The Nation Newspaper

Category: Capital Market

  • Early results show mixed performance in third quarter

    Early results show mixed performance in third quarter

    By Taofik Salako, Deputy Group Business Editor

     

    Nigerian companies appeared to show resilience in the third quarter with many of them rounding off the nine-month period with appreciable profit, despite disruptions caused by coronavirus and the decline in the overall macroeconomic performance.

    Early filers at the weekend showed mixed performance across the sectors with companies in the healthcare and food sectors riding the wave of lockdowns an health needs to stronger performance.

    Most quoted companies on the Nigerian Stock Exchange (NSE) are expected to release their nine-month results for the period ended September 30, 2020 by this weekend in line with extant listing requirements that require companies to submit their quarterly results not more than 30 days after the end of the period. The deadline for the third quarter results is on Friday, October 30, 2020.

    Companies that have submitted their results included United Capital Plc, Africa Prudential Plc, GlaxoSmithKline Consumer Nigeria Plc, NCR Nigeria, Unilever Nigeria, Chemical and Allied Products (CAP) and Austin Laz and Company.

    United Capital recorded significant growth in income and profitability in the third quarter with pre-tax profit rising by 26 per cent to N4.12 billion within the nine-month period. Key extracts of the nine-month report for the period ended September 30, 2020 showed that gross earnings rose by 33 per cent from N5.32 billion in third quarter 2019 to N7.07 billion in third quarter 2020. Net operating income grew by 58 per cent from N4.29 billion to N6.76 billion.

    Profit before tax increased from N3.27 billion to N4.12 billion while profit after tax rose from N2.75 billion to N3.46 billion. Basic earnings per share increased to 58 kobo in third quarter 2020 compared with 46 kobo recorded in third quarter 2019.

    The balance sheet of the finance and investment group also improved considerably with total assets rising by 41 per cent from N150.46 billion recorded by the year ended December 31, 2019 to N211.5 billion by the third quarter 2020. Total liabilities also rose by 46 per cent from N130.88 billion last December to N191.45 billion in third quarter of the year. Shareholders’ fund increased to N20.08 billion in third quarter 2020 as against N19.59 billion last December.

    Africa Prudential recorded decline in all major performance indices in the third quarter with prre-tax profit dropping by 11 per cent during the period. The report showed decline in the general performance of the company with gross earnings dropping by nine per cent from N2.90 billion in third quarter 2019 to N2.63 billion in third quarter 2020.

    Profit before tax dropped by 11 per cent to N1.57 billion in third quarter 2020 as against N1.76 billion in comparable period of last year. Profit after tax also declined from N1.5 billion to N1.41 billion.

    The company stated that the decline was due to 29.61 per cent reduction in revenue from contracts with customers, 5.4 per cent reduction in other income, 3.4 per cent increase in personnel expenses, and 17.2 per cent increase in amortisation of intangible assets.

    Africa Prudential’s interest income however increased by six per cent, driven by 19.83 per cent increase in interest income on loans and advances, and 780 per cent increase in interest income on bonds. The total increase in interest income was achieved despite 45.94 per cent reduction in interest income on treasury bills and 87.95 per cent reduction in interest income on short-term deposits.

    Further analysis showed that the company’s fees from corporate actions grew by 25.79 per cent, register maintenance grew by 47.49 per cent and revenue from digital technology consultancy increased by 264.63 per cent year-on year. However, there was a revenue decline from fee from contracts by 30 per cent due to the impact of COVID-19 on key clients which resulted in renegotiation and repricing.

    GlaxoSmithKline showed modest improvements across most  major profit and loss items. Gross revenue rose from N15.92 billion in third quarter 2019 to N16.45 billion in third quarter 2020. Gross profit dropped from N4.57 billion to N4.42 billion.

    Profit before tax rose from N613.03 million to N638.71 million while profit after tax increased to N434.32 million in third quarter 2020 as against N427.03 million in corresponding period of last year.

