Nigeria must prepare for next global economic crisis — Emefiele

Governor of Central Bank of Nigeria, Godwin Emefiele, on Wednesday, said Nigeria must prepare for the next global economic crisis.

Emefiele said this while delivering a lecture titled: ‘Beyond the Global Financial Crisis: Monetary Policy under Global Uncertainty,’ at the University of Benin, Benin, Edo State.

He said although the country had made progress in the year under review, more efforts must be made to reduce the country’s unemployment rate.

Emefiele stated, “From some of my concluding remarks, you may have observed, whether you like it or not, there is global uncertainty that will, unfortunately, most certainly lead to another crisis.

“The question could be, how are we as Nigerians, particularly our leaders, I am talking of monetary and fiscal policy authorities, how are we preparing our country for the next crisis?

“We have luckily exited recession; we have seen recession pending downward to about 18.72 per cent in 2017 to about 11. 37 per cent today.

“We have seen the reserve moving up but unfortunately we still have issues and those issues border on the unemployment rate and those issues border on how we prepare our country,” he said.

While enumerating effort being made by the apex bank to stabilise the nation’s economy, Emefiele said the introduction of the investors and exporters’ window had helped in shoring up the country’s external reserves.

He said the turnover in the I&E FX Window had reached over $48bn since the inception of the window and that the nation’s foreign exchange reserve had risen to $45bn in April 2019 from $23bn in October 2016.

The CBN governor added that Nigeria’s current stock of external reserves was able to finance nine months of current import commitments.

He said with the improved availability of foreign exchange, the exchange rate at I&E FX Window had remained stable over the past 24 months at an average of N360/$, and the parallel market exchange rate had appreciated from N525/$ in February 2017 to N360/$ today.

“After five consecutive quarters of negative growth beginning in the 1st quarter of 2016, a coordinated approach by the fiscal and monetary authorities supported a rebound in the nation’s economy during the second quarter of 2017.

“The recovery has been driven largely by improved non-oil activities especially the agriculture sector which expanded consistently by about 3.5 per cent to 4.3 per cent reflecting government’s efforts at diversifying the economy,” he added.

In the same vein, Emefiele was quoted in a statement from the CBN as seeking economic patriotism and urging stakeholders in the public and private sectors to look inwards in developing the Nigerian economy.

Emefiele charged Nigerians to think of what they could do to improve the fortunes of the economy, rather than what they could benefit from the economy.

The CBN governor noted that there was huge potential within the Nigerian economy to make it as developed as other countries, which were its peers at independence but had gone ahead to become more developed.

He added that the lecture was part of the bank’s efforts at promoting research and collaboration with universities, towards developing policies and programmes that would enhance the economic well-being of all Nigerians.

He highlighted how the crisis had helped to reshape monetary policy tools used by Central Banks to address dips in their economies.

He said, “The 60 per cent drop in crude oil prices between 2014 – 2016 along with normalisation of monetary policy by the United States Federal Reserve Bank in 2014, imposed severe constraints on the Nigerian economy, given our reliance on crude oil for over 90 per cent of our export earnings and 60 per cent of government revenue.”

MTN, Vitafoam, 10 others push stock market higher

The nation’s stock market extended its gaining streak on Wednesday to the fifth straight day on the back of price appreciation recorded by MTN Nigeria Communications Plc and 11 other firms.

The All Share Index of the Nigerian Stock Exchange increased by 3.07 per cent to 31,145.15 basis points from 30,218.14 bps on Tuesday while the market capitalisation of listed equities surged to N13.717tn from N13.309tn.

MTN Nigeria led the gainers as its share price appreciated by 9.98 per cent to N144.85.

Vitafoam Nigeria Plc followed, with an increase of 9.82 per cent to close at N3.87 per share.

Dangote Cement Plc, Thomas Wyatt Nigeria Plc and University Press Plc rose by 9.73 per cent, 8.11 per cent and 5.88 per cent to N203, N0.40 and N1.80 per share respectively.

