Four out of the FUGAZ banks – Access Bank, GTB, UBA, and Zenith Bank, paid a sum of N1.52 billion to Pricewaterhouse Cooper (PWC) and Ernst & Young (EY), as audit fee in the first half of 2020, from a total revenue of N1.27 trillion. 

Despite the downturn caused by the COVID-19 pandemic, which put most aspect of the economy on hold in Q2 2020, two of the biggest audit firms in the country received a sum of N1.52 billion from four of the five tier–1 banks in Nigeria. The audit fees paid by the four banks however, declined by 5.23% compared with the N1.61 billion paid in the same period of 2019.  

READ: Zenith Bank’s Profit After Tax in H1,2020 rises by 16.8% to N103.8 billion

Audit fees paid 

• Access Bank paid a total of N467 million to PWC – the highest 
• GTBank paid N409 million to PWC 
• Zenith Bank paid N364 million to PWC  
• UBA paid N282 million to EY. 

READ: Guinness Nigeria: Revenue recovers but operating performance remains weak

Details 

• Access Bank paid N467 million in H1 2020, 16.8% less when compared with N561 million paid in H1 2019. 
• GTBank increased its audit expenses by 4.6%, from N391 million paid to PWC in H1 2019 to N409 million in H1 2020. 
• Zenith Bank paid a sum of N364 million to PWC in H1 2020, which represents a 3.9% decrease compared to N379 million paid to KPMG in H1 2019. It should be noted that Zenith Bank changed its Auditors in 2020 from KPMG to PWC. 
• UBA paid a sum of N282 million to EY in H1 2020, 2.5% more than the N275 million paid to PWC in H1 2019. 

The four banks boast of a total asset value of N26.63 trillion, aggregate market value of N1.73 trillion as of 15th September 2020, and posted an aggregate profit after tax of N303.56 billion in H1 2020.

READ: Exclusive: Best bank in Nigeria judging by the numbers  

What it means 

PWC audited three of the accounts under consideration with UBA being the only exception. It is handled by EY. Findings revealed that while PWC earned N1.24 billion (81.6%) out of the total audit fee of N1.52 billion, EY got only N282 million (18.4%). 

Decline in profit 

The four banking giants posted an aggregate profit after tax of N303.6 billion in H1 2020, a marginal decrease of 1% compared to N306.6 billion posted in the comparable period of 2019. However, only Zenith Bank managed to record a positive growth in profit, as it grew its profit after tax by 16.8% from N88.9 billion in H1 2019 to N103.8 billion in H1 2020. 

UBA on the other hand, recorded the highest negative growth in profit. It posted a profit after tax of N44.4 billion, as against N56.7 billion recorded in H1 2019. This is followed by GT Bank, which recorded a 4.9% decline in profit, from N99.1 billion to N94.3 billion. Access Bank posted a profit after tax of N61.04 billion, 1.4% decline compared with the N61.9 billion recorded in the previous year. 

Explore the Nairametrics Research Website for Economic and Financial Data

Bottom line 

The decline in profit posted by the tier-1 banks could be attributed to the ripple effect of the COVID-19 pandemic, which also reflected in the audit fees paid to auditors during the year. However, despite the economy contracting by 6.1% in Q2 2020, the banking sector saw its activities grow by a massive 28.4% (year-on-year). 

Note: FBN was exempted from this analysis because their Half year 2020 financial is unaudited 

Despite the ease of lockdown in the country, the prices of household items continue to trend upwards, as traders across Lagos markets have once again lamented the sustained decline in patronage. This is according to the latest Household Market Survey conducted by Nairalytics, the research arm of Nairametrics.  

The persistent increase in the price of food items across major markets in Lagos State continues to hit harder on consumers, as local and foreign rice, tomatoes, pepper, flour amongst others, recorded significant surges in their prices.  

Explore the Nairametrics Research Website for Economic and Financial Data

According to the latest report, a 50kg bag of Mama Gold flour that was initially sold for an average of N11,575, now sells for an average of N16,500 – a 42.6% increase. Also, a 50kg bag of Mama Gold rice now sells for an average of N28,875, as against N24,375 recorded two weeks ago. 

The survey further shows that a big bag of pepper increased by 23.1%, to sell for an average of N16,000, compared to an initial average of N13,000. A big basket of round-shaped tomatoes, now sells for an average of N12,000. 

The report contains information on items that witnessed price increase, price decrease, as well as information on special markets, and insights.  

