The Nation Newspaper

Author: The Nation

  • 2020 marginal oilfield bid rounds as catalyst for growth

    2020 marginal oilfield bid rounds as catalyst for growth

    By Wale Ajayi

     

    WITH the recent shortlisting of 161 indigenous companies to advance to the next and final stage of the bid round process for 57 marginal oilfields in the country, the Nigerian oil and gas industry is expected to witness tremendous growth in no distant time.

    The 161 successful companies were selected from the over 600 that applied for pre-qualification, again showing that the Federal Government is creating an enabling environment for investment.

    A marginal oil field is any field that has reserves booked and reported annually to the Department of Petroleum Resources (DPR) and has remained undeveloped for over 10 years.

    These fields are oil fields that have been discovered by major international oil companies (IOCs) in Nigeria in the course of exploring larger acreages.

    The President, by the provisions of the Petroleum (Amendment) Act of 1996 has the power to declare a field as a marginal field where a discovery has been made but has been left unattended for 10 years.

    The major reasons for awarding marginal fields are to create new and diverse investment and boost reserves. Marginal fields in Nigeria are located onshore and in the shallow waters. There are about 178 marginal oil fields.

    The last bid round conducted in 2003 was fraught with litigations and other challenges which hampered the development of some of the awarded 24 marginal oilfields to the detriment of the nation.

    A similar exercise was attempted in 2013/2014 but it was suspended for myriads of reasons including lack of transparency in the bidding processes.

    Thus, when the DPR announced on June 1, 2020, that it has opened bid rounds for 57 marginal oilfields in the country, some sceptics believed that the process would go the way previous exercises had gone in the past.

    For instance, statistics show that nine out of the 24 marginal oilfields awarded in 2003 are productive while the others are under-utilised.

    They also show that 67 per cent of marginal fields have not produced a single barrel of oil since they were issued licenses.

    Faced with these daunting challenges, the DPR management under the able leadership of Mr Sarki Auwalu was determined to adopt a different and strategic approach for the 2020 marginal oilfield bid rounds.

    The emergence of the COVID-19 pandemic and the crash in global crude oil prices left the regulatory agency with no option than to ensure that the exercise is successfully conducted in line with the anti-corruption mantra of the President Muhammadu Buhari administration and for the benefit of the country.

    Auwalu says: “This time around the process will be automated unlike in the past. Our awardees will be credible investors with technical and financial capability.

    “There is also the Post-General Award Conditions. This deals with the transfer of interest post-award. It means awardees cannot transfer more than 49 per cent interest to another party post-award.

    “It also includes termination of rights of interest holder which gives the minister power to withdraw the interest of a party who fail to meet its obligations in terms of joint awardees.”

    Auwalu says the conditions protect the interest of all investors, stressing that any disagreement arising among awardees and their partners post-award will first be referred to the Nigeria Oil and Gas Alternative Dispute Resolution Centre in DPR.

    According to him, this will reduce the years spent in courts over disputes which usually lead to non-performance of the marginal fields, adding that such awards will henceforth be withdrawn by the government.

    Commenting on the ongoing process, Mr Bank-Anthony Okoroafor, a former Chairman of Petroleum Technology Association of Nigeria (PETAN), says he is impressed with the way DPR has handled the bid rounds.

    “I have to be honest with you. The way I have seen the exercise is that it went very well. It was transparent and apart from being transparent, it was detailed.

    “There was, first of all, a pre-qualification stage where all the companies had to show technical and financial capacity. After that, those that were successful were now able to bid for the assets.

    “And for once, there was no leakage. I think the DPR managed to keep the process very secret,” Okoroafor says.

    Despite the shortcomings of previous exercises, awarding of marginal oilfield bid licenses remains a positive move for the nation’s oil and gas industry.

    The DPR says the objective of the 2020 marginal field bid round is to deepen the participation of indigenous companies in the upstream segment of the industry and provide opportunities for technical and financial partnerships for investors.

    According to the agency, the existing 16 marginal oilfields contribute two per cent to the national and gas reserves and their operations have brought peace and development to their host communities in the Niger Delta.

    The agency says it will also expand the government’s revenue, which has dwindled due to the crash of crude oil prices at the international market and create jobs through Exploration and Production activities.

    This will in turn expand the sector’s contribution to Nigeria’s Gross Domestic Product (GDP) which is only about 10 per cent.

    It is also interesting to note that indigenous companies such as Seplat Petroleum Development Company, Waltersmith Petroman Oil Limited and Niger Delta Petroleum Resources all emerged from previous marginal oilfield bid rounds.

    These companies have grown over the years to become key players in the oil and gas space and it is expected that the 2020 marginal oilfield bid rounds would produce similar companies who would help Nigeria to become a petroleum products refining hub in future.

     

    • Ajayi, an oil and gas industry analyst, writes from Abuja.

  • N5b debt: Bank gets court’s nod to sell Obat Oil’s hotel

    N5b debt: Bank gets court’s nod to sell Obat Oil’s hotel

    Joseph Jibueze, Deputy News Editor

     

    THE High Court of the Federal Capital Territory in Jabi, Abuja, has ordered the sale of an Abuja hotel owned by Obat Oil and Petroleum Limited to offset N5 billion debt it owes Ecobank Plc.

    Justice Hassan Babangida gave the other in a suit filed by Ecobank.

    The hotel, Febson Hotels & Malls, is on Plot 2425, Herbert Macaulay Way, Abuja.

    Obat Oil, the firm which owns the property, was founded by an oil mogul and popular monarch, the Olugbo of Ugbo Kingdom in Ilaje Local Government Area of Ondo State, Oba Fedrick Akinruntan.

    He was, in 2014, ranked by Forbes magazine as the second richest king in Africa and the richest in Nigeria.

    Obat Oil immediately appealed the judgment and applied for stay of execution.

    Ecobank, through the application filed on October 18, 2019, sought the court’s authorisation to sell the hotel to recover the N5billion owed it by Obat Oil.

    It claimed that it had reached an agreement with Obat Oil to sell the hotel to offset the company’s N5 billion debt, adding that the agreement was adopted by the High Court of Lagos State as a consent judgment delivered on March 15, 2017.

    Read Also: Court orders arrest of fake monarch in Delta

    The bank, through its lawyer, Mr Kunle Ogunba, a Senior Advocate of Nigeria, added that Obat Oil, in a November 16, 2019 letter, informed the bank that it had found a buyer for the hotel and would offset the debt with the proceeds of the sale.

    It added that the company reneged on its promise to have the hotel sold and pay the N5billion debt on or before December 31, 2019.

    Obat Oil’s lawyer, Mr Olalekan Ojo, also a SAN, did not deny his client’s N5billion indebtedness but maintained that Ecobank was no longer the creditor because the bank had in a letter dated April 5, 2017, allegedly assigned its rights and interests in the case to a third party, ETI Specialised Finance Company Limited.