Other gainers were GlaxoSmithKline Consumer Nigeria Plc, Unity Bank Plc, UAC of Nigeria Plc, Cadbury Nigeria Plc, Custodian Investments Plc, Dangote Flour Mills Plc and Conoil Plc.

Twenty-seven companies recorded price depreciation on Wednesday, with Law Union and Rock Insurance Plc leading the pack as it shed 9.09 per cent to close at N0.40 per share.

Other losers were Ecobank Transnational Incorporated, Japaul Oil and Maritime Services Plc, Courteville Business Solutions and Nestle Nigeria Plc.

Ecobank declined by 8.50 per cent to close at N9.15 per share, while Japaul Oil and Maritime Services dipped by 8.33 per cent to close at N0.22 per share.

Courteville Business Solutions fell by eight per cent to close at N0.23, while Nestle Nigeria depreciated by 7.69 per cent to close at N1,320 per share.

Analysts at Afrinvest Securities said the bullish performance made the year-to-date loss to improve to -0.9 per cent from the -3.9 per cent recorded in the previous session.

They, however, noted that activity level was mixed as volume traded declined by 12.2 per cent to 294.4 million units and value traded advanced 1.7 per cent to N17.5bn.

The analysts said, “MTN Nigeria (93.7 million units), Zenith Bank Plc (29.5 million units) and United Bank for Africa Plc(22.4 million units) were the most traded stocks by volume while MTN Nigeria (N13.6bn), Dangote Cement (N1.7bn) and Zenith (N566.4m) led top traded stocks by value.

“Performance across sectors was largely bearish as four of five indices under our coverage trended southwards. The consumer goods index led decliners, down 3.6 per cent on account of sell-offs in Nestle (-7.7 per cent) and Nigerian Breweries Plc (-0.7 per cent).”

The banking index shed 2.7 per cent due to price depreciation in Guaranty Trust Bank Plc(-2.6 per cent)and Zenith Bank(-2.6 per cent) while the insurance and oil and gas indices dipped by 0.5 per cent and 0.3 per cent respectively following losses in Law Union (-9.1 per cent) and Oando Plc(-2.2 per cent).

On the flip side, the industrial goods index emerged the lone gainer, up 1.1 per cent driven by bargain hunting in Dangote Cement (+9.7 per cent).

The analysts said, “Investor sentiment, as measured by market breadth (advance/decline ratio), weakened to 0.4x from 0.8x recorded in the previous trading session as 12 stocks advanced against 27 decliners.

“Despite the weak investor sentiment, we expect the rally in MTN Nigeria and renewed interest in Dangote Cement to continue to buoy market performance in the near term.”

The Ministry of Finance released N4.33 trillion for three-year capital spending, Minister of Budget and National Planning, Udoma Udo Udoma, disclosed. The  funds covered  spendings on 2016 to 2018 budgets.

In a statement, released yesterday at the end of tenure press conference in Abuja, Udoma said N1.2 trillion was released under the 2016 budget, N1.58 trillion under the 2017 budget and N1.55 trillion has been released under the 2018 budget, as at May 8, 2019.

The minister said the release of the funds was part of the important strategy government embarked on in order to exit recession was to seek to reflate the economy.

“This was why we increased the capital budget. We increased budgetary allocations to capital expenditure from 16.1 per cent in 2015 to 30.2 per cent in 2016, 31.7 per cent in 2017, 31.5 per cent in 2018 and 26 per cent in 2019 – with priority given to the key execution priorities of the ERGP. We were also able to increase our capital releases. The Ministry of Finance was able to release, for capital spending, the sum of N1.2 trillion under the 2016 Budget, the sum of N1.58 trillion under the 2017 Budget and, as at 8th May,2019, the sum of N1.55 trillion has been released under the 2018 Budget,” he said in the emailed statement.