(READ MORE: Prices of tomatoes, garri, potatoes, others jump as low inventory hits major markets)

Items that witnessed price increase  

Listed below are the items that recorded significant price increase: 

• A 50kg bag of Honeywell flour increased by 24.7%, from an initial average of N11,525 to sell for N14,375, while Mama Gold brand sells for an average of N16,500. 
• A 50kg bag of Dangote flour now sells for an average of N14,333, compared to N11,067 recorded a fortnight ago. 
• A big bag of pepper that was initially sold for an average of N13,000, now sells for an average of N16,000 – a 23.1% increase.
• A big basket of round shaped tomatoes increased by 9.1% to sell for an average of N12,000, compared to an initial average of N11,000. 
• The cost of a big basket of oval shaped tomatoes spiked by 14.3%, from an initial average of N7,000 to sell for an average of N8,000. 
• A 50kg bag of Mama Gold rice now sells for an average of N28,875, from an initial average of N24,375 – a 18.5% increase. 
• A big bag of brown beans increased by 8.6%, from an initial average of N30,375, to sell for an average of N33,000. 
• A 5-litre gallon of vegetable oil that was sold for an average of N2,525 two weeks ago, now sells for N2,750 – 8.91% increase. 
• A bag of bush mango seeds (Ogbono) increased by 5% to sell for an average of N105,000. It was initially sold for an average of N100,000. 

Items that witnessed price decrease 

Some of the items that recorded slight decrease in prices include: 

• A 50kg bag of garri (Ijebu) that reduced by 5.31%, to sell for an average of N13,375, compared to an initial average of N14,125. 
• A big basket of sweet potatoes that was initially sold for an average of N18,000, now sells for N14,000 – a 22.2% decrease. 
• A 5-litre gallon of Kings oil now sells for an average of N3,000, as against N3,050 recorded last month. 
• A big bag of dry onions reduced marginally by 2.11%, to sell for an average of N34,750, compared to N35,500 recorded two weeks ago. 
• A big bag of new onions now sells for an average of N25,500, a 1.92% reduction, compared to an initial average of N26,000. 

Items that maintained initial prices 

Items whose prices remained the same, compared to two weeks ago include: 

• A crate of egg which continues to sell for an average of N1,200, same as recorded in the previous report. 
• A medium-sized basket of round shaped tomatoes continues to sell for an average of N7,000. 
• A 50kg bag of beans (Oloyin) sells for an average of N20,375. 
• A 400g tin of Peak Powdered Milk sells for an average of N1,200, while 900g still sells for an average of N2,363. 
• The various sizes of cartons of noodles maintained their initial prices – 305g Indomie (N3,150), 210g Indomie (N3,200), and 100g Chikki (N2,150).  
• 500g and 900g Milo tins still sell for N1,038 and N2,125 on average respectively across the four markets.
• A carton of Golden Penny Pasta sells for an average of N4,325. 

READ: FAAC disagrees over revenue allocation for FG, States, LGs

Special markets/items 

Nairalytics had reported two weeks earlier, that prices of major food items such as rice, beans, pepper, and other items recorded significant increase. This was partly attributed to seasonal fluctuations and supply chain bottlenecks caused by the COVID-19 induced lockdown. 

In the latest increase, traders decried the sudden jump in price of flour. Flour, which is a necessity for the production of items like bread, cakes, and confectioneries, recorded a significant spike, as a 50kg bag of flour witnessed a 29.5% increase in price.

(READ MORE: Yearn.finance: Buyers earn 125,322% profits)

An interview with a trader at Oyingbo market revealed that customers have become disgruntled with the persistent increase in prices of most food items, as it has become a cause for worry to the traders, “We are worried about this continued increase in price of food, as some of our customers now decide to buy less due to the price increment, while others just take a walk,” She said. 

She further revealed, “Bakeries have now increased the price of bread, as the increase in price of flour has affected their already declining profits.”  

READ: Only customers with minimum of 12 hours electricity can have tariff increase – FG

Below are the prices of various brands of rice sighted at Daleko market:

Mama Gold (10kg) – N4,500; Royal Stallion (50kg) – N29,000; Rice Master (10kg) – N5,000; Mama Gold (50kg) – N29,000; Caprice (50kg) – N29,000; Mama’s Pride(50kg) – N24,500; Umza (50kg) – N24,500; Labana (50kg) – N25,000; Alamzat (50kg) – N23,500; Big Bull (50kg) – N25,000; Mama’s Choice (50kg) – N24,000. 

Market insights 

Major tomato traders at Mushin market, during the week, blamed the increase of tomatoes on the fact that, the season for the oval shaped tomatoes is coming to an end. According to Mrs. Jamiu, “Very soon, oval shaped tomatoes will no more be available in the market, as its season is almost over.”  

Nairametrics, earlier reported that a small basket of oval shaped tomatoes was sold for an average of N800 at Mushin market last month. However, it has doubled in price, and now sells for an average of N1,700. 

