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Pension funds managers are really going to struggle in 2020 – Sigma Pensions CEO 

The CEO of Sigma Pensions Limited, Dave Uduanu, said Pension Fund Administrators in Nigeria are going to have a really difficult year.

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Pension funds managers are really going to struggle in 2020 – Sigma Pensions CEO 

The Chief Executive Officer of Sigma Pensions Limited, Dave Uduanu, said Pension Fund Administrators in Nigeria are going to have a really difficult year. Uduanu disclosed this recently when he joined CNBC Africa’s Esther Awoniyi to talk about how Nigerian PFAs intend to navigate through Nigeria’s compressed investment terrain and inflationary pressures.

According to him, 2020 is looking very tough, with bond yields below 10%, even as treasury bill yields are at about 4%. Uduanu also noted that these are all below inflation rate, even as he wondered how possible it is to manage savings in a country where yields are below inflation.

Pension funds managers are really going to struggle in 2020 – Sigma Pensions CEO 

Dave Uduanu, Sigma Pensions Limited 2

He said: “In 2019, a lot of PFAs were able to deliver returns that were slightly above inflation in the four key funds that we manage. However, this year is looking tougher, it’s looking challenged. Bond yields are below 10% and treasury bill yeilds are below 4%… All below inflation. 

“I think the key question is – how do you manage savings in a country where yields are below inflation. Even asides from pension funds, for the man on the streets, if you want to achieve the goal of financial inclusion which is for them to open bank accounts and keep their money in the bank, you have to ensure that at least, interest rates are at par with inflation or very close to inflation. But that’s not the case here.

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“So, PFAs are really going to struggle this year. However, the equity market has come to support the yields. In the first month of the year, it was about…just under 10% and in the first two weeks of the year it was touted as the best performing stock in the world.”

[READ MORE: PFAs boost investment in infrastructure to N40.52 billion)

At the bane of PFAs’ rather gloomy 2020 performance outlook is recent restrictive policy that was implemented by the Central Bank of Nigeria. Uduanu recalled that 2019 was relatively good year for bonds and treasury bills until the apex bank came up with its OMO policy. The policy more or less restricted a large segment of investors from being able to invest in treasury bills.

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Speaking further, Uduanu admitted to a sentiment which was previously expressed by other PFAs about the likelihood that some specific banking stock might lose their valuation. He also expressed worry over the lack of alternative asset classes to support the void this would most certainly create.

“Look, the market is driven by liquidity. We see a lot of PFAs and indeed other investors jumping into the equity market. The market has been depressed for the last three years. There are some good names that have rallied in the last few years. Banking names will struggle this year because, as you know, the Central Bank raised its CRR rate and that means that banks are going to struggle with liquidity…”

He, however, expressed the optimism that the Nigerian equity market will do much better than last year and this is due mainly to the fact that investors t=do not have much investment options at the moment.

In terms of where PFAs are specifically looking to invest this year, Uduanu mentioned the real estate sector. According to him, now that the other rates are down significantly, PFAs are beginning to see mortgage rates that are very close to 10%. He added that the PFAs are now trying to come up with a vehicle that allows borrowers to borrow at 9%.

You may watch the full interview here.

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Emmanuel is a professional writer and business journalist, with interests covering Banking & Finance, Mergers and Acquisitions, Corporate Profiles, Brand Communication, Fintech, and MSMEs. He initially joined Nairametrics as an all-round Business Analyst, but later began focusing on and covering the financial services sector. He has also held various leadership roles, including Senior Editor, QAQC Lead, and Deputy Managing Editor. Emmanuel holds an M.Sc in International Relations from the University of Ibadan, graduating with Distinction. He also graduated with a Second Class Honours (Upper Division) from the Department of Philosophy & Logic, University of Ibadan. If you have a scoop for him, you may contact him via his email- [email protected] You may also contact him through various social media platforms, preferably LinkedIn and Twitter.

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Company Profile

NPF Microfinance Bank: Providing ‘friendly’ financial services for almost 3 decades

NPF microfinance bank has shown resilience over the years, and this is reflected in its consistent positive performance.

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The Police is your friend is a cliché many are familiar with, but most do not know that this friendship extends to financial services. Incorporated as a community bank in 1993, with License No. FC 00200, the Nigerian Police Force (NPF) Microfinance bank has been providing banking services to the Nigerian banking public for almost three decades.  

However, it is one of those stocks that hardly make the headlines, except for landmark events. This friendly microfinance bank is the pick for Nairametrics corporate profile this week.  

Incorporation  

NPF Microfinance Bank Plc (Formerly NPF Community Bank Ltd), was incorporated on 19th May, 1993, to provide services such as retail banking, loans and advances, and other allied services to both serving and retired officers and men of Nigeria Police Force, its ancillary institutions, and later on, the general banking public.  

