The effect of the Coronavirus pandemic, which led to an economic shutdown in some parts of Nigeria, is not only being felt by Nigerians. Instead, many of the 36 states in Nigeria are also feeling the impact.

Among the states that have been feeling the heat, before and during the pandemic (with no record of investment between January and April 2020), are Rivers, Ondo, Edo, Sokoto, Oyo, Abia, and Anambra states. Others are Adamawa, Bauchi, Benue, Borno, Cross River, Delta, Ebonyi, Enugu, Imo, Kastina, Kogi, Kwara, Osun, Oyo, Yobe, and Nassarawa states.

This information is contained in the Capital importation report obtained from the Central Bank of Nigeria, CBN. The report also detailed the total amount of fresh investments attracted to the Nigerian economy during the period.

[READ MORE: States’ IGR hits N691 billion as Osun, others recorded biggest growth]

Note that most of the states that failed to attract investments during the period under review also failed to attract any investments in 2019. This means that it is either the necessary steps were not taken by the governments, or foreign investors could not find attraction in the states or the environments were simply not conducive for investment.

Lagos outshines FCT, Niger, 5 other states

As expected, Lagos topped the list of states that attracted investments during the period under consideration. Lagos attracted the highest amount of $5.39 billion during the period. The investment inflow into the state represents over 87% of the $6.17 billion.

Lagos is followed by the Federal Capital Territory which attracted a total investment inflow of $754.01 million.

Niger State attracted a total investment inflow of $11.60 million. Sokoto State also attracted $2.50 million, while Kaduna State attracted the sum of $1.98 million and Ogun attracted $1.70 million.

Kano and Akwa Ibom states recorded investment inflow of about $700,000 and about $237,000 respectively among others.

The limited investment inflows into some of these states clearly indicate that the states are not really attractive to the investors, even before the pandemic. The Managing Partner, FA Consult, Peter Adebayo, explained that the nation’s economy is not attractive enough to pull investments to states that lack the desired viability.

“Most of the investors are scared of insurgencies in the country, though such is limited to some parts of the nation, except for the well-connected investors that are given special attention,” he said.

Back story: Last March, Nairametrics reported that Ekiti, Kogi, Sokoto, Bayelsa, Ebonyi, Gombe, Jigawa, Abia, and five other state governments failed to attract investments in 2019.

The Federal Government has denied some media reports that it spent the sum of N13.5 billion monthly on the homegrown school feeding programme across the 36 states of the federation and Abuja during the lockdown period when school children were at home.

The FG said it had only spent about N523.3 million on the school feeding programme during the lockdown.

The disclosure was made by the Minister of Humanitarian Affairs, Disaster Management and Social Development, Sadiya Farouq, during the daily briefing of the Presidential Task Force (PTF) on Covid-19, on Monday, August 3, in Abuja.

The minister said that there had been a lot of rumours and speculations about one of the key government interventions, the Home Grown School Feeding Programme.

She explained that the programme was modified and implemented in three states following a March 29th Presidential directive, while also stating that it was done in consultation with stakeholders.

The minister said, “It is critical at this juncture to provide details that will help puncture the tissue of lies being peddled in the public space. The provision of ‘Take Home Rations’, under the modified Home Grown School Feeding programme, was not a sole initiative of the MHADMSD.

“The ministry, in obeying the Presidential directive, went into consultations with state governments through the state Governor’s Forum, following which it was resolved that ‘take-home rations’, remained the most viable option for feeding children during the lockdown. So, it was a joint resolution of the ministry and the state governments to give out take-home rations.

“The stakeholders also resolved that we would start with the FCT, Lagos and Ogun states, as pilot cases.”

Going further, she revealed that each take home ration was valued at N4,200 and that the figure was arrived at after proper consultation.

The minister said that the figure was generated from data provided by the National Bureau of Statistics (NBS) and the Central bank of Nigeria (CBN).

She said, “According to statistics from the NBS and CBN, a typical household in Nigeria has 5 to 6 members in its household, with 3 to 4 dependents. So, each household is assumed to have three children.

“Based on the original design of the Home Grown School Feeding programme, long before it was domiciled in the ministry, every child on the programme receives a meal a day. The meal costs N70 per child.

“When you take 20 school days per month, it means a child eats food worth N1,400 per month. Three children would then eat food worth N4,200 per month and that was how we arrived at the cost of the ‘take-home ration.”