    He said this implied that only ETI Specialised Finance Company Limited could assert any right over the N5bn judgment.

    Delivering judgment last Thursday, the judge held that Ecobank had the locus standi (legal right) to enforce the Lagos State High Court judgment.

    Justice Babangida ruled that there was nothing placed before the court to show that the alleged transfer of the bank’s right in the N5billion to ETI was complete.

    He noted that although the bank, in its April 5, 2017 letter, stated that ETI would act on its behalf, there was no evidence showing that ETI complied with the condition in the letter requiring it to give the debtor the bank account into which the N5billion should be paid.

    “The judgment sum has not been paid till today and it was agreed by the parties that the property in question, Febson Hotels & Malls, should be sold in satisfaction of the judgment sum,” the judge added.

    Granting the bank’s application, Justice Babangida ordered: “The court hereby orders the issuance of a writ for the attachment and for sale of the property known as Febson Hotels & Malls and the sum of N5 billion to be realised from the sale should be paid to the applicant.”

    Obat Oil, through Ojo, filed a two-ground notice of appeal at the Court of Appeal in Abuja, contending that the trial judge “erred in law” by not declining jurisdiction to entertain and grant Ecoban’s motion on notice dated October 18, 2019.

    The lawyer argued that the court ought to decline jurisdiction because the judgment debt sought to be enforced by Ecobank had been assigned to ETI Specialised Finance Company.

    In another grounds of appeal, Obat Oil argued that the trial judge erred in law because he relied on the reply affidavit filed by the judgment creditor on November 5, 2019 “after the judgment creditor had started its address in respect of the motion on notice filed on October 1, 2019, without obtaining the leave of the trial court to file the said reply affidavit”.

    The firm argued that the judge arrived at a decision that occasioned “grave miscarriage of justice” by relying on such reply affidavit.

    In its motion for stay of execution of the judgment, which it filed before the lower court, Obat Oil sought an order of injunction and stay of execution restraining Ecobank from enforcing the judgment pending the determination of its appeal.

     

  • 400 register for skills training in Oyo

    400 register for skills training in Oyo

    Our Reporter

     

    AT least 400 persons have registered for skill empowerment programme organised by a not-for-profit organisation, Glorycloud Global Outreach, in Oyo State.

    The NGO seeks to empower individuals with relevant training and skills that can set them up for life and business.

    The organisation also seeks to give back to its community by providing infrastructural amenities and social support to it.

    The president, Rev. Sunday ’Yinka Adebiyi, an indigen of Eruwa and the official sponsor, has over the years provided moral and economic support to the town and its people.

    The organisation announced its maiden edition of the Free Skill Acquisition Empowerment Training, scheduled to last for two weeks starting from today.

    Read Also: Makinde should tackle insecurity, says Oyo APC

    Some of the skills to be taught are catering, fashion design, web design and digital marketing, makeup & gele tying, among others.  The NGO said at least 400 applications have been received, following which the participants will undergo intense practical training.

    A graduation and award presentation ceremony will follow.

    Glorycloud Global Outreach will on January 23, commission the Dream Centre, a media/viewing centre where motivational and inspiring movies will be aired and talk shows will be shown.

    There will also be the handing over of a borehole facility built by the organisation for the Idi-Ata community in Oyo State.

     

  • Fears, expectations of real sector operators

    Fears, expectations of real sector operators

    Already buffeted by myriad challenges caused by the prevailing harsh operating environment, there are fears that the resurgence of the COVID-19 pandemic and the economic recession may have set the stage for more turbulence in the real sector of the economy this year. Operators and experts, however, say that putting in place robust policies and comprehensive support systems to encourage scale and lower cost of production could wade off the impending turmoil. Assistant Editor CHIKODI OKEREOCHA looks at some of the issues that will shape the real sector, performance in 2021.

     

     

    IT took outcry by members of the Organised Private Sector (OPS), including Manufacturers Association of Nigeria (MAN), Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA), Lagos Chamber of Commerce and Industry (LCCI), and Nigerians generally, to force the hand of the Federal Government to put the implementation of last week’s upward adjustment of electricity tariff on hold.

    This followed Power Minister Mamman Saleh’s Thursday directive to the National Electricity Regulatory Commission (NERC) to inform the Electricity Distribution Companies (DisCos) to suspend the implementation of the tariff review pending the conclusion of the Joint Ad-Hoc Committee’s work at the end of January 2021.

    However, while the Federal Government may have bowed to pressure and pulled the breaks on the implementation of the vexatious and widely condemned upward adjustment of electricity tariff, the tariff hike was seen as foretaste of the challenging times that lie ahead for real sector operators in 2021.

    For one, the upward review of tariff between N2 per kilowatt and N4 per kilowatt was to have taken effect from January 1, 2021, barely three months after the NERC increased tariffs on September 1, 2020. Also, the reversal did not foreclose another tariff hike. In fact, Saleh said the new electricity tariff would take effect at the end of this month after the end of talks between the Federal Government and Labour.

    What this means is that members of the OPS must prepare for an increase in electricity tariff and its resultant increase in cost of production. This reality was not lost on them. This was why they were quite vociferous in condemning the tariff hike, describing it as “outrageous,”  “ill-timed,” “not manufacturing friendly,” and calling for its suspension.

    The Director-General of MAN, Mr. Segun Ajayi-Kadir, put the grouse of manufacturers over the tariff increase in perspective. He said, for instance, that inadequate electricity supply topped the list of challenges confronting the manufacturing sector and has been largely responsible for its lackluster performance for some decades now.

    According to him, electricity-related expenses of a manufacturing concern constitute about 40 per cent of the production overhead in some sub- sectors. He said with the sector employing over five million workers, directly and indirectly, and contributing 8.93 per cent to the Gross Domestic Product (GDP), the electricity tariff increase was not growth friendly and was antithetical to competitiveness.

    The MAN DG added that the suspended tariff increase came at the commencement of the African Continental Free Trade Agreement (AfCFTA) and barely three months after a huge increment was imposed on electricity consumers on September 1, 2020. “It (tariff hike) appears to be insensitive to the prevailing precarious situation of the sector. The increase is coming at a wrong time and would clearly reverse the little gains in the recent past.

    “This is against the background of prevailing harsh operating environment, the increasing burden of taxes, the enormous spending on self-generated electricity up to the tune of N70 billion (excluding hundreds of billions of naira spent on settling monthly electricity bills) and the ailing state of a sector that is just recovering from a lockdown occasioned by the ravaging COVID-19 pandemic,” he lamented.

    Ajayi-Kadir expressed worries that the recent increase in price of electricity will have overwhelming negative impact on the economy, especially the manufacturing sector. The trickle-down effects, he said, include decrease in foreign exchange earnings from the sector, as high cost of production feeds into export commodity prices.