The Bank mission says it is targeted at providing banking and other permissible financial services to poor and low-income households and micro enterprises, with emphasis on members of the NPF Community. 

It commenced operations on 20th August, 1993 with a single branch in Ikoyi, having obtained a CBN provisional license to operate as a community bank. The bank obtained its full license to operate as a Community Bank on 24th January 2002. Five years later, it converted from its Community Bank status to a Microfinance Bank, following CBN directive which allowed it to open branches in all the states. It was registered as a Public Limited Company on 13 July, 2006, and received an approval-in-principle to operate as a Microfinance Bank on 10 May 2007. 

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NPF microfinance bank obtained the final license on December 4, 2007, but its stocks did not get listed on the main board of the NSE, until December 2010, after 17 years of operations. 

Its stock price is considered quite stable, trading within a narrow band, with its price-earnings ratio estimated to be about 9.45 times earningsslightly higher than the 9.3 times earnings, which is the average PE ratio on the NSE. 

The bank’s authorized capital at inception was N500,000.00, made up of 500,000 ordinary shares of N1.00 each. This has grown over the years to its current level of N2 billion, made up of N4 billion ordinary shares of 50k each, of which 2,286,637,766 ordinary shares of 50k eachare issued and fully paid up. 

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At a share price of N1.22, the current Market Cap is put at N2.789 billion.  

Branch network has increased to about 35 branches across several states in the country. In August 2019, the bank reaffirmed an earlier decision to embark on another public offer to raise funds for the purpose of incorporating Information Technology to meet customers needs and branch improvement, and to fund a three-year strategy from 2019 to 2021. 

Management  

Mr. Akinwunmi M. Lawal has been Managing Director since June 2014, while the Board of Directors has been chaired by Azubuko Joel Udah (Esq.) since 2015. 

Mr. John Kwabe Tizhe and Mr. Francis C. Nelson are Executive Directors; while Mr. Usman Isa Baba, Mr Aminu Saleh PaiMr Jibrin G. Gane, Mr. Salihu Argungu Hashimu, Mr. Abdulrahman SatumariMr. Dasuki Danbappa GaladanchiMrs. Rakiya Edota Shehu, and Mr. Mohammed D. Saeed are Non-Executive Directors. 

Recent financials 

Although the NPF microfinance bank may not boast of a large customer base like most of the popular commercial and microfinance banks in the country, the bank has consistently shown favorable financials over the decades. The bank stocks is highly illiquid, but it has consistently and successfully paid dividends for the last 21 years, paying as much as N114.3 million in dividends for 2018.  

The audited results for FY 2018, shows a N300 million growth in gross earnings from N3.6 billion in 2017 to N3.9 billion in 2018, while there was a decline in profitThis decline is partly traceable to the 128.6% increase in marketing expenses from N63 million in 2017 to N144 million in 2018, while Directors’ remuneration rose 63%, from N65 million in 2017 to N106 million in 2018. 

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Profit before tax fell sharply from N819 million in 2017 to N287 million in 2018, and Profit after tax also dropped from N631 million in 2017 to N195 million in 2018.  For 2019, the Profit Before tax shot up to over N1 billion, while Profit after tax grew to N796.4 million.  

Within the 2018 financial year, customer deposit grew by 14.67% from N9.126 billion to N10.465 billion, while total asset increased from N15.952 billion in 2017 to N17.597 billion in 2018. In comparison, 2019 customer deposits grew further to N11.32 billion, and total assets increased further to N19.58 billion.  

The bank attributed the poor performance in 2018 to the adoption of the IFRS 9, which caused a rise in net impairments, a N700 million growth in operating expenses, as well as a N266.48 million fraud committed by one of its middle management staff in the Sokoto branch. Although N35 million was recovered of the sum, shareholders bore the brunt of the loss, as dividend per share dropped from 17 kobo in 2017 to 5 kobo in 2018.   

Whatever steps the company took to prevent a repeat of frauds, it was not effective; because 2019 saw an increase in frauds committed by members of its staff. The bank recorded frauds amounting to N2.1 million in four separate incidences, and another N12.26 million ATM electronic fraud. Though some of the money was recovered, over N12 million remained unrecovered at the end of the financial year.   

Conclusion 

NPF microfinance bank has shown resilience over the years, and this is reflected in its consistent positive performance. However, it will have to work more on tightening lose ends to prevent cases of fraud and forgeries, which dips into its yearly profits and takes a chunk from shareholders dividends. 

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Business

Lagos State government seals warehouse repackaging expired curry powder

Following an anonymous tip, LASCOPA has sealed off a warehouse where expired curry powder was being packaged.

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Lagos state government seals a warehouse repackaging expired curry powder.

The Lagos State Consumer Protection Agency (LASCOPA), under the aegis of the Lagos State Government, has sealed a warehouse for repackaging unwholesome and expired curry powder.

This disclosure was made this morning in a press release to the general public, which was seen by Nairametrics, via the official website of Lagos State Government.

