As part of moves towards a complete easing up of the lockdown, the Lagos State recently announced the reopening of schools. The government also announced that the reopening of religious houses and places of worship would take effect from August 7.
However, this is subject to strict adherence to standard precautions that have been put in place. All schools are expected to provide hand-washing facilities and ensure physical distancing within their premises. The Lagos State government will make available face mask 200 schools to which this reopening exemption applies for the duration of the reopening.
Relevant agencies have been directed to carry out spot checks and random inspections of schools and defaulters will be sanctioned appropriately.
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Shoprite Nigeria is worth at least N25 billion
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Why Shoprite is “exiting” Nigeria
Social clubs, recreational centres to reopen August 14
COVID-19 Update in Nigeria
Daily Parallel Market exchange rate – ₦480/$1
Shoprite’s owners to leave Nigeria after 15 years
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