    CAP grew turnover by 3.7 per cent to N6.0 billion in third quarter 2020. Gross profit dropped by 2.1 per cent to N2.7 billion while earnings before interest and tax (EBIT) stood at N1.2 billion. EBIT margins of 19.5 per cent represented a decline of 610 basis points, which the company attributed to the impact of gross profit compression and budgeted staff cost increases driven by deliberate initiatives to strengthen the work force. Profit before tax dropped to N1.4 billion while profit after tax declined by 24,4 per cent to N928 million in third quarter 2020 as against N1.2 billion in third quarter 2019. Expectedly, earnings per share dropped by 24 per cent from N1.75 last year to N1.33 this year.

    Austin Laz did not record any activities during the period. The company reported that it was undergoing operational challenges, consequently, all production activities were in suspension pending the resolution of the challenges.

    Group Chief Executive Officer, United Capital Plc, Mr. Peter Ashade, said the operating environment remained tough amid the lingering COVID-19 situation and negative macroeconomic impacts as seen in the continued depreciation of the exchange rate, consistent uptick in headline inflation rate among other macroeconomic indicators.

    According to him, the group’s business has not been immune to the challenges, though it has remained nimble.

    “We continued to implement our business growth and continuity plans premised on a solid risk assessment framework to ensure we remained focused on providing best-in-class solutions to all client segments. These contributed to the impressive growth across our businesses leading to 33 per cent growth in revenue and 26 per cent increase in both pre-tax profit and profit after tax during the nine-month period,” Ashade said.

    He noted that the group has started to see the fruit of the strategic decision to raise N10 billion new debt capital. The company had in the second quarter issued N10 billion Series 1 Bond under the N30 billion Medium-Term Debt Program – the first to be issued by an investment banking firm in Nigeria. It was oversubscribed by about 24 per cent.

    He added that going into the last quarter of the year, the group is encouraged by the increasing market confidence in its brand even in the wake of the most globally devastating pandemic of the last century.

    “We know the operating environment is turbulent, but we are committed to deliver superior returns to our shareholders, as we drive growth and profitability across all our businesses,” Ashade said.

    He pointed out that in line with the group’s  initial strategy for the 2020 business year, it shall continue to push further its market diversification and cost-optimization initiatives as well as implement phased automation of its business processes whilst upholding commitment to ensuring a significant improvement in value delivery to all stakeholders.

    Managing Director, Africa Prudential, Mr. Obong Idiong said while the negative economic impact of the COVID-19 continue to reflect on traditional income lines, the transition of the company from a traditional registrar business to a technology business deploying technology to transform the registrar, cooperative, e-commerce, and digital technology play could not have come at a better time.

    “We are confident that as the company’s new businesses continue to gather momentum, we will continue to deliver sustainable value to our investors. Among the gradual result of the transformation process is the 264 per cent year-on-year growth in digital technology consultancy income. We also grew our investment income by six per cent year-on-year through an efficient allocation of investmentible fund despite the prevailing low interest rate regime,” Idiong said.

    He assured that the company will continue to consolidate on its gains in the digital technology space to deliver great value and exceptional experience to clients across all its touch points.

    Managing Director, Chemical and Allied Products (CAP) Plc, David Wright, said CAP’s performance in 2020 has been affected by COVID-19, particularly in April and May as a result of the stringent movement restrictions which constrained production and led to supply chain disruptions.

    “Despite the challenging operating environment, we achieved strong revenue and volume growth of 34 per cent and 34.6 per cent respectively in the third quarter of the year. Going forward, we expect to continue to see the positive effects of our growth strategy on our sales and remain focused on managing operating costs to deliver on profit ambitions in the fourth quarter,” Wright stated.

     

  • NSE suspends Sunu Assurances

    NSE suspends Sunu Assurances

    By Taofik Salako, Deputy Group Business Editor

    The Nigerian Stock Exchange (NSE) has placed Sunu Assurances Nigeria Plc on full suspension, implying a total cessation of trading on the shares of the company.