According to Udoma,  the key mandates of the ministry include preparing the annual budgets as well as the medium-term expenditure frameworks. The Ministry is also tasked with rendering policy advice to the Federal Government on all aspects of national development, development of national plans (long, medium and short term), monitoring and evaluation of Government policies and programmes, surveillance on the economy, coordination and management of development cooperation, amongst other things.

He said the ministry adopted the zero-based approach for budget preparation, which required justification of every budget item for funds allocation.

However, it must be explained that even under a zero based approach there are still ceilings applied because of funding constraints. We introduced online budget preparation to ensure that the identity of any person inputting any budget item can be ascertained. This has improved the integrity of the budget. Most importantly, we were able to ensure that our executive budget proposals are aligned with the strategic policies of government as set out in the Medium-Term Fiscal Framework and Fiscal Strategy Paper, and other governmental programmes and plans.

He said the economy was badly affected by the sharp fall in crude oil prices which fell from over $110 in mid-2014  to below $30 by January 2016. The situation was worsened by the disruption of oil production activities in the Niger Delta.The collapse of oil revenues led to a contraction of the economy ultimately resulting in the economy falling into recession in the second quarter of 2016.

THE net value of all registered mutual funds in Nigeria rose by N64.9 billion to close the first quarter of the year at N686.485 billion, according to data provided by the Securities and Exchange Commission (SEC).

Latest report on net asset value (NAV) of mutual funds by SEC obtained by The Nation showed that net asset value (NAV) of mutual funds  rose from N621.59 billion by December 28, 2018 to close first quarter of the year at N686.485 billion, representing an increase of N64.9 billion or 10.4 per cent.

The report indicated that the number of mutual funds also increased from 80 funds in December 2018 to 82 funds in March 2019. The first quarter  represented 686.6 per cent increase on total NAV of N87.27 billion recorded by July 27, 2012.

Mutual funds, otherwise known as collective investment schemes (CIS), are joint investment vehicles through which investors can pool funds and invest in chosen basket of securities with a view to optimise returns and reduce risks.

NAV is determined by subtracting total liabilities of a fund from its total assets. It can further be divided by the total number of units of the fund to determine the unit price.

A mutual fund is usually categorised by the class of assets that forms the primary focus of its investments. Thus, there are equity funds, money market funds, bond funds, real estate funds, ethical funds and balanced funds, among others.

A breakdown of the funds showed strong preference for money market funds, which invest mainly in money market instruments such as treasury bills. Money market funds accounted for N517.6 billion. Fixed income funds followed with N65.72 billion. Real estate funds placed third with N44.6 billion. Mixed funds-which invest in various assets across equities, money market and fixed income funds, among others, stood at N24.79 billion.

Further breakdown showed that investors’ values in bonds funds totalled N16.62 billion, equity funds and ethical funds accounted for N11.94 billion and N5.21 billion.

Stanbic IBTC Asset Management Limited (SIAML) remains the largest investment management firm in Nigeria with its funds dominating major segments of the market. Stanbic IBTC Money Market Fund is the largest CIS with NAV of N253.22 billion. FBN Money Market Fund, being managed by FBN Capital Asset Management Limited, ranked second with N137.5 billion; ARM Money Market Fund, being managed by Asset & Resources Management Company Limited, was the third largest CIS with N52.9 billion in NAV.

The Nigerian Stock Exchange (NSE) recently launched its new trading platform for mutual fund as part of efforts to boost investors’ participation in CIS. About five per cent of investors in the capital market engage in mutual funds, a paltry fraction that underlines the tendency of most retail investors to invest in the market directly.

NSE Chief Executive Officer, Mr Oscar Onyema, said the launch of the Exchange’s distribution and trading platform for mutual funds would not only provide an opportunity for the 256 brokers in the market to distribute to existing 13.9 million investors’ accounts in the Central Securities Clearing System (CSCS) but also attract new investors that may be interested in gaining exposure to the capital markets through mutual funds.

