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Coronavirus

Nigeria’s Fund Industry Remain Resilient Amid COVID-19 Concerns

COVID 19 has done some devastating damage to the economy, One industry in Nigeria that has remained resilient in spite of it all is the mutual fund industry. 

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Nigeria’s Fund Industry Remain Resilient Amid COVID 19 Concerns

There is no doubt that COVID-19 has done some devastating damage to various parts of the Nigerian economy and indeed, the world economy. Price of oil fell so much such that, buyers were figuratively or literarily being begged to buy, stock markets became jittery, unemployment rate spiked, the need for social services skyrocketed, the list goes on and on.

One industry in Nigeria that has remained resilient in spite of it all, is the mutual fund industry.  The health and wellbeing of the asset management industry is usually measured or gauged with trends in inflow, outflows, and total Net Asset Value (NAV).

Using those metrics as a measure of the extent to which the Coronavirus impacted the industry, one can say that the mutual fund industry in Nigeria is alive and well, and is defying all the odds against a virulent virus that visited the world with vengeance. Before the advent of COVID-19, early in 2020, the total asset value of Nigeria’s mutual funds stood at N1.042 trillion (according to the December 27th 2019 edition of NAV Summary Report from the SEC). Fast forward to May 15th 2020, after COVID-19 took hold on the world economy, the total net asset value of mutual funds in Nigeria has increased to N1.31 trillion. This represents an increase of N270 billion or 26%

Fund Flows: Of the N270 billion increase in asset value, N260.5 billion came from increase in net flows while N9.5 billion came from investments returns. The fact that the industry saw a positive inflow of that magnitude in periods where people were almost at the verge of dipping hands into their savings and investments is indicative of how resilient the industry has been. Although the industry was shaken by the effects of the virus and the trends in the oil market between March and April, it regained its strength towards the end of April and has since maintained a positive trend.

Flight to Safety: In what looked like flight to safety, much of the positive fund flows went to Bond Funds and Money Market Funds. While Money Market Funds recorded a year to date net positive flow of N97.5 billion, Bond Funds generated N110.4 billion in net inflows. This is the first time any fund category is generating more positive flows than the Money Market Fund category. The reason could be because yields on bond funds are slightly better than what is obtainable from money market funds. Eurobond funds, recorded N12 billion in positive net flows while Infrastructure fund category saw N27 billion come in.

(READ MORE: What you need to know as banks rebrand CBN intervention funds to woo borrowers)

Performance Indicators: In an apparent justification for the flight to safety, almost all funds under the equity fund category made losses except ACAP Canary Growth fund and PACAM Equity fund. In all, that category of funds has lost an estimated N1.2 billion within the period under review. On the other hand, only 6 out of the 21 Bond funds made losses as that category of funds gathered an estimated gain of N3.5 billion. Eurobond funds seem to be basking in the euphoria of Naira devaluation as they gain massively from what is lost from the value erosion in the Naira. The Eurobond category generated an estimated N9.8 billion from January to May 15th 2020. It does look like this category of fund may be a good hedge against Naira devaluation. Much of the gains however, came from Stanbic IBTC Dollar fund and United Capital Euro Bond fund.

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Nigeria’s Fund Industry Remain Resilient Amid COVID 19 Concerns

Though there are pockets of gains by some funds, most of the categories made lose within the period under review, arising mostly from their increased exposure to the equity market.

Elsewhere in the World: This trend does not seem to be peculiar to Nigeria. Recent news from Canada indicates that Canadian Pension Plans defied the COVID-19 menace and added $17 billion to increase the total net asset value to $409 billion, as at March 31st 2020. Like the Nigerian mutual fund industry, $5.5 billion of the increase in Canada’s pension plans came from contributions or net flows while $12.1 billion was as a result of positive performance.

Future Expectations: The year 2020 is still too young and the world economy too volatile for credible prediction, one can therefore not say with great certainty if the yield driven funds like the Bond Funds and Money Market Funds will maintain the momentum in generating positive gains. In terms of generating positive net flows, it does look like that trend will continue till the end of the year when it becomes clearer what direction the world economy will be heading to following the devastating effects of COVID-19. Until then, we are watching.