    He listed other effects to include reduction in government tax revenue occasioned by drop in sales, as a lesser quantum of disposable income will be available to purchase manufactured goods; reduction in capacity utilisation; further decline in GDP, large scale unemployment across the 76 manufacturing sub-sectors and possible increase in crime rate.

    The MAN boss also expressed fears that the tariff increase will trigger reverse-multiplier effect as cost of production escalates and the headways already made in the sector is eroded.

    “This is because most of MAN-member companies are classified in the ‘D’ categorisation (D1, D2 and D3) where tariff is the highest.

    “Manufacturing sub-sectoral groups with higher energy consumption which include Basic Metal, Iron and Steel and Fabricated Metal Products; Domestic & Industrial, Rubber and Foam; Non-Metallic Mineral Product; and Chemical & Pharmaceuticals sectoral groups would be worse-off,” he explained.

    Ajayi-Kadir pointed out that the manufacturing sector, as the engine of sustainable growth, was still struggling with the debilitating impact of the COVID-19 pandemic and was yet to recuperate.

    He, therefore, said operators expect that government will continue to provide stimulus packages that will aid the sector’s recovery and avert the shutdown of factories nationwide.

    “We expect that NERC, as the regulator, will ensure improved electricity generation, transmission and distribution that will lead to adequate and reliable electricity supply in the country rather than squeezing the mere 4000MW to meet all revenue needs of key sharing stakeholders.

    “We equally expect NERC to make regulations that will ensure that 80 per cent of consumers are metered to ensure consumption reflective payment; aid inflow of investment in the energy industry in order to increase generation capacities and usher in large scale production of electricity,” he said, insisting: “The recent absurd tariff increase does not support these desirable propositions.”

     

    Heartache over COVID-19, economic recession

    However, inadequate electricity supply and incessant increases in tariff without a commensurate improvement in generation, transmission and distribution is not the only problem that will confront real sector operators this year. This is so considering the fragile nature of the economy, which slid into a recession in 2020.

    Nigeria slid into its worst economic recession in over three decades, recording a GDP contraction of 3.62 per cent in the third quarter of 2020, according to the National Bureau of Statistics (NBS). It was the second consecutive quarterly GDP decline since the recession of 2016.The cumulative GDP for the first nine months of 2020 stood at -2.48 per cent.

    The collapse in oil prices coupled with the COVID-19 pandemic plunged the Nigerian economy into a severe economic recession, the worst since the 1980s. Now, there has been a resurgence of the deadly virus across the globe.

    Although the authorities have ruled out the possibility of another lockdown to contain the second wave of the virus, there are fears that its rapid spread may force a rethink in favour of a lockdown. This could spell trouble for real sector operators if, and when it happens.

    Given the challenging economic conditions, operators and experts say that key policy reforms are imperative to support and sustain macroeconomic stability.These include a foreign exchange management framework that reflects the market fundamentals and the acceleration of the economic diversification agenda.

    Others are the normalisation of Lagos ports environment, the oil and gas sector reform, especially the petroleum industry bill; reduction in the cost of governance at all levels; improvements in the domestic revenue (particularly independent revenue) to reduce volatilities of government revenue, among others.

    The Director-General, Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA), Ambassador Ayo Olukanni, said, for instance, that in the  reality of COVID-19 and its impact on the  economy, manifesting as economic recession, a continuous increase in the cost of production (which would be the result of the periodical electricity tariff increases) will impede the growth of the real sector.

    “Business concerns will attempt to pass-on some of these costs to consumers by increasing their prices, demand would drop, and the vicious-cycle will continue,” he said.

    The NACCIMA DG, therefore, said: “Our counsel to the government remains the implementation of policies (even if it is in the short term) that increase the productive capacity of the real sector, as well as the disposable income of the general populace, as this is the time-tested approach to exiting a recession.”

    Ajayi-Kadir also said it is imperative that the performance of the manufacturing sector is enhanced through a pro-manufacturing policy that will encourage scale and lower unit cost of production rather that throwing fiery darts that will worsen its performance this year.

     

    AfCFTA opens window of opportunity for operators

    However, as dicey as the situation appears to be for the real sector, the commencement of the implementation of the African Continental Free Trade Area (AfCFTA) on January 1, 2021, promises to be a game-changer. With Nigeria’s ratification of the trade liberalisation deal last November, the belief is that the stage is set for the economy’s enhanced competitiveness.

    The implementation of the AfCFTA Agreement will form a $3.4 trillion economic bloc with 1.3 billion people across the continent and is expected to probably double intra-Africa trade through better harmonisation and coordination of trade liberalisation.

    According to the African Union (AU), the AfCFTA will offer the continent an opportunity to reconfigure its supply chains, reduce reliance on others and speed up the establishment of regional value chains which will boost intra-Africa trade.

    However, Nigeria, Africa’s largest and most populous economy is tipped to benefit more from the free trade deal given its large market and population.

     

     

  • Agriculture: Investments for scale, value

    Agriculture: Investments for scale, value

    Infrastructural changes are expected to boost agriculture and set the stage for future international investment and cooperation this year. Although some indicators point to favourable economic landscape, problems, which have fueled challenges in the sector still remain, DANIEL ESSIET reports.

     

    NIGERIA’S agricultural sector was  negatively impacted in a major way from the fallout of the COVID-19 pandemic last year. Due to the fear of contracting COVID-19, several emergency measures were put in place, and  fewer persons were visiting the farms.

    Before now, the borders were shut in furtherance of  the vision of a self-reliant and self-sufficient country.

    As the barriers have been lifted,  there is hope for positive change. The government’s vision for agriculture seeks to change the view that agriculture is for subsistence livelihood while it also seeks to promote agriculture as a wealth generator and entrepreneurial enterprise, producing food and non-food commodities to meet local and export demands. Analysts hope that the  economy  would  exhibit moderate economic growth is based largely on agriculture and extractive industries.

    Export of some commodities   such as cocoa, cashew, and sesame will  increase this year. However,  agriculture may be highly susceptible to adverse weather conditions and fluctuations in commodity prices.

    Much of the growth has come from a surge in rice production and there will be increased  efforts  to  broaden the country’s export market, primarily in the raw materials sector.

    This year, watchers expect the  sector  to be  affected by disasters. Recurring floods and droughts  may  occur  as real threat to development and food security. Last year, flooding in the Middle Belt and Soutwest part of the country  increased the vulnerability of local communities and puts small farmers, live stock holders, and agro-processors at risk.

    Agriculture has suffered from  COVID-19, but the supply of agricultural products to markets remains stable.Country Manager, HarvestPlus, Dr Paul Ilona acknowledged that COVID-19 represented a serious test for national agriculture, since the sector faced the health crisis and its socio-economic consequences as well as a crisis linked to climate change.

    The 2019-2020 agricultural season faced unfavourable climatic conditions, characterised by irregular rainfall. The water reserve for agricultural use in dams was  characterised by several territorial disparities.