He said the new platform will enhance visibility for listed funds and promote financial inclusion, while stimulating retail investor participation in the market.

“This distribution platform is a new channel for accessing mutual funds which are listed on the NSE. This restates our commitment to provide market operators, issuers, fund managers and investors with a reliable, efficient and an adaptable platform to create a more transparent, liquid and accessible market in line with global best practices,” Onyema said.

According to him, the platform will facilitate electronic transactions with seamless connection between NSE, CSCS, fund managers and brokers as investors have the benefit of a single view of their mutual fund investment while being able to invest with multiple fund managers through a single broker.

He noted that in recent years, there has been significant increase in the number of mutual funds in Nigeria, an indication of the growing interest in collective investment schemes.

“However, there is significant room for growth in mutual fund assets, as the ratio of these to the Nigerian Gross Domestic Product is estimated at less than 1.0 per cent. As at February 18, 2019, the numbers of registered mutual funds with the SEC stood at 76 with NAV in excess of N600 billion. Of these registered funds, 47 are listed on the NSE memorandum listing platform. With the launch of this new distribution platform, we expect to receive more applications for listing of mutual funds,” Onyema said.

CSCS Managing Director Mr. Haruna Jalo-Waziri said the new platform marked another milestone for the Nigerian capital market as it will serve as a step towards improving the level of financial inclusion in Nigeria by giving investors varieties of investment products.

According to him, as part of its commitment to providing far-reaching benefits to the capital market, CSCS has proactively invested in technology that would enable us provides seamless post-trade services to a wide range of financial instruments including collective investment schemes.

“Additionally, fund managers can now augment their product distribution strength using the brokerage communities’ network. We believe this will also contribute towards increasing secondary market participation while growing funds under management for Asset managers,” Jalo-Waziri said.

Fund Managers Association of Nigeria (FMAN) President Mr. Dayo Obisan noted that one of the initiatives in the FMAN five-year road map was to develop and implement a nationwide distribution and trading platform for mutual funds.

Association of Stockbroking Houses of Nigeria (ASHON) Chairman Chief Patrick Ezeagu said stockbroking firms were delighted to have been a part of the development and emergence of the new trading platform.

According to him, the new platform was directed at reawakening the small savers in order to take advantage of investing through mutual fund and to have the synergistic benefit of a better return in the market.

“The memorandum trading platform will facilitate the ease of doing business in trading and distribution of mutual funds, it will inspire small savers thereby promoting financial inclusion which is an important focus of our members. We congratulate everyone that contributed to the success of this initiative and encourage all operators to embrace this new aspect of deepening of our market which is a formidable incursion into an erstwhile grey sector,” Ezeagu said.

Consolidated Hallmark Insurance assures on dividends

Consolidated Hallmark Insurance assures on dividendsConsolidated Hallmark Insurance (CHI) Plc has assured shareholders that it would sustain regular dividend payment as shareholders approved payment of N162.6 million as dividends for the 2018 business year.

Addressing shareholders at the annual general meeting yesterday in Lagos, Chairman, Consolidated Hallmark Insurance (CHI) Plc, Mr. Obinna Ekezie, said the company has been positioned to sustain regular dividend payment, noting that it has paid dividend for seven years out of its 11 years of operations.

He said shareholders would receive a dividend per share of two kobo for the 2018 business year after the company posted net profit of N407.07 million during the year ended December 31, 2018.

Managing Director, Consolidated Hallmark Insurance (CHI) Plc, Mr. Eddie Efekoha said the performance of the company in 2018 showed an improvement on the growth projections for the industry.

He pointed out that the company’s gross premium rose by 20.85 per cent to all-time high of N6.865 billion while the company has further energized its retail and agency segments to grow new business into the group.

According to him, CHI’s revenue diversification drive was a major factor that aided the sustained financial performance through the challenging market conditions of 2018, further reinforcing its role as a formidable player in the insurance industry.