 

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  • This analysis is based solely on data obtained and obtainable from the Security and Exchange Commission, Nigeria

 

 

 

Uchenna Ndimele is the President of Quantitative Financial Analytics Ltd. MutualfundsAfrica.com and mutualfundsnigeria.com (both Quantitative Financial Analytics company website) is a leader in supplying mutual fund information, analysis, and commentary on African mutual funds. We provide reliable fund data; and ratings information that will add value to fund managers, the media, individual investors and investment clubs.

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Business News

COVID-19 Update in Nigeria

On the 11th of April 2021, 57 new confirmed cases and death was recorded in Nigeria

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Covid 19 update symptops

The spread of novel Corona Virus Disease (COVID-19) in Nigeria continues to record significant increases as the latest statistics provided by the Nigeria Centre for Disease Control reveal Nigeria now has 163,793 confirmed cases.

On the 11th of April 2021, 57 new confirmed cases and death was recorded in Nigeria.

To date, 163,793 cases have been confirmed, 154,107 cases have been discharged and 2,060 deaths have been recorded in 36 states and the Federal Capital Territory.

A total of 1.8 million tests have been carried out as of April 11th, 2021 compared to 1.7 million tests a day earlier.

COVID-19 Case Updates- 11th April 2021,

  • Total Number of Cases – 163,793
  • Total Number Discharged – 154,107
  • Total Deaths – 2,060
  • Total Tests Carried out – 1,803,177

According to the NCDC, the 57 new cases are reported from 7 states- FCT (20), Lagos (19), Bayelsa (7), Kaduna (4), Rivers (3), Osun (3) and Jigawa (1).

Meanwhile, the latest numbers bring Lagos state total confirmed cases to 57,969, followed by Abuja (19,723), Plateau (9,030), Kaduna (8,989), Rivers (6,999), Oyo (6,838), Edo (4,893), Ogun (4,621), Kano (3,930), Ondo (3,226), Kwara (3,120), Delta (2,617), Osun (2,553), Nasarawa (2,378), Enugu (2,259), Katsina (2,097), Gombe (2,034), Ebonyi (2,017), Anambra (1,909), Akwa Ibom (1,810), and Abia (1,683).

Imo State has recorded 1,655 cases, Bauchi (1,540), Borno (1,337), Benue (1,188), Adamawa (1,051), Niger (930), Taraba (910), Bayelsa (878), Ekiti (868), Sokoto (775), Jigawa (527), Kebbi (450), Cross River (385), Yobe (365), Zamfara (234), while Kogi state has recorded 5 cases only.

READ ALSO: COVID-19: Western diplomats warn of disease explosion, poor handling by government

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Lock Down and Curfew

In a move to combat the spread of the pandemic disease, President Muhammadu Buhari directed the cessation of all movements in Lagos and the FCT for an initial period of 14 days, which took effect from 11 pm on Monday, 30th March 2020.

The movement restriction, which was extended by another two weeks period, has been partially put on hold with some businesses commencing operations from May 4. On April 27th, 2020, Nigeria’s President, Muhammadu Buhari declared an overnight curfew from 8 pm to 6 am across the country, as part of new measures to contain the spread of the COVID-19. This comes along with the phased and gradual easing of lockdown measures in FCT, Lagos, and Ogun States, which took effect from Saturday, 2nd May 2020, at 9 am.

On Monday, 29th June 2020 the federal government extended the second phase of the eased lockdown by 4 weeks and approved interstate movement outside curfew hours with effect from July 1, 2020. Also, on Monday 27th July 2020, the federal government extended the second phase of eased lockdown by an additional one week.

On Thursday, 6th August 2020 the federal government through the secretary to the Government of the Federation (SGF) and Chairman of the Presidential Task Force (PTF) on COVID-19 announced the extension of the second phase of eased lockdown by another four (4) weeks.