    With the suspension, there will be no trading, including buying and selling, in the shares of the company and it will also not witness any price change.

    The full suspension, which took effect yesterday, will run till the close of business on October 30.

    In a circular, the NSE noted that the suspension was in relation to the Sunu Assurances’ ongoing share capital reconstruction.

    According to the Exchange, the suspension was necessary to allow for closure of the company’s register of members in order to determine shareholders eligible for the share capital reconstruction as at the qualification date of October 16.

    Sunu Assurances Nigeria is undertaking share capital reconstruction, which will see cancellation of 11.2 billion ordinary shares of 50 kobo each, 80 per cent of the company’s current issued share capital.

    Sunu Assurances plans to cancel 11.2 billion ordinary shares of 50 kobo each out of its existing issued 14 billion ordinary shares of 50 kobo each as part of a recapitalisation plan aimed at increasing the capital base of the insurance company to the new minimum capital base.

    Regulatory filing showed that the share capital reconstruction will result in the cancellation of four existing ordinary shares out of every five ordinary shares held by shareholders as at the close of business last Friday.

    With this, the total number of issued ordinary shares post capital reconstruction exercise will be 2.80 billion ordinary shares of 50 each while a total of 11.2 billion ordinary shares of 50 each will become cancelled and unissued.

    Shareholders of Sunu Assurances Nigeria had at an extra-ordinary general meeting in March 2020 approved the share capital reconstruction. It has also filed application for approval from the NSE.

    The company had stated that the purpose of the share capital reduction was “to allow for the issuance of new ordinary shares by way of a rights issue and private placement, in order for the company to comply with the recently revised share capital requirement by the National Insurance Commission (NAICOM) for insurance companies”.

    The company explained that the share capital reconstruction was adopted as the more efficient approach to creating room for new equity capital issuances.

    “The share capital reconstruction will lead to the cancellation of 11.2 billion ordinary shares and result in an increase in the share price to N1. This will enable the rights issue, private placement and any subsequent equity capital raising to be priced above the nominal value of 50 kobo,” the company stated.

    According to the company, the shortfall between its paid up capital and NAICOM’s new capital requirement of N10 billion for non-life insurance companies was N7.71 billion as at September 30, 2019.

    The company stated that it is exploring a recapitalisation plan to augment the shortfall ahead of the December 30, 2020 deadline for compliance with the new minimum capital base.

    NAICOM had in May, last year released new capital requirements for insurance businesses with a 13-month compliance period for operators to shore up their minimum capital base to the required level. The minimum paid-up share capital of a life insurance company was increased from N2 billion to N8 billion, non-life insurance from N3 billion to N10 billion, composite insurance from N5 billion to N18 billion while re-insurance companies were directed to raise their capital base from N10 billion to N20 billion.

    SUNU Assurance Group had in 2016 acquired 60 per cent equity of the former Equity Assurance Plc and renamed the company SUNU Assurances Nigeria Plc. SUNU Assurance has operations in not less than 12 Franco-phone African countries and the acquisition of Equity Assurance was a major entry strategy into the Anglo-phone countries.

  • Sunu Assurances seeks regulatory approval to cancel 11.2b shares

    Sunu Assurances seeks regulatory approval to cancel 11.2b shares

    Sunu Assurances Nigeria Plc at the weekend submitted application seeking regulatory approval to proceed with its planned share capital reconstruction, which will see cancellation of 11.2 billion ordinary shares of 50 kobo each, 80 per cent of the company’s issued share capital.

    Sunu Assurances plans to cancel 11.2 billion ordinary shares of 50 kobo each out of its issued 14 billion ordinary shares of 50 kobo each as part of a recapitalisation plan aimed at increasing the capital base of the insurance company to the new minimum capital base.

    Shareholders of Sunu Assurances Nigeria had at an extra-ordinary general meeting in March 2020 approved the share capital reconstruction.