Acting on an anonymous tip-off from a member of the public, the Special Monitoring Team of LASCOPA, led by its General Manager, Mrs. Kemi Olugbode, paid an unscheduled assessment visit to the warehouse, to verify the claim. The tip turned out to be genuine.

This decision is in line with the State Government’s core mandate of protecting consumers from unwholesome products. The warehouse which was sealed by LASCOPA, for repackaging unwholesome and expired curry powder with the name Chinchilli and Ducross for sale, was said to be owned by Canvest Nigeria Limited. The warehouse is located at Plot 4, Cocoa Industrial Road, Ogba, Ikeja.

The General Manager, speaking after the exercise, said the enforcement team discovered thousands of expired products stored in cartons, while some were found in sacks that were ready to be repackaged for sale in the market.

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(READ MORE: Lagos to remove illegal structures obstructing Lekki Regional Road project)

The Head of LASCOPA, emphasized that the staffs of the company involved in the fraudulent operation have been arrested. Olugbode disclosed that the property will remain sealed until the government commences prosecution of the owners of the warehouse, and all those involved in the illicit activity are apprehended.

Mrs. Olugbode, also encouraged members of the public to support the present administration’s determination to rid Lagos of all illegal activities, by reporting those who are engaged in unwholesome activities that are detrimental to the health of residents.

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FG to seek international cooperation to curb illicit financial flows

FG hopes to strengthen international cooperation in curtailing the menace of illicit financial flows.

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FG to seek international cooperation to curb illicit financial flows, Ghana and south africa, Illicit financial flows: Nigeria lost $157.5 billion between 2003 and 2012 - Buhari , President Buhari says World Bank, IMF data are not reliable, Ahead of Nigeria, Ghana and South Africa top FDI inflows in Africa – Fitch , Nigeria’s Buhari wants MDAs to publicly disclose transactions above N5 million  

The Federal Government has said that there is a compelling need to strengthen international cooperation in the global effort to curtail the menace of illicit financial flows, as current international mechanisms are not strong enough.

This was disclosed by President Muhammadu Buhari in a speech delivered on his behalf by Vice President Yemi Osinbajo on Thursday at the Financial Accountability, Transparency and Integrity (FACTI) Panel Video Conference.

Osinbajo’s spokesman, Laolu Akande, in a statement in Abuja, explained that the event was held at the sidelines of the ongoing United Nations General Assembly (UNGA).

READ: EFCC and CBN intensifies fight against financial fraudsters

The session also featured presentations by the immediate past President of the United Nations General Assembly, Prof. Tijjani Muhammad-Bande, and Amb. Mona Jul of the Economic and Social Council (ECOSOC).

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He said, “The current international mechanisms for asset recovery are not good enough as can be seen in the amount lost to illicit financial flows and the length of time taken before the repatriation of just a small fraction is made.

READ: Nigeria received $96 billion diaspora remittances inflow in 6-years

“The FACTI Panel report can play an important role in bridging the expectations of source and destination countries as well as in harmonising the process of assets recovery and return. We agree with the Panel on the importance of having a balanced approach that reflects the situation in different regions and the priorities of different stakeholders. I believe that for the global aspiration to recover better from the impact of the pandemics and to yield any inclusive result, we must comprehensively address existing structures that make it impossible for countries to generate and retain a sizeable chunk of their resources. The success of the FACTI panel’s final report will be measured by the clarity of its recommendations in support of global governance reforms.”

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READ: UK Prime Minister diagnosed of Coronavirus

According to the President, evidence suggested that the contemporary international tax system used a taxing rights regime that was not fit for purpose.

He added that the system makes combating tax abuses, especially by multinational corporations, difficult for most developing countries.

READ: Nigeria, Ethiopia sign visa waiver agreement

“It is my hope that the final report of the FACTI Panel would introduce proposals that would lead us towards a fairer international tax regime .I also hope that the report would contain proposals that would address the continuing advocacy for country-by-country reporting, open disclosure and automatic exchange of information on beneficial ownership, as well as eliminate financial secrecy jurisdictions and tax havens that facilitate base erosion and profit shifting. Profit shifting, harmful tax competition–the so-called “race to the bottom–and the taxation of the digital economy should also receive adequate attention and focus in the report of the Panel. FACTI Panel’s report should assess how effectively we are meeting our commitments to combating the scourge and strengthening cooperation in dispute settlement and peer learning, particularly in assets recovery and return,” he said.

Explore the Nairametrics Research Website for Economic and Financial Data

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Other leaders who spoke at the forum included the Prime Minister of Norway, Erna Solberg, the Prime Minister of Pakistan, Imran Niazi and Former President of Lithuania, and FACTI Panel Co-Chair, Dalia Grybauskaite.

Ibrahim Mayaki, former Prime Minister of Niger and FACTI Panel Co-Chair, also spoke at the event.

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