The naira is expected to be under intense pressure from the dollar starting next week, no thanks to Nigeria’s poor export earnings due the COVID-19 pandemic.
This is coming as Nigeria’s commercial banks struggle to meet dollar demands by importers who are seeking to meet past due obligations.
Already, the naira has been depreciating across the official and parallel markets since mid-March, following a crude price slump. As Nairametrics reported, the Central Bank of Nigeria devalued the naira and suspended foreign exchange sales to Nigeria’s retail currency traders.
Earlier this past Thursday, the naira dropped to N387.30 per dollar and then declined further to N387.70 on Friday at the official currency spot market.
On the black market, however, the naira was quoted at about N415 per dollar, having fallen more than the spot market rate.
Foreign exchange inflows into Africa’s largest economy plunged after crude oil prices fell drastically, even as the COVID-19 pandemic continues to exacerbate an already tight currency market.
Recall that the drop in crude oil prices and Nigeria’s dwindling foreign exchange reserves had led to experts’ predictions that it was only a matter of time before the CBN decide to devalue the naira.
In addition, America’s biggest bank, JP Morgan Chase, had reported that it expects a 10% devaluation of the naira to N400 per dollar by the end of the end of Q2 2020.
The first quarter of 2020 have witnessed a generally bearish trend in global financial markets, starting with China which, unfortunately, was the first epicenter of COVID-19 pandemic.
With China being a major trade partner to Nigeria, it was not surprising how the initial Coronavirus crisis and resultant lockdown in China had diffused through the Nigerian economy.
Nigeria exports a significant volume of its crude oil output to China. And crude oil sales account for about half of Nigeria’s revenue and 90% of its export earnings.
Nigeria’s foreign reserves have depleted to $35.8 billion as of late March 2020, all due to all the upheavals in the global economy.
The country has now resorted to selling its crude at an unusually low discount starting from April, all in an effort to undercut its rivals and survive.
CAP Plc set to merge with Portland Paints and Products Plc.
CAP Plc and Portland Paints have taken a decision to merge their respective businesses in accordance with applicable laws.
The Board of Directors of Chemical and Allied Products Plc (CAP Plc), and Portland Paints and Products Plc (Portland Paints), have decided to merge their respective businesses in accordance with applicable laws to drive growth and expansion within the Nigerian and African markets.
This is according to a press release signed by Bolarin Okunowo, the Managing Director of Portland Paints, made available on NSE, Monday, 26th October 2020.
The completion of the proposed merger is subject to approvals being obtained from the Federal Competition and Consumer Protection Commission, the Securities and Exchange Commission (SEC), The Nigerian Stock Exchange (NSE), the Federal High Court, as well as shareholders of CAP and Portland Paints.
What you should know
- Should the proposed merger go ahead, CAP Plc will emerge as the resultant entity.
- The proposed merger will be executed by way of a Scheme of Merger (the “Scheme”) in accordance with Section 711 of the Companies and Allied Matters Act, 2020, and other applicable laws, rules, and regulations.
- The Scheme will involve the transfer of all Portland Paints Plc’s assets, liabilities and business undertakings including real property and intellectual property rights to CAP Plc.
- In consideration for the transfer, CAP Plc is offering shareholders of Portland Paints a choice to receive N2.90 cash for every Portland Paints share held OR 1 new ordinary share of CAP Plc, credited as fully paid up for every 8 Portland Paints shares held.
- The proposed consideration represents a 45% premium to the last traded share price of Portland Paints Plc on October 16, 2020, being the last business day prior to the date on which CAP Plc sent its merger proposal to the Board of Portland Paints and a 41% premium on the trading price as at close of trading on October 23, 2020.
What they are saying
Commenting on the proposed merger, David Wright, Managing Director of CAP, said, “The decision to pursue the proposed merger, is driven by the Board’s strategic plan to aggressively grow within the Nigerian and African markets.
“We believe that the Proposed Merger presents a unique opportunity that will benefit all stakeholders, from shareholders to customers, as well as the broader economy. I am excited by the prospect of an enlarged company with a broader decorative paint portfolio covering the premium, mid-market and affordable segments and the inclusion of marine and protective coatings, all of which will benefit our customers and shareholders.”
The Managing Director of Portland Paints, Bolarin Okunowo, submitted that “In recent months, the Board and Management of Portland Paints have evaluated various strategic options with a view to positioning our company to capture emerging growth opportunities.
“CAP Plc’s business is complementary to ours, and both companies will be better able to serve our respective customers by coming together. I believe the combination of Portland Paints and CAP will yield significant benefits for all of our stakeholders.”
Portland Paints and Products Nigeria Plc – with 85.98% of the company’s issued share capital owned by UAC Nigeria Plc, manufactures and sells decorative, industrial, and marine/protective coatings for the construction of oil & gas industries in Nigeria. Portland Paints is the Nigerian representative of Hempel. It is listed on the NSE.
Chemical and Allied Products Plc (CAP) – a subsidiary of UAC Nigeria Plc – which holds 51.49% of the company’s shares, manufactures and sells premium and standard paints and coatings, and is the sole technological licensee of Akzo Nobel Coatings International B.V. in Nigeria. It is listed on the NSE.