    Regulatory filing at the weekend showed that the share capital reconstruction will result in the cancellation of four existing ordinary shares out of every five ordinary shares held by shareholders as at the close of business last Friday.

    With this, the total number of issued ordinary shares post capital reconstruction exercise will be 2.80 billion ordinary shares of 50 each while a total of 11.2 billion ordinary shares of 50 each will become cancelled and unissued.

    The Nigerian Stock Exchange (NSE) stated that it will place trading in Sunu Assurances’ shares on suspension effective today.

    The company had stated that the purpose of the share capital reduction was “to allow for the issuance of new ordinary shares by way of a rights issue and private placement, in order for the company to comply with the recently revised share capital requirement by the National Insurance Commission (NAICOM) for insurance companies”.

    The company explained that the share capital reconstruction was adopted as the more efficient approach to creating room for new equity capital issuances.

    “The share capital reconstruction will lead to the cancellation of 11.2 billion ordinary shares and result in an increase in the share price to N1. This will enable the rights issue, private placement and any subsequent equity capital raising to be priced above the nominal value of 50 kobo,” the company stated.

    According to the company, the shortfall between its paid up capital and NAICOM’s new capital requirement of N10 billion for non-life insurance companies was N7.71 billion as at September 30, 2019.

    The company stated that it is exploring a recapitalisation plan to augment the shortfall ahead of the December 30, 2020 deadline for compliance with the new minimum capital base.

    NAICOM had, in May lasat year, released new capital requirements for insurance businesses with a 13-month compliance period for operators to shore up their minimum capital base to the required level.

    The minimum paid-up share capital of a life insurance company was increased from N2 billion to N8 billion, non-life insurance from N3 billion to N10 billion, composite insurance from N5 billion to N18 billion while re-insurance companies were directed to raise their capital base from N10 billion to N20 billion.

    SUNU Assurance Group had in 2016 acquired 60 per cent equity of the former Equity Assurance Plc and renamed the company SUNU Assurances Nigeria Plc. SUNU Assurance has operations in not less than 12 Franco-phone African countries and the acquisition of Equity Assurance was a major entry strategy into the Anglo-phone countries.

     

  • NSE places Law Union and Rock Insurance on full suspension

    NSE places Law Union and Rock Insurance on full suspension

    The Nigerian Stock Exchange (NSE) at the weekend placed Law Union and Rock Insurance Plc on full suspension, implying a total cessation of trading activities on the shares of the company.

    With full suspension, there will be no trading, including buying and selling, in the shares of the company and it will also not witness any price change. The full suspension took effect on Friday, October 16.

    The NSE explained that the suspension was necessary to prevent trading in the shares of the company beyond the effective date of the acquisition of the company.

    The effective date is the day the Certified True Copy (CTC) of the court sanction of the scheme of arrangement for Kanuri LUR Limited to acquire the entire issued and fully paid ordinary shares of 50 kobo each in Law Union held by the scheme shareholders was registered with the Corporate Affairs Commission (CAC).

    The Exchange noted that the scheme of arrangement for the acquisition will result in the delisting of Law Union from its Daily Official List.

    The NSE had earlier approved application by Law Union & Rock Insurance seeking voluntary delisting of its shares from the main board of the Exchange.

    The voluntary delisting was part of ongoing acquisition of Law Union by Anglophone West Africa private equity firm, Verod Capital Management.

    Verod had offered N5.3 billion for the acquisition of the entire share capital of Law Union in a major bid that further opened up mergers and acquisitions in the  insurance industry.

    The board of Law Union had confirmed that it received a binding offer from Verod Capital seeking to acquire the 4.296 billion ordinary shares of 50 kobo each of Law Union at N1.23 per share. The offer thus valued Law Union at N5.28 billion.

    The offer price of N1.23 per share represented a premium of 208 per cent on the 60-day volume weighted average share price and 140 per cent on Law Union’s closing share price on February 26, 2020.