    The fishing industry may  emerge  as one of the most important contributing sectors to the nation’s revenue as Lagos and other states make efforts  on building domestic production and  export of fish.

    The industry is responsible for the livelihood of approximately  100,000 persons and their families.

    However, recent developments suggest there are good  signs ahead for the country’s seafood sector to  contribute to  economic growth. The rice industry will remain a key sector in Nigeria’s long-term food security plans. It has been  as  a  transformative agricultural area with the potential to generate positive impacts along   the  value chain.

    The Federal Government is working with  the private sector to make the rice food system more resource-efficient and climate-resilient ,using precision agriculture, gene-editing and biological-based crop protection, and technologies that improve traceability.  The Nigerian agricultural sector is brimming with massive investment opportunities, across the value chain, for both local and foreign investors, with the current favourable policies of the government aimed at making the sector a viable base of the economy. The government still relies on the Agriculture Promotion Policy (APP) 2016-2020, which sets out strategies for stakeholders to build a sustainable agribusiness economy with the capacity to attain food security, import substitution, economic diversification and job creation.

    The APP identifies viable investment areas, including agricultural production, distribution and supply of production input, provision of enterprise specific infrastructure, agricultural produce storage, processing and marketing of farm produce, agricultural research and development, commodity export and agricultural support services. It prioritises private sector participation, in partnership with government, as the vehicle to fast-track agricultural growth and development.

    The policy deals with the development of the agricultural sectors with the aim of doubling exports and the agricultural GDP by 2030.

    The country also intends to modernise the irrigation network of its farms, especially of those with the highest added value.

    Globalmultidisciplinary practice, PwC Nigeria in its report of the State of Agriculture in Nigeria sees  African Continental Free Trade Area (AfCFTA) as capable to providing  the necessary  help to support Nigeria ’s agri-business, create new regional markets for farmers, strengthen the agro-value chains and significantly reduce agricultural imports from outside the continent.

    Africa,  in particular, is a promising market for Nigeria thanks  to AfCFTA.

    In addition, Africa’s agribusiness sector is projected to reach $1 trillion in 2025, driven by the continent’s rapidly growing middle class.

    Experts  expect  Nigeria  to take advantage of  Africa’s food import bill projected to rise to $110 billion by 2025  to export produce to other countries on the continent.

    So far, PwC Nigeria, in its report of the State of Agriculture in Nigeria, noted that about 90 per cent  of Africa’s agricultural export to non-African market were  dominated by primary or semi-processed products while about half of intraregional trade is associated with processed products.

    With AfCFTA,  the report said the gains can be strengthen at a much higher pace.

    Consequently, it is expected that the establishment of AfCFTA would help to support Africa’s agri-business, create new regional markets for farmers, strengthen the agro-value chains and significantly reduce agricultural imports from outside the continent.

    On the other hand, the government is working  to ensure the viability of Nigeria’s agriculture  amid a challenging year.

    Despite the obstacles presented by the ongoing pandemic, the government is making progress on a multitude of issues.The Federal Government is establishing Special Agro-Industrial Processing Zones aimed at boosting productivity, integrating production and enhancing the processing and exporting of select commodities.

    The government has commenced the development of more ports in Akwa Ibom and Lagos states to enhance its maritime capabilities.

    Despite Nigeria’s success in the digital transformation in the agricultural field, it is still at the beginning of the road.The government is coordinating efforts with partners to digitise the agricultural sector to increase crop production.

    The digital transformation in agriculture would improve the sector’s appeal and open employment opportunities for young people in a job market that has become more dependent on technology.

    To encourage young people to become involved in developing agriculture, analysts have  called for the creation of a bridge between youth and the agricultural sector through digitisation.

    Except things change, challenges, noted PwC Nigeria  in its report, would still hamper the growth of the sector this year. These include nomadic herdsmen shifting towards the south of the country in search of grazing fields and water for their animals. This has resulted in violent conflict with crop farmers in the south.

    Although the government has provided several facilities through the Central Bank of Nigeria (CBN) such as the Anchor Borrower’s Programme to help provide small-scale farmers with adequate financing, the farming industry still lacks adequate access to finance.

    While the  government views agro-industrial processing as a key generator of employment, support for food-processing capacity has  increased. However, farmers still find it challenging to access the several instruments  provided to encourage high-value agricultural production and exports by the private sector.

    Nigeria ’s varying geography allows agro-industrial investors to diversify production across the year.

    Besides export markets, agro-industrial producers can also benefit from a growing domestic market aligned with the expansion of the middle class.

    Another challenge might come from the growing impact of climate change. The authorities are attempting to mitigate the risks through water-management policies, increased irrigation infrastructure and promotion of crops with lower water requirements, but droughts, desertification and soil erosion are swelling problems for the sector.

    On the average, farmland size in Nigeria are less than one in size, which makes it hard to achieve the necessary economies of scale required for a profitable agro-industry.

    Policymakers view the creation of sufficient employment opportunities as a critical development priority.

    Because agriculture is a key earner for such an important part of the population, investment projects that aggregate existing growers into value-adding production chains are likely to see a higher degree of support.

    While Nigeria has shown strong ambition in accelerating agricultural growth and positioning  itself for large-scale adoption of new agricultural technologies, not much has been achieved  in terms of mechanisation.

  • Construction sector: Optimism on improved activities

    Construction sector: Optimism on improved activities

    Most stakeholders in the construction sector look forward to increased activities and greater contributions to the national economy in 2021, OKWY IROEGBU-CHIKEZIE reports

     

    THE construction sector will see greater impetus in 2021 as various activities by the governments and private sector kick in.

    Stakeholders expected improved construction activities and demand, driven by both governments and private sector.

    Managing Director, Dutum Construction Company Limited, Temitope Runsewe said the construction industry will be a significant growth driver for Nigeria’s economy in 2021.  He spoke on the sidelines of the “2021 Nigeria real estate market outlook” meeting in Lagos.

    According to him, with the over N3.85 trillion budgeted for capital expenditure by the Federal Government in 2021, spending on infrastructure would help to drive economic growth.

    Runsewe said though the Coronavirus pandemic had affected economies and businesses globally, the medium to long-term outlook for the industry remained positive.

    He said this was because the construction industry increased its contribution to Nigeria’s GDP to N572.9 billion from N513.6 billion in Q2 2020.

    Runsewe said the National Bureau of Statistics had projected the construction industry to record a Compound Annual Growth Rate of 16.6 per cent to reach an all-time high of N13.2 trillion by 2024.

    According to him, this makes it imperative for players in the real estate and construction industry to exploit the attendant opportunities for growth that will be presented.

    “With the positive outlook of the construction industry for 2021 and the forecasted growth in the industry, Dutum construction intends to participate and contribute toward the development of various industry segments,” Runsewe said.