(READ MORE: Prices of beans, potatoes, palm oil, others jump as traders lament hike, seasonal scarcity)

Mrs. Olaoluwa, who also sells at Mushin market, shared a contrary opinion. She attributed the increase in price of major food items including tomatoes to the approaching festivity.

“As the year is coming to an end, it is normal for prices of items in Nigeria to jack up, it is just hitting harder this year because of the effect of the COVID-19 pandemic.” She said 

When Nairalytics Research visited Daleko market, Mrs. Oladayo, reiterated that the Federal Government’s decision to restrict importation of rice, is the major cause of the increase in price of rice. According to her, Nigeria is not able to produce enough rice that can circulate across the country, hence the unavoidable scarcity. 

She reiterated that the stony rice being sold in the markets also affects the prices of the commodity, as most consumers who do not wish to buy the inferior quality, will have to pay more for neater brands of rice.  

READ: Ethereum miners made $113 million in August 2020

About Nairametrics Food Price Survey 

Nairametrics Food Price Watch, is a bi-weekly Household Market Survey that covers the prices of major food items in Nigeria, with emphasis on five major markets in Lagos – Mushin market, Daleko market, Oyingbo market, Idi-Oro market, and Mile 12 market. 

Africa’s largest economy, Nigeria, recorded a total sum of N1.28 trillion as the value of “used vehicles” (popularly known as Tokunbo) and motorcycles imported in one year (Q3 2019 – Q2 2020). This is according to data obtained from various foreign trade reports released by the National Bureau of statistics.

According to data obtained from the foreign trade reports, Nigeria recorded the sum of N1.28 trillion as the value of imports for used vehicles and motorcycles between Q3 2019 and Q2 2020, compared to N899 billion recorded in the corresponding period (Q3 2018 – Q2 2019), implying an increase of c.42%.

READ: Cutix Plc to pay its shareholders N220.1 million final dividend

Looking at the numbers

The Nigerian economy remains an import-dependent economy and this is largely driven by the importation of manufactured goods.

• During the period under review, used vehicles imported into Nigeria was estimated at N799.5 billion, compared to N564.9 billion in the corresponding period. This indicates that the importation of used vehicles in Nigeria surged by 42%.
• Similarly, motorcycles imported into Nigeria during the period was estimated at N477.1 billion, an equally 42% jump when compared to N335 billion recorded in the corresponding period.
• Basically, most motorbikes imported into the country are completely Knocked Down (CKD), a fully disassembled item parts that are required to be assembled by the end-user or the reseller.
• A cursory look at the reports showed that used cars were majorly imported from countries like the United States, Netherlands, Italy, Belgium, Germany and Canada.

READ: Mysterious Bitcoin whale moves 15,022 BTCs worth $162 million

The Rising trend

In recent years, the surge in importation of used vehicles and motorcycle in Nigeria has been significantly driven by e-hailing car and bike services, one of the two fastest-growing businesses in Nigeria.

The rising trend of technology adoption by businesses in Nigeria has a trickle-down growth impact on the ride-hailing industry. Today, spread all over major commercial cities across the country are Uber, Bolt, OgaTaxi, GidiCab and many others, all competing in the ride-hailing industry. On the other hand, the bike-hailing platforms are equally worth the mention, with GoKada, Opay, Max.NG and so on.

In Nigeria, other key factors driving the demand for ride-hailing services include rising urbanisation, growing youth population, surging number of internet and smartphone users and increased investment.

READ: UPDATED: Nigerian economy grows by 2.27% in 2019, post highest quarterly growth since 2016 recession

Automobile industry at the ebb amidst harsh regulatory environment

The Nigerian economy appears to be underpinned by a harsh regulatory environment and policy uncertainty. In the e-hailing industry, investors continue to face what can be regarded as a harsh regulatory environment.

For instance, bike-hailing startups operating in Nigeria’s commercial city, Lagos saw their market evaporate after the government put an end to commercial motorcycling in key areas (15 local government areas) of Lagos State effective February 2020. A decision that was greeted with widespread protests from riders and commuters alike.

READ: UPDATED: Nigeria’s GDP contracts by 6.10% in Q2 2020, as critical sectors plunge

In addition, car-hailing platforms had been tussling with the government for months over licensing fees and disputed levies. Recently, the Lagos state government announced that ride-hailing operators will pay a levy of N20 known as road improvement fund, on each trip their drivers make in a day starting from August 27. Despite the collapse of bike hailing platforms in Lagos, investors continue to explore the country to upscale their operations.

Largely, Nigeria’s automobile industry is still docile. While the increased demand for vehicles and motorcycle in the country is expected to indirectly attract investors and grow the automobile industry, trillions are continually being spent year on year to meet the country’s vehicles demand deficit.

Despite the attempt of the current administration to lure Toyota and other car manufacturers into the country, the industry is still underpinned by slow growth in the past decade.