    Verod Capital focuses on investing equity and equity-linked capital in growth companies across various consumer-driven sectors in Nigeria, especially the insurance sector.

    Insurance companies are in a hot race to raise new equity capital to meet new minimum capital requirements for various insurance functions as directed by NAICOM. NAICOM had in May 2019 released new capital requirements for insurance businesses with a 13-month compliance period for operators to shore up their minimum capital base to the required level.

    The minimum paid-up share capital of a life insurance company was increased from N2 billion to N8 billion, non-life insurance from N3 billion to N10 billion, composite insurance from N5 billion to N18 billion while re-insurance companies were directed to raise their capital base from N10 billion to N20 billion.

     

  • Investors stake N15.9b on three top-tier banks

    Investors stake N15.9b on three top-tier banks

    By Taofik Salako, Deputy Group Business Editor

     

    Nigeria’s two largest banks and largest pan-African banking group were the main drivers of activities at the stock market as investors sought to lock in positions into value stocks ahead of the third quarter earnings.

    Nigeria’s largest financial institution, by market capitalisation, Guaranty Trust Bank (GTBank), the second largest bank, Zenith Bank and pan-Africa banking group, United Bank for Africa (UBA) were the three most active stocks at the stock market, accounting for more than 45 per cent of turnover during the week.

    Trading report at the weekend showed that the three most active stocks accounted for 885.515 million shares worth N15.88 billion in 6,308 deals, representing 45.30 per cent and 69.11 per cent of the total equity turnover volume and value.

    The banks belong to the exclusive list of Nigerian banks that traditionally pay dividends twice a year. GTBank, Zenith Bank and UBA had recently paid interim dividends based on their first half results. The six-month results had shown steady outlook, despite the adverse impact of the coronavirus on corporate earnings.

    Total turnover at the Nigerian Stock Exchange (NSE) stood at 1.96 billion shares worth N22.98 billion in 22,844 deals last week as against 3.14 billion shares valued at N35.37 billion traded in 35,099 deals two weeks ago.

    The bank-led financial services sector retained its traditional most active position on the activity chart with a turnover of 1.65 billion shares valued at N18.82 billion in 13,050 deals; representing 84.29 per cent and 81.92 per cent of the total equity turnover volume and value. The conglomerates sector occupied a distant second position on the activity chart with 99.313 million shares worth N87.823 million in 553 deals. The consumer goods sector placed third with a turnover of 60.57 million shares worth N991.19 million in 3,269 deals.

    Benchmark price indices at the stock market closed positive for the fourth consecutive week, with average return of 0.86 per cent, equivalent to net capital gain of N128 billion for the week. This nudged the average year-to-date return to 6.77 per cent.

    Aggregate market value of all quoted equities on the NSE rose from the week’s opening value of N14.852 trillion to close weekend at N14.980 trillion. The All Share Index (ASI)- the value-based common index that tracks all share prices at the NSE, closed weekend higher at 28,659.45 points as against its week’s opening index of 28,415.31 points.

    Sectoral indices showed that the positive overall market situation was driven by widespread bargain-hunting, especially within the banking, oil and gas and consumer goods sectors. The NSE Banking Index closed the week with average return of 2.89 per cent. The NSE Oil and Gas Index trailed with 2.40 per cent. The NSE Consumer Goods Index posted average return of 1.87 per cent. The NSE Industrial Goods Index inched up by 0.24 per cent. The NSE 30 Index- which tracks the 30 largest companies, rose by 1.07 per cent. However, the NSE Insurance Index dipped by 0.68 per cent.

    There were 35 gainers against 23 losers last week as against 53 gainers and 14 losers recorded in the previous week. Eterna recorded the highest gain, in percentage terms, of 34.99 per cent to close at N4.90. International Breweries followed with a gain of 12.92 per cent to close at N5.33 while Cadbury Nigeria rose by 12.59 per cent to close at N8.05 per share.