    Chief Operating Officer, NorthCourt Real Estate, Ayo Ibaru listed opportunities being presented to stakeholders in the industry as demand for real estate increases.

    Ibaru said Nigeria was at a great risk of losing Foreign Direct Investment (FDI) to less volatile neighbouring economies, if it failed to adapt to economic realities or continue with the trend of policy inconsistencies.

    He added that the situation would present an opportunity for local investment in the construction industry to thrive.

    He pointed out the role technology and innovation would play for the future of the industry.

    According to him, the adoption of virtual viewings of properties and other property technology offerings are increasing despite cultural concerns.

    Also contributing a highway engineer, Afolabi  Adedeji who  also spoke on the outlook for the construction and the real estate sector for 2021 identified funding and access to Forex as a big issue for all stakeholders in the sector.  According to him there are still ‘shocks’ from the COVID ­19 pandemic regarding site workers, transportation of materials to site, etc.

    He cautioned that all ongoing capital projects must continue, even if there is a need to phase or ‘scale down’.

    “The cost recovery element needs to be re-visited. Tolls & Taxes are unpopular, but what alternative do we have to these? There is still a glut in the upper income Housing Market in our cities. Yet more structures are being erected. Indicators show that the economy is laying prostrate or is on its knees. The wealth available seems to be concentrated in a few hands. The construction industry is a barometer for assessing general macro-economic performance,” Adedeji said.

    He advised that proper maintenance of roads, railways, public buildings, etc, which were procured with loans, must be placed on the front burner.  He further asked that facility management should be incorporated to avoid, emergency repairs at high cost, premature replacement, disuse, abandonment and others.

    Adedeji stated that generally it is not all gloom and bleak adding that with the special Jobs programme for youths in 774 Local Government Council and the 300,000 Housing units  set to be delivered by the government  for low-to-medium income households things may yet change in the sector  in the days ahead.

    Former Managing Director, UACN Property Development Company, Mr. Hakeem Ogunniran said the real estate sector would witness compact developments unlike before. He recalled that while he was with UACN Property, they had a belief that if it’s not luxury development they would not touch it.

    Ogunniran, who is the CEO of Eximia Realty Company Limited, said the times do not support such and noted that studio flats, self- contain and maximum two-bedroom flats would dominate the market. He regretted the many luxury houses that have stayed in the shelf for years in many upscale areas resulting to the preponderance of so many to­let houses.

    According to him any serious developer will build for the needs of the market  and achieve a turn around, noting that young and upwardly mobile young men and women are looking for functional houses that they can maintain instead of large houses, duplexes that are clumsy.

    He said property developers would build what the market want and by extension what is affordable than building large estates and houses that will tie their fund noting that the challenge of fund mismatch in the real estate sector is still a persistent problem and should be dealt with.

    President, Nigeria Institute of Town Planners (NITP), Toyin Ayinde spoke on the need to recognise that the new year marks the turn of another season and so a new beginning.

    According to him we experienced something different from what we all planned for in the year due to the coronavirus pandemic. He, however, advised that it shouldn’t stop us from hoping for a better year.

    “We’re hoping that the government would go through its plan to construct 300,000 housing units. It would trigger some multiplier effect in the economy as a few unemployed could get employed and the opportunity for other economic activities subsequently manifest. I believe that it should be an opportunity for researchers in the industry to propose alternative local construction materials to bring down costs, so that affordability may increase,” Ayinde said.

    According to him, the year provides an opportunity to plan these housing units as part of human settlements or they constitute new towns in themselves. This would require the integration of the various systems that make human settlements sustainable.

     

     

  • Dialing into optimism

    Dialing into optimism

    Amid the global and national macroeconomic challenges, the information and communication technology (ICT) sector will continue to be major economic growth driver for Nigeria. Adoption of 5G technology, National Identity Number (NIN) linkage with subscriber identity module (SIM) and other legacy issues are some of the factors that will shape the industry in the new business year, LUCAS AJANAKU reports.

     

    LAST year was, undoubtedly, challenging for businesses as COVID-19 went on rampage, decimating lives and livelihoods.

    Several economies, including Nigeria’s, inevitably slipped into recession. But the telecoms sector remained resilient as its infrastructure provided the platform for governments, private and public businesses to run seamlessly and remotely.

    Since every cloud has a silver lining, the telecoms operators are optimistic the year will be better.

    “We are hopeful that a lasting solution for COVID-19 will be found by first quarter 2021 so that life can start returning to normal as much as possible. However this is (going to) be a (year of) “new normal” as there will be more remote working and digitisation of services.  This means there will be more need for telecom and ICT infrastructure in the coming months and telecom operators are ready to implement the services needed to serve the need of the citizens,”said Ikechukwu Nnamani, President, Association of Telecoms Companies of Nigeria (ALTON).

    But despite the challenges, the sector’s contribution to Gross Domestic Product (GDP) increased to over 14.30 per cent as at Quarter 2, according to the National Bureau of Statistics (NBS). In financial value, the 14.30 per cent translates to N2.272 trillion whereas it was10.60per cent by December, 2019. Also, telecoms investment continued to grow it moved beyond $70 billion threshold.

    This year however, the first quarter (Q1) might witness a dip in the revenue of both mobile network operators (MNOs) and Federal Government’s by way of taxes as a result of government policies. The directive of the Minister of Communications and Digital Economy, Dr Ibrahim Pantami, to the Nigerian Communications Commission (NCC) to deactivate SIMs not linked to the NINs will definitely impact the sector negatively if not properly managed. Though the government came out with extension to the initial two-week ultimatum, the outbreak of the second wave of COVID-19 that has kept civil servants below grade level 12 may have put spanners into the wheel. Anxious subscribers that thronged the registration centres of the National Identity Management Commission (NIMC) were disappointed as they got nobody to attend to them. Though all the MNOs, some state governments and over 100 private firms have licences to work for NIMC, it is still not clear how it will be done. But no fewer than 25million subscribers are in fear of being deactivated.

    Another major issue that will define the industry is the deployment of 5G technology in the country. About two years ago, the NCC had given MTN the go ahead to the trial of the technology in some major cities in the country. The development had generated bitter reaction from both the literate and less literate populace as Coronavirus was linked to the deployment of the technology in China.

    Following the misinformation, miscommunication, misunderstanding and misconception that greeted the trial of the technology, the Commission in 2020 began a deliberate regulatory measure by developing and a Draft Consultation Document on the Deployment of Fifth Generation (5G) Mobile Technology in Nigeria. The document defined the implementation plan for the deployment of 5G. It provided a background into the benefits of 5G technology and outlined NCC’s plans and strategies for a successful implementation of 5G and clearly presented guidelines for the relevant areas of the technology and the expectations from the operators. The trial, among others, was to study and observe any health or security challenges the 5G network might present.