Governor Babajide Sanwo-Olu of Lagos State announced the closed down of the Eti-Osa Isolation Centre, with effect from Friday, 31st July 2020. He also mentioned that the Agidingbi Isolation Centre would also be closed and the patients relocated to a large capacity centre.

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Due to the increased number of covid-19 cases in Nigeria, the Nigerian government ordered the reopening of Isolation and treatment centres in the country on Thursday, 10th December 2020.

On 26th January 2021, the Federal Government announced the extension of the guidelines of phase 3 of the eased lockdown by one month following the rising cases of the coronavirus disease in the country and the expiration of phase 3 of the eased lockdown.

On 28th February 2021, the federal government confirmed that the first tranche of Covid-19 vaccines will arrive in Nigeria on Tuesday, March 2nd, 2021.

On Tuesday, 2nd March 2021, the National Primary health Care Development Agency announced the arrival of the expected COVX Astrazeneca/Oxford covid-19 vaccines.

On Saturday, 6th March 2021, President Muhammadu Buhari and his vice, Yemi Osinbajo received vaccination against the covid-19 as the State House in Abuja.

READ ALSO: Bill Gates says Trump’s WHO funding suspension is dangerous

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Business

Lagos eases restrictions on social, event centres, sets new occupancy limit

The state government has pegged the occupancy limit for event centres in Lagos to 500 people while social events can now have 200 people at a time.

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The Lagos state government has further eased restrictions on social and event centres in the state. This follows due consultations and deliberations between the Lagos State Governor, Babajide Sanow-Olu, and relevant stakeholders and MDAs.

The state government has pegged the occupancy limit for event centres in Lagos to 500 people while social events can now have 200 people at a time.

This disclosure is contained in a statement by the Lagos State Commissioner for Tourism, Arts and Culture, Uzamat Yusuff, and the Director-General of the Lagos State Safety Commission, Mr Lanre Mojola, on Friday, April 9, 2021.

The statement noted that safety marshals will be deployed to any social event with over 200 people and event centre exceeding the 500 limits.

READ: Lagos Govt seals Queens Park Event Centre, Oniru for contravening COVID-19 protocol

The statement partly reads, “All event centres must hold a valid license of The Lagos State Ministry of Tourism, Arts and Culture prior to operating as an event centre in the State.

“All event centres must be duly registered and verified on The Lagos State Safety Commission website www.lasgsafetyreg.com prior to holding any event.

An Event Safety Clearance must be obtained from the Lagos State Safety Commission through the website www.lasgsafetyreg.com for any proposed event or exhibition.

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Safety Marshals shall be deployed by an accredited event safety consultant from Lagos State Safety Commission for every social event with attendance exceeding over 200 people.

READ: Lagos state government reacts to reopening of event centers, clarify guidelines

Occupancy limit at any event must not exceed 50% of the maximum design capacity of the hall, wherein Occupancy Limit stickers provided by the Lagos State Safety Commission must be boldly posted at the entrance of the event hall.

Maximum allowable capacity for event centres irrespective of the occupancy limit is 500 people. Deep cleaning must be carried out before and after every event. Physical distancing shall be maintained between seated guests and a maximum number of seated guests should be 6 (six) people on a table of 10 persons.

Event duration should not exceed a maximum period of 6-hours. All guests and service providers at the facility must wear a nose mask and make use of hand sanitisers All guests and service providers must endeavour to wash their hands before entering the venue or in the alternative use hand sanitisers. Temperature checks must be taken at all entry points into a facility.

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Guests and service providers with temperature (above 37.5) are to be politely turned back and referred to paramedics or the emergency response team on the ground. Hand sanitizers must be positioned at the entry points and different spots within the hall.

All event centres must endeavour to display standard COVID-19 safety signs. The signs must be bold and installed at conspicuous locations. Event centre owners/ planners/vendors would be responsible for any breach of protocols by their staff.

In case you missed it

  • It can be recalled that in July 2020, the Lagos State Government had issued fresh guidelines on the reopening of event and social centres following their shutdown as part of measures to contain the spread of the coronavirus pandemic.
  • The state government insisted that the owners of such facilities must register with the government pending further directives.

 

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