    On the negative side, E-Tranzact led with a drop of 26.38 per cent to close at N1.73. Portland Paints and Products Nigeria followed with a drop of 10.31 per cent to close at N2 while Consolidated Hallmark Insurance declined by 8.11 per cent to close at 34 kobo per share.

    Also traded during the week were a total of 701,543 units of Exchange Traded Products (ETPs) valued at N6.051 billion in 44 deals compared with a total of 1.051 million units valued at N4.847 billion traded in 33 deals two weeks ago.

    In the debt segment, a total of 19,475 units valued at N23.752 million were traded in five deals compared with a total of 79,691 units valued at N108.241 million traded in 23 deals penultimate week.

     

  • Buhari allocates N509b for pension liabilities

    Buhari allocates N509b for pension liabilities

    By Omobola Tolu-Kusimo

    President Muhammadu Buhari has appropriated a total of N501.19 billion to offset pension liabilities in the 2021 budget proposal.

    He made this known during his 2021 Budget Speech: Budget of Economic Recovery and Resilience at The Joint Session of the National Assembly, Abuja last Thursday.

    He stated that the budget would take care of pensions, gratuities and retirees’ benefits.

    The Federal Government,   the employer of civil and public servants, is owing retirees under the Contributory Pension Scheme (CPS) and Defined Benefit Scheme (DBS). They include the Nigeria Police, the Nigeria Custom Service, Nigeria Immigration Service, Nigeria Prisons Service, Civil Service and other parastatals.

    Findings by The Nation, however, shows that the budgeted amount is below what is required to settle accrued liabilities for retirees under the CPS and long-standing liabilities of retirees under the DBS.

    Read Also: Buhari congratulates Akeredolu over reelection

    The liabilities range from 18 per cent pension contributions that has accrued for four years, accrued pension rights of up to one year and 33 per cent accrued rights of many years.

    At present, the Federal Government is owing pension benefits of CPS retirees that retired since October.

    Buhari said: “An aggregate expenditure of N13.08 trillion is proposed for the Federal Government in 2021. This includes N1.35 trillion spending by government-owned enterprises and grants and aid funded expenditures of N354.85 billion.

    “For 2021, the proposed N13.08 trillion expenditure comprises non-debt recurrent costs of N5.65 trillion; personnel costs of N3.76 trillion; pensions, gratuities and retirees’ benefits of N501.19 billion; overheads of N625.50 billion; debt service of N3.124 trillion; statutory transfers of N484.49 billion; and sinking fund of N220 billion to retire certain maturing bonds.”

  • WACT inaugurates $15m equipment at Onne Port

    WACT inaugurates $15m equipment at Onne Port

     

     

    The West Africa Container Terminal (WACT) has inaugurated two new state-of-the-art Mobile Harbor Cranes (MHCs) and two Reach Stackers worth $15 million at the Onne Port, Rivers State.

    With the acquisition, WACT boasts of four MHCs.

    At the inauguration,  WACT Managing Director, Mr. Aamir Mirza, said the equipment were acquired as part of the terminal’s $100 million investment.

    “Our equipment and infrastructure upgrade are the key enablers for WACT to better serve her customers. Our cranes shall offer improved and higher productivity, which means shorter port stay of vessels, resulting in saving to our liner customers. We are able to handle the next generation and larger gearless vessels.

    “This investment will include the deployment of reefer racks having 600+ plugs, a new workshop, larger powerhouse and 20 Rubber Tyred Gantry (RTG) cranes. All of this will result in more efficient operations and shall enable customers to take delivery of their cargo much earlier,” he said.

    He added: “Our vision is to make WACT the gateway to East Nigeria and beyond. We believe this vision can be achieved much earlier if the government can support us by addressing some fundamental challenges like security risk because of piracy, clearance of overtime containers, improving roads and related infrastructure that connect Onne Port to the rest of Nigeria.’’