    The Executive Vice Chairman of NCC, Prof. Umar Danbatta, said: “For the avoidance of doubt, as with the previous technologies such as 1G, 2G, 3G and 4G, the Commission will not commence 5G deployment without due consultation with all relevant stakeholders.”

    The consultation and eventual deployment of the technology is expected to take a new speed this year.

    Push for the attainment of the new broadband target of the Federal Government is expected to gather more steam. Further to this, the NCC started the review of Infrastructure Company (InfraCos) framework and funding options. A committee was constituted to review the framework for licensing InfraCos and recommend sustainable funding options for effective implementation of the proposed national fibre project. The constitution of the committee was sequel to the requirements of the new Nigerian National Broadband Plan (NNBP 2020-2025) and reports of relevant committees set up by the Federal Executive Council (FEC), which include the Inter-Ministerial Review Committee on Multiple Taxation on Telecommunications Operators over Right-of-Way (RoW) and the Technical Sub-Committee on Right-of-Way for Deepening Broadband Penetration in Nigeria. These requirements and reports relate to the imperative of reviewing the InfraCo framework to cater for the delays in take-off, change in exchange rate, supply chain and other challenges imposed by the COVID-19 pandemic. “The InfraCo project is dear to the government because of its ability to enhance robust and pervasive broadband infrastructure to drive service availability, accessibility and affordability,” Dambatta said.

    Dear to the heart of the Federal Government is the push for knowledge based and digital economy. To actually drive this, a new Strategic Management Plan (SMP) 2020-2024 was unveiled at the twilight of last year. It is believed that SMP will accelerate the implementation of the National Digital Economy Policy and Strategy (NDEPS) and the NBP 2020 – 2025 of the Federal Government.

    During the year, it is expected that the SMP, which is a vision document for planning, monitoring, analysing, and assessment of the Commission to meet its goals and set objectives, will be aggressively pursued with its five pillars, which include regulatory excellence, universal broadband, promote development of digital economy, market development; and strategic partnership and 25 intended outcomes.

    Initiatives such as embedded (e-SIM) and national roaming are expected to take firm footing during the year. Two MNOs, MTN Nigeria and 9mobile, got approval to carry out trial on the workability of e-SIM service in the country. The trial, approved to run for one year, will involve testing 5,000 e-SIMs in line with regulatory conditions.

    The NCC had said the primary objective of the e-SIM trial was to assess the technical performance of the e-SIM on telecoms service providers’ network towards eventual rollout, if satisfactory. He said the e-SIMs is a technology that will eliminate the need for physical SIM card slots on mobile devices in the near future, adding that the trial is in line with the Commission’s forward-looking regulatory approach to ensure Nigeria’s telecoms ecosystem is in tandem with global best practices.

    Similarly, the MNOs were granted regulatory approval to trial national roaming service. The two telcos are expected to configure their networks to begin test and simulation for customer experience. The trial approval covers a few local governments, designated as the National Roaming geographic area, in Ondo State. Basically, roaming service will enable a mobile subscriber to automatically make and receive voice calls, send and receive data, or access other services when travelling outside a particular network geographical area by utilising the network coverage of other networks with roaming arrangements to access service.

    The primary objective of the National Roaming Service trial was to encourage network resource sharing among operators. It is will also lead to operational expenditure (OPEX) optimisation and capital expenditure (CAPEX) efficiencies leading to freeing up of resources to expand mobile network coverage to unserved and underserved communities across the country, which will lead to improved Quality of Service (QoS) delivery to subscribers.

    The lifting of the suspension on the Spectrum Trading Guidelines (STG) 2018, pending the conclusion of the ongoing review of the Guidelines, will also boost the industry. The lifting of the suspension followed deliberations on the subject by the Board of NCC.

    The Commission had, in a statement on May 27, 2020, announced the suspension of STG 2018 for the telecommunications industry and informed licensed telecoms operators, prospective investors, industry stakeholders and the public of the regulatory decision. The Board of NCC had earlier taken the decision for Spectrum Trading in response to telecommunications global dynamics, as well as the efforts to optimally utilise and maximise the benefits of Spectrum as a scarce resource. Spectrum is a limited resource, which, when inefficiently utilised, greatly limits broadband coverage and speed. The current STGs were developed in 2018 after industry-wide consultations and this instrument allows that the spectrum resource be traded on the Secondary Market through Transfer, Sharing or Leasing (TSL) upon satisfying stipulated regulatory conditions.

    The guidelines review was necessitated by the launch of NBP to ensure that unutilised Spectrum is fairly traded to facilitate rollout by other operators among others. The guidelines will also help to address the need for ubiquitous broadband deployment to accelerate penetration and access in line with the economic agenda of the Federal Government.

  • Maritime: A wind for growth

    Maritime: A wind for growth

    Despite the havoc on the world economy by the coronavirus pandemic, coupled with difficult business environment experienced last year and uncertainties still surrounding the second wave of the COVID-19, operators in the maritime industry are optimistic that a friendly environment will come on stream this year. Consequently, they expect the industry to record significant growth in 2021. OLUWAKEMI DAUDA reports.

     

    AS we enter into the new year, stakeholders’ in the maritime industry, who spoke with The Nation in  separate interviews, have outlined their expectations from the government, even as they expressed hope for a friendly business environment this year.

    They want the Federal Government to invest heavily in the sector so that it would be able to contribute significantly to the Gross Domestic Product (GDP), assist in the diversification of the economy,  generate employment and boost revenue.

     

    Removal of the perennial gridlock

    The stakeholders’ were unanimous in their position that the government must find a lasting solution to the perennial  gridlock in Apapa, address the problem associated with the cost of cargo clearance at the port and provision of modern scanners to reduce the cargo dwell time.

    The Nigerian Ports Authority (NPA)  former President, Association of Nigerian Licensed Customs Agents (ANLCA), Prince Olayiwola Shittu, said the government  must come up with plans that would make the ports outside Lagos attractive for business and see to the quick development and completion of some of the on going Deep Sea port projects in the country.

    “For the Nigerian Ports Authority, NPA, we want to see them coming out stronger to ensure that some of the Deep Sea projects are completed this year so that Shippers can benefit from the economy of scale.

    “NPA must also ensure that empty containers are taken to the holding bays by the shipping companies to free the port access roads. They should ensure that the Apapa-Oshodi Expressway and other port access roads are fixed to eliminate the gridlock and reduce the high cost the importers are paying to truck drivers to move their containers out of the port.

    Shittu also charged NPA to collaborate with stakeholders’and the security operatives to ensure that there was adequate security within and around the ports.

    The President, National Council of Managing Directors of Licensed Customs Agents, Lucky Amiwero, said the industry witnessed significant downturn in the last six years as a result of government neglect.

    Amiwero said if the sector must grow to attain its full potential, the government must do more than pay lip service to the challenges facing it.