He outlined that due to management’s unrelenting efforts to ensure that the company is run efficiently, the company recorded a reduction in underwriting expense and operating expense ratios in 2018, closing at 14.57 per cent and 18.6 per cent in 2018 as against 24 per cent and 26 per cent recorded respectively in 2017.

Unity Bank denies keeping MDAs’ funds

Unity Bank has faulted the allegation against it by Special Presidential Investigation Panel for Recovery of Public Property (SPIPRPP) that it is keeping funds belonging to Ministries Departments and Agencies (MDAs) of government.

In a statement, the lender said it has conducted itself professionally  by providing all evidence of customers instructions requested by the panel as it relates to all the MDAs.

The bank said it  had transferred all the MDAs balances to their respective Treasury Single Accounts in Central Bank of Nigeria as far back in 2016.

“Upon approaching the bank in 2018 to conduct investigations on the subject MDAs, Unity Bank, as a responsible corporate citizen, cooperated with the panel accordingly. But out of its own volition, the panel refused to admit further documentary evidence from the Bank when it was obvious that the Bank has no balances kept in its books for the MDAs.”

NCAA gives travel agents ultimatum

Nigerian Civil Aviation Authority (NCAA) has issued a 60-day ultimatum to travel agencies to register and obtain its certificate of registration before carrying out any business in the country.

Spokesman of the authority, Mr Sam Adurogboye said in a statement.

He said the ultimatum, which became effective since May 7, 2019, was part of steps taken by the apex civil aviation regulator to instill sanity and orderliness into the operations of travel agencies in Nigeria.

Besides, he said the authority will be collaborating with the International Air Transport Association (IATA) to provide robust regulatory oversight in the down stream of the industry.

MTN Listing: Equities rally N2.68tr in 4 days

Nigerian equities recorded their highest daily gain in 2019 yesterday as the positive momentum that greeted the listing of MTN Nigeria Communications Plc drove the market to its fourth consecutive positive closing.

Benchmark indices at the Nigerian Stock Exchange (NSE) indicated average gain of 2.88 per cent yesterday, equivalent to net capital gain of N372.1 billion. With this, total gain by the market since the listing of MTN Nigeria jumped to N2.68 trillion, including initial listing value of N1.83 trillion. MTN Nigeria, which was listed by way of introduction at N90 per share last Thursday, has been rising by the maximum allowable price change of 10 per cent since Thursday.

Aggregate market value of all quoted equities on the NSE, which had opened last Thursday at N10.627 trillion, closed yesterday at N13.310 trillion. The All Share Index (ASI) rallied back to the 30,000 points to close yesterday at 30,218.14 points as against 28,286.08 points recorded as opening index last Thursday. The sustained rally has moderated the average year-to-date return to -3.86 per cent.

“Following sustained interest in MTN Nigeria, we expect the bullish run in the equities market to continue,” Afrinvest Securities stated.

MTN Nigeria recorded the highest gain of N11.95 to close at N131.70 per share. The current market value increased MTN Nigeria’s market value to N2.68 trillion, N850 billion net capital gains on the telco’s entry value of N1.83 trillion on Thursday. Dangote Cement followed with a gain of N7 to close at N185. Forte Oil rose by N2.25 to close at N27.80 while Guaranty Trust Bank chalked up 90 kobo to close at N31.30 per share.

The momentum of activities improved by 56.5 per cent to 335.60 million shares valued at N17.2 billion in 4,453 deals. MTN Nigeria was also the most active stock with a turnover of 110.7 million shares worth N14.58 billion.

“We expect the rally in the equities market to persist in the short term, following sustained interest in MTN Nigeria shares,” Cordros Securities stated.

Stock investors gain N372bn as market cap hits N13tn

Investors raked in a total of N372bn on Tuesday as the market capitalisation of listed equities on the Nigerian Stock Exchange increased to N13.310tn on Tuesday from N12.938tn on Monday.