     

     

    The Comptroller-General of Nigeria Customs Service, Col. Hameed Ali (rtd), who was represented at the event by the Assistant Comptroller General in charge of Zone C, ACG Elton Edorhe, while reiterating the commitment of NCS to trade facilitation, said the deployment of the new Mobile Harbor Cranes and Reach Stackers by WACT would improve efficiency and aid quick release of cargo at the port, leading to increased revenue for the government.

    He said, “Modern Customs is concerned about trade facilitation around the world. The deployment of these cranes will mean efficiency. More containers will be brought in and handled proficiently and that will increase revenue generation to the Federal Government coffers through Customs.

    “Trade facilitation is a process that is all encompassing. It is not only for one organization. Every stakeholder must be involved. So, we are happy that WACT is doing their part by investing more and commissioning these new equipment.”

     

     

    The Managing Director of Nigerian Ports Authority (NPA), Hadiza Bala Usman, who was represented by the Port Manager of Onne Port, Dr. Abubakar Dantsoho, commended WACT for acquiring the new cranes, which he said would aid efficiency, improve productivity and ensure quick turnaround of vessels at the port.

    Also speaking at the event, the General Manager Operations and Technical, Oil and Gas Free Zones Authority (OGFZA), Mr. Ajayi Adekunle, who lauded the management of WACT for the acquisition of the additional cargo handling equipment, said despite the setback caused by the COVID-19 pandemic to businesses, WACT has remained committed to the realization of the objectives of the free zone.

    “In the last couple of years, WACT has demonstrated that our corporate objective of taking investments in the free zone to the next level is being achieved. The acquisition of these additional Mobile Harbor Cranes and Reach Stackers is remarkable given the serious setback that the coronavirus has brought to businesses in the free zone and the country.

    “This commissioning ceremony represents an important private sector contribution to the effort of the government to diversify and strengthen the national economy through the Economic Recovery and Growth Plan,” Adekunle, who represented the Managing Director of OGFZA at the crane commissioning ceremony, said.

    Several other stakeholders including the representatives of shipping companies, freight forwarders, community leaders in Onne and other government agencies, who attended the commissioning ceremony, were full of praises for WACT and its management team.

    WACT, which started commercial operation in 2006, is the first Greenfield container terminal in Nigeria to be built under a Public Private Partnership (PPP) model. Over the years, the company has grown to become the most efficient gateway to markets outside the Lagos area.

     

  • FACAN rallies to unban Nigeria from EU

    FACAN rallies to unban Nigeria from EU

    By Daniel Essiet

     

    THE President, Federation of Agricultural Commodity Associations of Nigeria (FACAN), Dr Victor Iyama, has urged for efforts to get Nigeria out of the European Union’s (EU) ban next year.

    In January 2013, EU suspended the imports of dried beans from Nigeria for one year. The ban was over the excessive use of chemicals by the nation’s farmers to control a pest, Maruca vitrata, from damaging crops on the field.

    Farmers were also found to be overusing chemicals and pesticides in preserving beans, without regards to human health.

    Again in mid-2015, the EU suspended the export of selected Nigerian agricultural produce into her member countries.

    The ban will end next year.

    Iyama said the association was working with exporters to identify the key challenges and provide possible solutions.

    The major impediments include meeting food safety standards and requirement for high-quality organic products which fetch better prices and are in high demand.

    He said the industry needed several interventions across the value chain, from availing land and provision of cold rooms, an export development fund as well as linkages to markets, among others.

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    He noted that the ban had  affected the economy, adding that there was the need to avoid future rejection of agricultural commodities.

    He pointed out that the association was doing its best to revert the situation.

    Iyama appealed that the Central Bank of Nigeria (CBN) to rethink its previous directive, especially its policy that compels exporters to remit dollars to the government and get paid in naira at the official exchange rate.

    Reacting to the CBN’s circular on export proceeds domiciliary account, Iyama noted that though the move by the CBN was aimed at ensuring prudent use of foreign exchange resources and the elimination of the incidence of over-invoicing, transfer pricing, double handling charges, among others, curtailing access of exporters to their repatriated proceeds, would in advertently limit competitiveness and hinder  growth.