    He said, “The maritime sector was flogged for the past five years and since then, we have been experiencing downturn because not much have been invested in the sector even though we are second in terms of revenue. The gridlock problem, cost of cargo clearance at the port, lack of scanners have persisted for too long because government has not been serious about trying to find solution to the problem in Apapa. It is not just about repairing the road; the gridlock is about looking at how we need to take care of the port and plan outside the Lagos ports.

    “These are issues the government needs to look into and see how they will intervene and address the situation because the more we continue to lose out in the maritime space, the more we continue to lose employment. The industry has lost close to 60 percent of the work force and it is going to lose more if government is not serious about anything.

    “What we are doing is allowing other countries benefit from our own throughputs. The government should set up a committee to look at the reforms. You don’t bring politicians to come and rule the port, we need experts to look at the port sector and reform it. Once you don’t put experts into things, there is no way you can get it.”

     

    Automation of clearing processes

    On his part, a maritime lawyer, Mr Oluwaseyi Muhammed, said if improvement and development must be achieved this year, there is need for Customs to review its process of cargo clearance, which he said gives too much room for discretionary powers by officers and has made Lagos ports the most expensive to do business in the sub-region.

    The lawyer stressed the need for the government to invest in infrastructure and use of automation for quick clearance of cargo to boost revenue.

    “We need to automate port processes and review the processes of cargo clearance. The current processes are very frustrating to importers. We have too many discretionary powers, which are also creating room for corruption, so we need to streamline the processes because they are making cargo clearance at the ports especially Lagos ports very costly and it is a nightmare for many importers particularly those that are connected to the corridor of power,” he said.

     

    National single window:

    A Single Window is an organic mixture of the collaborative efforts of parties involved in a nation’s international trade activities. It uses the latest information communications technology (ICT) techniques, international data and messaging standards together with simplified, harmonised and remodelled information systems for data exchange to replace traditional paper-based information

    The Nigerian Ports Authority (NPA) Managing Director, Ms Hadiza Bala Usman, told reporters last year that government agencies, terminal operators and stakeholders must key into the government’s initiative of promoting the SW platform to meet the 48-hour cargo clearance deadline.

    The NPA, she said, has embarked on the establishment of a SW through an intense automation and introduction of Standard Operating Procedures (SOPs).

    “The adoption of a national SW platform will strengthen the port industry by boosting efficiency and reduce cost and time, which are the major objectives of port concession agreement signed by private terminal operators,” she said, adding that the SW has been used by many countries to facilitate trade at ports.

     

     

  • Banking sector recapitalisation may define sectoral competition

    Banking sector recapitalisation may define sectoral competition

    The recapitalisation of the banking sector, which followed continued depreciation of the naira against global currencies, may become a dominant factor in sectoral competition in the year. Although part of the Central Bank of Nigeria (CBN) Governor, Godwin Emefiele’s five-year plan, not much has been heard in terms of banks shoring up their capital bases. But the depreciation of the naira against dollar means more lenders will raise fresh capital to boost their capital base for domestic and global competition, writes COLLINS NWEZE.

     

    WHEN the Central Bank of Nigeria (CBN) Governor Godwin Emefiele unfolded his policy direction for the next five years, recapitalisation of banks topped the list.

    Under the impending exercise, banks will raise their capital base above the N25 billion minimum level adopted in 2004. The CBN boss also plans to lead the economy to double-digit growth, single-digit inflation, $12 billion non-oil exports by 2023 and raise financial inclusion to 95 percent by 2024 while retaining the managed-float exchange rate.

    The CBN guidelines stipulate that regional banks must have a minimum paid-up capital of N10 billion, national banks, N25 billion and banks with international operations N50 billion.

    According to Emefiele, the 2004 recapitalisation, which increased banks’ capital base from N2 billion to N25 billion, has weakened. He plans to pursue a programme that will make the banks rank among the top 500 in the world.

    Managing Director/CEO Afrinvest West Africa Limited, Ike Chioke advised that in the year, the industry would now require a recapitalisation exercise in the short to medium term as hinted by the Central Bank of Nigeria.

    He, however, said the currency environment and weak investors sentiment pose a big challenge to the exercise.

    “The underpriced valuation of the banking sector many hurt banks seeking to raise tier-1 capital while tier-2 capital funding cost may be unaffordable to the current risk environment. The CBN directed that the minimum interest rate on savings deposit be reduced to a minimum of 10 per cent of Monetary Policy Rate (1.25 per cent), the previous minimum of 30 pr cent of MPR (3.75 per cent) effective from September 1, 2020,” he said.

    Even the International Monetary Fund (IMF) believes that Nigeria’s banks needed improved capital. Its Monetary and Capital Markets Department Director Tobias Adrian advised the banks to seek higher capital through recapitalisation and also tackle rising Non-Performing Loans (NPLs).

    Emefiele  said: “In the next five years, we intend to pursue a programme of recapitalising the banking industry to position Nigerian banks among the top 500 in the world. Banks will, therefore, be required to maintain higher level of capital, as well as liquid assets in order to reduce the impact of an economic crisis on the financial system.

    “You will all agree with me that it was Governor Charles Soludo in 2004 that did the last recapitalisation we had, moving the capitalisation from N2 billion to N25 billion. And I must commend those efforts because it resulted in positioning Nigerian banks not only in Africa, but also being among the banks in the world in terms of capitalisation and it also increased or helped to strengthen the banking industry capacity to take on large ticket transactions- and those are some of the things we badly need today.”

    Other stakeholders said recapitalisation would provide more funds for the banks to do business, especially consumer credit, mortgage finance, which they have not been given any consideration.

    Also, recapitalisation will give banks the power to take advantage of opportunities in the industry, and lend more to the real sector.

    Many banks had eroded their capital due to the high level of NPLs, adding that recapitalisation would present a new lifeline for the banks.

    Association of Bureau de Change Operators of Nigeria (ABCON) President Aminu Gwadabe said recapitalisation would help the banks remove toxic assets from their balance sheets which make it difficult for them to lend.

    The exercise, he added, would help the lenders attract new foreign and local investors that would provide the needed capital for them to take bigger roles, including investment in infrastructure.

    He said the banks were not lending as expected, adding that recapitalisation would provide them with the right capital mix to lend to larger segments of the economy.

    Former Executive Director, Keystone Bank Richard Obire said recapitalisation would draw yes and no answers depending on where one stands.

    He described the NPLs as high and real, noting that a number of banks, including the tier-1 lenders are affected by the rise in bad loans.

    Budget implementation

    Aside banking sector recapitalisation, the next big thing that will define Nigeria’s economic performance in 2021 is the execution of the N13.58 trillion budget.

    An economist, Boniface Chizea, says the  implementation of the 2021 Budget at the beginning of the year will positively impact the prospects of the economy in the year under review.