#EndSARS: Anyone found culpable in Lekki Toll Plaza shooting would be held accountable – Sanwo-Olu
Sanwo-Olu has continued to ensure Nigerians that those found culpable in the unfortunate Lekki shootings will not escape the law.
Lagos State Governor, Babajide Sanwo-Olu, has said that the Lagos State Government would ensure that anyone found culpable in last Tuesday’s shooting at the Lekki Toll Plaza would be held accountable for their actions.
This was disclosed in a statement by the Lagos State Government, after the Governor’s interview with CNN’s Becky Anderson.
In the interview with CNN, the Governor said, “We will be committed to a full investigation of what happened and people would be held accountable. They certainly would be held accountable. We would do everything possible to ensure that they are held accountable.
“People have claimed that their friends and family members have been killed. So, this Judicial Panel of Enquiry is meant to bring all of these stories to accountability; where we can make restitution, where families can prove and identify officers that were responsible for this.
“I am not the Commander-in-Chief of the Armed Forces, I am Governor of a State. The report would be out and we would channel the report to all the relevant authorities in the state to ensure that every one that is found culpable is accountable for the act.”
He added that there was no international pressure on Nigerian leaders to investigate the Lekki incident, and he had met the #EndSARS protesters. He also acknowledged that the protests were legitimate.
“There are no international pressures whatsoever. These are genuine protesters that we all believe and we all have knowledge about. I was the first governor among governors, with due respect to all my other colleagues, who came out to meet with them, who started from the front. I carried the EndSARS flags with them. I met with them twice and we all had the rally together and worked together,” he said.
Explore Data on the Nairametrics Research Website
Sanwo-Olu also said that the investigations would be a catalyst for positive change of Governance, and he saw it as a wake-up call for those in power.
“I genuinely believe there would be a change for two reasons. One, what has happened, especially in Lagos is extremely unimaginable. Number two is that it was a clarion call for all of us in government, especially understanding and realizing what the youths truly want us to be doing. So, it hit all of us like a thunderbolt and it was just a wake-up call,” he said.
What you should know
Nairametrics reported last week that several social media accounts had revealed that peaceful protesters were allegedly being shot at by the military at the Lekki toll holdout. The Nigerian Army, however, denied deploying soldiers to attack #EndSARS protesters who assembled at the Lekki Toll Plaza.
The Lagos State Government ordered an investigation into the Lekki Toll Plaza shooting that was allegedly done by some men of the Nigerian Army on Tuesday evening. Babajide Sanwo-Olu had also stated that Lagos State would not burn on his watch, as he tried to calm things down after hoodlums wreaked havoc post-Lekki shootings, and announced that the Judicial panel set up by the state would include the incident at Lekki toll gate.
The Lekki incident has gotten the world’s attention, with the Governor and other members of government admitting that there were casualties as a result of the incident. The onus is on the Federal Government to ensure the recommendations of the state judicial panels are properly executed after they submit their reports.
#EndSARS: The deliberate shooting of unarmed protestors was an outrage – Archbishop of Canterbury
The Archbishop of Canterbury has once again condemned the deliberate shooting of unarmed protesters in Lekki, calling it an outrage.
The Archbishop of Canterbury and Head of the Anglican Church, Justin Welby, has said that the deliberate shooting of unarmed protesters in Lagos was an act of outrage, and he urged for a path to peace, justice and reconciliation.
The Archbishop disclosed this in a social media statement on Monday evening. He had earlier called on Nigerian leaders to “come together and agree a common vision that puts aside difference, steers the ship of state away from the rocks of conflict and sets a course that is for the good of all.”
The deliberate shooting of unarmed protestors in Lagos and other parts of Nigeria last week was an outrage. I say this as a human being, as a Christian, and as the leader of the worldwide Anglican Communion – which counts some 18 million Nigerians as part of our global family.
— Archbishop of Canterbury (@JustinWelby) October 26, 2020
What you should know
The Archbishop last week condemned the shooting of unarmed protesters in Lekki and urged President Muhammadu Buhari to ensure that lives were protected.
“I condemn in the strongest terms the reported deliberate shooting of unarmed protesters in Lagos and other parts of Nigeria.
“I have urged President Muhammadu Buhari directly to ensure that lives are protected – and I say that again now,” he said last week.
In yesterday’s statement, Mr. Welby said: “The deliberate shooting of unarmed protestors in Lagos and other parts of Nigeria last week was an outrage. I say this as a human being, as a Christian, and as the leader of the worldwide Anglican Communion – which counts some 18 million Nigerians as part of our global family.”
He warned of the violent past of Britain’s colonial history and urged that Nigeria learned from the UK’s past mistakes.
Explore Data on the Nairametrics Research Website
“But I also say this as a British citizen, knowing that in our recent colonial past the UK has committed appalling acts of violence.
“And while I absolutely have no place to lecture or rebuke Nigeria, a country that is very dear to my heart, I can say this: learn from our mistakes. Do not go further down the path of violence and injustice. Turn around and find the path of peace, justice and reconciliation,” he said.
He said that Nigerian leaders could become heroes if they sacrifice ambition and work to unite Nigeria in a time of trouble.
“No nation can be built without heroism. This is a time for all those who play a role in the political and civil leadership of Nigeria to be heroes for the common good. This is a time to sacrifice ambition, to set aside party, to unite to serve in order that Nigerians from richest to poorest may flourish,” the Archbishop concluded.