The All Share Index, also known as the benchmark index, rose above the 30,000 basis points mark to settle at 30,218.14bps.

The bullish run of the market was sustained into the fourth consecutive day as buying interests in MTN Nigeria, Dangote Cement Plc and Guaranty Trust Bank Plc drove the ASI up by 2.88 per cent.

The year-to-date loss moderated to -3.9 per cent as activity level improved with volume and value traded advancing by 56.9 per cent and 116.7 per cent, respectively.

Of the total of 335.600 million shares valued at N17.186bn that exchanged hands in 4,453 deals on the trading floor on Tuesday, 110.718 million shares were that of MTN Nigeria, which saw its share price increase by 11.95 per cent from N119.75 to N131.70.

Since its listing on Thursday at N90, the share price of MTN Nigeria has gained 41.7 per cent.

MTN Nigeria also led the top traded stocks by volume with 110.7 million units, followed by others such as FBN Holdings Plc (31.4 million units) and Sterling Bank Plc (26.1 million units).

MTN Nigeria (N14.6bn), GTB (N743.5m), and Dangote Cement (N621.5m) were the top traded stocks by value.

Across sectors, performance was largely positive as four out of five indices advanced, except for the consumer goods index, which declined by 0.33 per cent due to major losses in Unilever Nigeria Plc, Nigerian Breweries Plc and Vitafoam Nigeria Plc.

The industrial goods index led gainers, up by 2.08 per cent on the back of major price appreciation in Dangote Cement and Cement Company of Northern Nigeria Plc.

Bargain hunting in GTB, Union Bank Plc, Forte Oil Plc and Eterna Plc drove the positive performance of the banking and oil and gas indices, which were up 0.94 per cent and 0.53 per cent, respectively.

The insurance index gained 0.41 per cent.

Investor sentiment weakened to 0.8x, a mild decline from the 0.9x recorded on Monday as 16 stocks advanced against 20 losers.

The best performers were MTN Nigeria, Africa Prudential Plc, Thomas Wyatt Nigeria Plc, which saw respective gains of 10 per cent, 9.4 per cent and 8.8 per cent.

Livestock Feeds Plc, Juli Plc and Afromedia Plc led the top losers table as their share prices shed 10 per cent, 9.6 per cent and 8.9 per cent, respectively.

Analysts at Afrinvest Securities Limited said following sustained interest in MTN, they expected the bullish run in the equities market to continue.

FG completed 134 aviation projects in four years —Minister

The Federal Government on Tuesday said it completed 134 projects in the aviation sector between 2015 and 2019.

The Minister of State for Aviation, Hadi Sirika, said the 134 projects were part of the 157 projects that were initiated and inherited by the current administration.

He said, “There are 157 projects initiated and undertaken by the government in aviation sector between 2015 and 2019. Out of these 157 projects, 134 have been completed 100 per cent.

“Some of them were inherited projects that we finished and most of them were new projects that we started and completed by the grace of God 100 per cent.”

He added, “The remaining projects are in excess or most of them are in excess of 50 per cent completion status and very few of them below 50 per cent.”

He named the Terminal D in Abuja airport, as well as its Fire and Rescue Station and the doplar radar system at Kano airport as few of the completed projects, adding that “some of the things we do in aviation are not things that the passenger or travelling public can notice and see.

“This is because they are away from sight but they make aviation very safe and secure and also in addition, very precise.”

Meanwhile, aviation unions have said they would commence an indefinite strike on Wednesday (today) following the failure of the Federal Ministry of Transportation (Aviation) and the Nigerian Civil Aviation Authority to address their concerns in the regulatory agency.

The Air Services Senior Staff Association of Nigeria, National Union of Air Transport Employees, the Association of Nigerian Aviation Professionals and the National Association of Aircraft Pilots and Engineers had on May 13, issued a seven-day ultimatum to the Federal Government to review the new organogram of the NCAA, failure of which would lead to an industrial action.