    Chizea, who is the Chief Executive Oficer of BIC Consultancy Services, said: “It is a good development that the budget has been approved ready for implementation from the first day of the year.

    “This is a welcome and cheering news as this development is bound to positively impact the prospects of the economy in the year under review”, he said.

    He recalled that 2020 was a year the  economy witnessed its worst performance in recent memory due to a combination of deleterious factors.

    He identified the factors to include the COVID-19 pandemic which set in toward the end of the first quarter of last year and the EndSARS protests that occurred last October .

    Other factors include the lackluster performance of the oil market and the mixed fortunes of the exchange rate of the Naira, among others.

  • Capital Markets: Entering new growth phase

    Capital Markets: Entering new growth phase

    The capital market braced through the COVID-19 pandemic to a world-leading performance in 2020. Capital Market Editor/Deputy Group Business Editor, TAOFIK SALAKO, reports that 2021 will also be an equally exciting year for the market as it transits into newness on many fronts.

     

    THE capital market was the silver lining in the economy clobbered by foreign exchange crisis, hyperinflation, lockdowns, disruptions and recession. Amid the COVID-19 pandemic and the intense disruptions to economies and corporate plans, the Nigerian capital market remained open for business throughout 2020 and posted several landmarks.

    Benchmark indices at the Nigerian Stock Exchange (NSE) showed average full-year return of 50.03 per cent in 2020, equivalent to net capital gain of N6.483 trillion. The recent highest return was 42.3 per cent recorded in 2017.

    The All Share Index (ASI)- the value-based common index that tracks all share prices at the NSE closed 2020 at 40,270.72 points, 50.03 per cent above 26,842.07 points recorded as opening index for the year. Aggregate market value of all quoted equities at the NSE rose to N21.057 trillion as against N12.958 trillion recorded as opening value for the year, an increase of N8.1 trillion.

    The additional increase in value of market capitalisation, above the ASI percentage change, was due to additional or supplementary listing of shares during the year.  Other landmarks included the launch of Nigeria’s biggest corporate bond and the largest foreign-driven shareholders’ recapitalisation of a quoted company.

    The new business year is on many fronts a year of momentum for the capital market. While the secondary market, with its thrills and shrills of gains and losses, will continue to signpost the market at a glance, more profound institutional and regulatory changes will define the market in 2021. The first major change is the full demutualisation of the 60 years old NSE. Demutualisation, the conversion from a mutual, member-owned non-profit status to a profit-making, shareholders-owned, public limited liability company, is arguably the biggest change at the NSE in more than three decades and probably the final metamorphosis of the NSE.

    Established as the Lagos Stock Exchange on September 15, 1960 under the provisions of the Companies Ordinance 1922, with a share capital of £5,000 divided into 500 ordinary shares of £10 each, the name of the exchange was changed from Lagos Stock Exchange to Nigerian Stock Exchange on December 15, 1977.

    With the enactment of the Companies and Allied Matters Act (CAMA) 1990 and prohibition of companies limited by guarantee from being registered with a share capital; the NSE was re-registered on December 18, 1990 as a company limited by guarantee and the then existing share capital of N20,000 was cancelled and the equity rights of the initial subscribers extinguished. The demutualisation of the NSE is expected to be completed this year with the listing of the shares of the emergent holding company listed for public trading around the second half of the year. The new year already started with major announcements on incorporation of subsidiaries, leadership and complaints management.

    The demutualisation of the NSE is expected to further open up the competitive landscape at the stock market, with the NSE being able to drive major growth agenda while other trading platforms and exchanges riding on the ‘sense of emotional detachment’ to close gaps and foster a more competitive market with various privately-owned platforms for issuance and listing.

    The automation of the capital market is also expected to reach its crescendo this year. The launch of online public offering platform, the first of such initiative in Africa, brings the primary issuance processes to par with the secondary market processes, with enormous prospects for the depth and liquidity of the entire capital market. The global virtual public offerings subscription’s platform, known as X-PO by the NSE, will allow investors to conveniently subscribe and make payments for public offers through the web and mobile (USSD), from anywhere in the world. This innovation is expected to berth more innovations with other exchanges and stakeholders offering similar versions. As it was with the launch and proliferation of secondary market’s online trading platforms, the electronic offering (e-offer) is expected to significantly transform the primary market segment, removing the hassle of physical completion and submission of public offering applications forms, visiting bank for payment, delay in offering and allotment period and overall cost of issuance. The launch of e-offering is also expected to provide impetus for pending major initial public offerings (IPOs).  Regulations and market exigencies are also expected to culminate in many technological tie-ups including in the areas of identity management, trading and settlement, filing, investors’ relations and dividend payment. The passage into law of the bill establishing government-promoted Unclaimed Dividend Trust Fund, while it may be meddlesome and insensitive at first sight, is expected to rouse the market to remove the rep tape, corrupt practices and disconnections that have fuelled unclaimed dividend, and dampen popular participation in the market.

    The secondary market performance will depend on the same factors that propelled major recovery in 2020, but at a slower pace in 2021. Foreign exchange, inflation, naira depreciation and corporate earnings will determine the direction of the stock market. Against the background of the whooping 50.03 per cent return in 2020, many analysts see a moderate positive performance in 2021. But the market is full of surprises, as it did in 2020.

    “Our prognosis for the stock market in 2021 is that domestic interest, fueled by dividend expectations, is likely to sustain the market rally in first quarter 2021. However, in the absence of foreign demand, we see a short-term bear market from second quarter to third quarter 2021,” United Capital stated.

    In what may have a major impact on the pool of expertise at the capital market, the Chartered Institute of Stockbrokers (CIS) will commence the implementation of a new syllabus as well as new membership rule in line with existing realities in Nigeria and globally. It is also expected to see a major push for the passage of the Chartered Institute of Securities and Investments (CISI) bill, which aims at deepening professionalism across various functions in the market under a single process of certification and standardisation.

    At the emerging segment of alternative securities, Eagle Global Markets (EGM), which provides resources for trading in Bitcoin, Ethereum, Litecoin, Ripple and other kinds of Cryptocurrency (CFDs), stated that it expects stronger regulation and improved performance for crypto in 2021. Nigeria’s apex capital market regulator, Securities and Exchange Commission (SEC), which is focusing on fintech and other alternative securities to protect investors in uncharted territory, is expected to further concretise its rules on derived and alternative securities.

    “While 2020 taught us that nothing is guaranteed, many analysts are predicting an optimistic run for the markets in 2021,” EGM stated.

    The Lagos Commodities and Futures Exchange (LCFE) is also expected to commence trading operations this year, opening up new investment channel and further diversifying the capital market. LCFE plans to trade on agricultural commodities, solid minerals, currencies and oil and gas.

    With the markets becoming more dynamic and resilient, 2021 may not be measured in terms of high-end double-digit return, but it surely looks more positive for the long-term growth and development of the capital markets.