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.
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.
“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.”
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.
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.
Passengers can now arrive 90 minutes before departure for domestic flights – FG
The Federal Government has announced the reduction of arrival time for passengers from three hours to one hour and a half before departure for domestic flights.
This was disclosed in a tweet post by the Minister for Aviation, Hadi Sirika, through his Twitter handle on Monday, July 13, 2020.
The minister said that the decision was arrived at after they have reviewed passenger facilitation at the airport while noting that passengers should check-in online.
In the tweet post, Sirika said, ‘’My colleagues and I have reviewed passenger facilitation at our airports, consequently I am happy to announce that, henceforth travellers are to arrive one hour and half before their departure time for domestic flights. Travellers are advised to check-in online, please.’’
My colleagues & I have reviewed passenger facilitation at our airports, consequently I am happy to announce that, henceforth travelers are to arrive one hour and a half before their departure time for domestic flights. Travelers are advised to check in online, please 🙏🏽🇳🇬🇳🇬🇳🇬🙏🏽
— Hadi Sirika (@hadisirika) July 13, 2020
It can be recalled that the Federal Airports Authority of Nigeria (FAAN) had earlier in June issued flight resumption protocol for both international and local passengers across the country, advising passengers to arrive at the airport three hours before their time due to the new COVID-19 safety checks for domestic flight operations and five hours for international flight operations.
Seyi Makinde Proposes N3 billion investment plan for water supply
The local governments in Oyo are advised to submit a list of 10 faulty boreholes in the LG.
The Governor of Oyo State, Seyi Makinde announced the proposal of a N3 billion investment plan dedicated to water supply in rural and urban areas of the state.
Speaking through the Chairman of Rural Water Supply and Sanitation Agency (RUWASSA), Mr. Najeem Omirinde in Ibadan on Monday, he added that N500 million of the N3 billion would be used for repairing broken and faulty state-owned boreholes.
All Chairmen of each of the Local Governments in Oyo are advised to submit a list of 10 faulty boreholes in the Local governments.
The Oyo State governor also ordered that all new boreholes must be compliant with solar-powered pumps, to enable their longevity and save costs.
Urging residents to patronize the agency if they need to dig up boreholes for water, citing that it would be cheaper if done through the state agency than with private drilling companies.
Minister of Finance, Zainab Ahmed stated last year that Nigeria needs an estimated N36 trillion annually for the next 30 years to solve Nigeria’s infrastructure problem. The investment, although a tiny fraction of what Nigeria needs is a bold step by the Oyo State government.
FG asks UK court for more time to appeal $9.6 billion arbitration judgement
Malami stated that the Evidence of P&ID’s highly orchestrated scam had only recently come to light.
The Federal Government has approached a UK court to appeal for more time to appeal the $9.6 billion arbitration award against it over the breach of contract with Process & Industrial Development (P&ID) Ltd.
Nigeria has said that it needs more time to pursue its argument that the 2010 gas supply contract with Process & Industrial Development Ltd was a sham.
The legal dispute with P&ID is coming against the backdrop of the huge drop in the country’s revenue due to the collapse in oil prices globally. Nigeria had applied to US courts in March seeking for documents from 10 banks which includes Citigroup Inc. and JPMorgan Chase & Co, in a bid to prove its corruption allegations.
P&ID, however, has denied any wrongdoing in the whole transaction, arguing that Nigeria missed its opportunity to appeal.
The Nigerian Lawyer, Mark Howard, on Monday, the first morning of a 2-day hearing, said ‘’It is very unusual in a fraud case to discover a single smoking gun. By its very nature, fraud is conducted in secret, which makes it hard to detect and justifies an extension.’’
The legal representatives for Nigeria are seeking another hearing for the judge to decide whether any misconduct has taken place and whether it justifies overturning the contract
The Attorney General and Minister for Justice, Abubakar Malami in a statement said, ‘’Evidence of P&ID’s highly orchestrated scam had only recently come to light.’’
It can be recalled that last year, a UK judge upheld an earlier arbitration award to P&ID, which had accumulated to about $9.6 billion. The arbitration decision was over a failed contract to build a gas processing plant in the Southern city of Calabar.
The Nigerian lawyers disclosed that they have uncovered alleged bribes to government officials and their family members dating back to 2009.
Malami in his court filing on March 24, submitted that ‘’There is good reason to believe that ministers at the highest level were involved in a corrupt scheme to steal money from Nigeria.’’