    His words: “ the limitation of business activities of exporters goes contrary to the Federal Government’s Economic Policy on diversification in the promotion of non-oil export as this will negatively impact on the successes achieved in the agricultural sector,which Mr President holds very dearly.

    Having closed both the retail and wholesale auction windows through which currency is exchanged in Nigeria and directly, all exchange transactions to be carried out through the interbank, further attempt to regulate the access and ability of domiciliary account holders to deal with their hard earned lawful proceeds amount s to an unwanted incursion into business dealing of exporters ,which is outside the scope of the CBN.”

     

  • Bankruptcy looms for airlines, IATA warns

    Bankruptcy looms for airlines, IATA warns

    By Kelvin Osa-Okunbor

     

    THE world’s airlines are haemorrhaging at the rate of about $300,000 per minute or $13 billion monthly, which could force large swathes of the industry into bankruptcy within months, the International Air Transport Association (IATA) has warned.

    Its Director-General and Chief Executive Officer, Alexandre de Juniac, said with traffic levels set to remain stunted through next year, IATA said carriers will continue to burn cash next year, at a rate of $5 to $6 billion  monthly – even assuming that a Covid-19 vaccine is discovered.

    Lowering its estimates for revenue passenger-kilometres, the airline association  expects December traffic levels to be 68 per cent lower than last year, against a 55 per cent reduction that it forecast in July. It does not see sector profitability returning until 2022.

    Describing the crisis as growing longer and deeper than industry players imagined, Juniac said: “And the initial support programmes are running out. Today, we must ring the alarm bell again. If these support programmes are not replaced or extended, the consequences for an already hobbled industry will be dire.”

    Juniac said examining available cash and liquid assets of carriers in their six-month reports to the end of June, IATA found that on average airlines had enough funding to last just eight-and-a-half months, taking them to halfway through February 2021.

    Read Also: IATA: Airlines’ losses may exceed $84b

     

    Juniac said many carriers that are unable to raise cash from the markets face running out of liquidity far sooner than that.

    He said the number of airlines that have collapsed has so far been limited by around $160 billion in government support to the sector, such assistance has started to be withdrawn.

    Juniac said : “ At the heart of the problem is that while carriers have seen their revenues fall by around 80 per cent , costs have declined only 50 per cent , as aircraft and staff costs are difficult to reduce. This is why airlines burning through cash and still making significant losses,

    “Government support for the entire sector is needed . “The impact has spread across the entire travel value chain including our airport and air navigation infrastructure partners who are dependent on pre-crisis levels of traffic to sustain their operations.”

    IATA estimates that failure to invest in the sector not only threatens the aviation industry, but the 10 percent of global economic activity that is linked to it. According to statistics, aviation supports 46 million jobs across the world and $1.8 trillion in economic activity.

  • Abbey Mortgage Bank plans N3b new capital injection

    Abbey Mortgage Bank plans N3b new capital injection

    Abbey Mortgage Bank Plc plans to raise about N3.03 billion new equity funds from its shareholders.

    Regulatory filing at the weekend showed that the mortgage financial institution is seeking regulatory approval from the Nigerian Stock Exchange (NSE) to raise new equity funds through a rights issue.

    Abbey Mortgage Bank will be offering 3.69 billion ordinary shares of 50 kobo each at 82 kobo per share. The shares will be pre-allotted on the basis four new ordinary shares fr every seven shares held as at October 08, 2020.

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    Abbey Mortgage Bank had in February 2020 added N2.37 billion to its market capitalisation through the listing of 2.26 billion ordinary shares of 50 Kobo at N1.05 per share. The new shares arose from a private placement made to VFD Group Plc.

    With the additional shares, the total issued and fully paid up shares of Abbey Mortgage Bank increased from 4.20 billion ordinary shares of 50 kobo each to 6.46 billion ordinary shares of 50 kobo each.