The Minister said that it was agreed that the federal government would provide the funding, while the various state governments would handle the implementation. She said that in order to ensure a transparent process, the government had to partner with the World Food Programme (WFP) as technical partners.

She also said that her ministry invited government agencies like the EFCC, CCB, ICPC, DSS and some NGOs to monitor the process, just as TrackaNG also monitoring and giving daily updates, thereby validating the programme.

Giving a further breakdown she disclosed that in the FCT, 29,609 households were impacted, 37,589 households in Lagos and 60,391 in Ogun, making a total of 124,589 households that benefited from the programme between May 14, and July 6.

She said, if 124,589 households received take-home rations valued at N4,200, the amount would be N523,273,800.

A media report had suggested that the Federal Government claimed it was spending the sum of N679 million daily or N13.5 billion on the school feeding programme across the country even during the lockdown period when school children were at home.

Custodian Investment announced on Monday to acquire a 51% stake in UPDC, a real estate company owned by UACN. This is confirmed in a press release posted on the website of the Nigerian Stock Exchange.

UACN announced plans to spin off its investment in UPDC in 2019 after multiple years of losses and value accretion threatening to undermine the going concern status of the parent. Last June, UPDC announced it has raised N16 billion from the right issue as it prepared for its unbundling.

In separate press releases between Custodian and UACN, the duo agreed to a sale of 51% or 9, 465, 584, 668 ordinary shares of UPDC in a transaction that will occur in two phases.

Deal Details

• An initial sale of 5.1% of UPDC will be sold to Custodian Investment
• The second sale of 45.9% of UPDC will then be sold to Custodian Investment
• The companies did not reveal timelines for the consummation of the deal
• Due to this deal, UACN will stop its unbundling plans for UPDC
• The deal is subject to regulatory approvals.
• The purchase consideration was yet to be disclosed, however, UPDC has a market capitalization of N15 billion while Custodian has a Market Capitalization of N30 billion as at press time.

What they are saying

The CEO of Custodian, Wole Oshin and his counterpart in UACN, Folasope Aiyesimoju also commented on the transaction providing reasons for consummating the deal.

• According to Wole Oshin of Custodian Investment, “The rationale for the Transaction is that Custodian and UAC share the view that their ambitions for capturing opportunity in the real estate industry will be better achieved working in partnership.”
• Custodian also believes the transaction “will provide Custodian with a platform to capture arising real estate opportunities. It also immediately provides recurring cash flow visibility and attractive yields as a result of its direct exposure to Nigeria’s leading real estate investment trust (“UPDC REIT”) with a track record of profitability and annual dividend distribution which offers a good compliment for our product portfolio.”
• According to Folasope Aiyesimoju, Group Managing Director of UAC, “UAC received a credible offer from Custodian. The terms of the offer compelled the Board to re-evaluate the planned approach to de-consolidate UPDC and influenced the Board’s decision to proceed with the sale of a portion of UAC’s interest in UPDC to Custodian, effectively putting an end to the UPDC Unbundling.”

What they stand to gain from this deal

The two companies also revealed what they stand to gain from this transaction. According to Custodian, it decided to acquire for the following reasons;

• The company claims it is attracted to the ‘recurring cashflow visibility from UPDC REIT citing the huge cash flow it hopes to enjoy from rental income
• “The UPDC REIT is highly cash generative with recurring income streams. It has distributed an average of N1.4 billion p.a. over the last five years. Rental income from UPDC REIT is underpinned by leases with first-tier tenants. This presents a good match for our business.”
• Custodian also mentions the N10 billion in assets for sale on the books of UPDC which it will focus on “realising”.
• For UAC, while it will no longer be pursuing its deconsolidation strategy for UPDC, it will still retain part ownership of the company but will cease to have it as a subsidiary of UAC operating as a standalone.
• UPDC will now be a subsidiary of Custodian Investment.

UPDC’s Challenges

• UPDC reported a loss after tax of N15.8 billion in 2019 and has accumulated over N33 billion in losses since 2016.
• However, its REIT business has faired better reporting a pre-tax profit of N816.5 million in the first half of 2020. It has consistently declared dividends.
• UPDC collected about N956 million in cash distribution from UPDC Reit in 2019 alone.
• UPDC has undergone several restructuring since Themis Capital acquired majority ownership in UACN in 2018. However, it was unable to stop the hemorrhaging of losses.