The Nation Newspaper

Category: Equities

  • PZ Cussons woos global suppliers to Nigeria

    PZ Cussons woos global suppliers to Nigeria

    •Assures shareholders of sustained returns

    As part of its  commitment to local content development and reduction of import-dependent components of its operations, PZ Cussons Nigeria Plc has intensified efforts to woo its global suppliers to set up operations in Nigeria.

    Its Chief Executive Officer, Mr. Christos Giannopoulos, who spoke with newsmen during the visit of the directors and top management of the conglomerate to the Nigerian Stock Exchange (NSE), said the company has over the decades demonstrated its commitments to the Nigerian economy through its continuing investments and development of its domestic manufacturing capacity.

    One of the earliest companies in Nigeria, PZ Cussons Nigeria, was incorporated as a limited liability company in 1948. It became a public limited liability company in 1972 and was subsequently listed on the NSE in 1974.

    Chairman, PZ Cussons Nigeria Plc, Chief Kola Jamodu, who beat the gong to close the market for the day, assured all stakeholders of PZ Cussons’ commitments to delivering values to investors while supporting Nigeria’s national economic development.

    Giannopoulos said PZ Cussons believes that Nigeria has great prospects irrespective of the current challenges, which illustrated the recent investments and ongoing efforts to bring its global suppliers to Nigeria.

    According to him, the company is doing everything within its powers to attract its suppliers to set up their operations in Nigeria.

    He pointed out that the company imports majority of its raw material, noting that if the suppliers could set up operations in the country, it would reduce the cost of production and improve the bottom line.

    He noted that Nigeria has a lot of raw materials, which are not being optimised, adding that Nigeria would get greater values for its raw materials if it increases its ability to create as this would help reduce over dependence on import products.

    According to him, the company is working hard to reduce the amount of foreign goods that comes into the country, which is one of the reasons that it brought its associate companies and  secured 26 hectares of land, which allows it to produce palm oil in Nigeria.

    “PZ has brought its associate companies and got 26 hectares of land plantation, which allows us to produce palm oil in Nigeria. Nigeria was once the biggest palm plantation in the world. So, we are playing our part to be able to reduce the amount of foreign goods that Nigeria requires. The rest of our businesses are at growth stage and the old brands always looking to find the opportunities with the consumers as their tastes are changing,” Giannopoulos said.

    He assured shareholders that the company has been well-positioned to leverage on emerging opportunities in the industry to boost profitability and increase shareholders value.

    He noted that the fundamental of the company and investors’ confidence in the company remain strong, pointing out that PZ Cussons has been on NSE since 1974 and since then it has paid dividend every year.

    He urged the government to ensure stable operating environment for companies by implementing policies that allow existing and new companies to make long-term plan for investments and growth.

    “Business requires stability, the most important thing is for government to put in place policies or enforce policies for creating stable environment on a long-term basis,” Giannopoulos said.

  • Sterling Bank optimistic as core banking profit rises

    Sterling Bank optimistic as core banking profit rises

    Sterling Bank Plc rode on the back of improving internal efficiency to reduce funding costs and improve profitability of its core banking operations in the first quarter of 2016.

    Key extracts of the unaudited report and accounts of the Bank for the period ended last March 31, showed appreciable improvements in core underlying fundamentals, although macro-economic and industry headwinds subdued overall performance.

    The report indicated that net interest margin, which measures the profitability of a bank’s lending operations, improved to 8 per cent in the first quarter of 2016 as against 7.4 per cent recorded in the comparable period of 2015. The bank tightened grips on costs with cost of funds improving from 5.9 per cent in first quarter 2015 to 5.3 per cent in first quarter 2016.

    Major highlights showed steady performance with net interest income increasing by 24.7 per cent to N11.4 billion in 2016 as against N9.2 billion in 2015. This was driven by a 14.4 per cent decrease in interest expense resulting in a 940 basis points improvement in net interest margin to 56.9 per cent. However, profit before tax, on the face of it, declined by 30.6 per cent to N2.8 billion in 2016 as against N4.0 billion in 2015. But when adjusted for non-recurring items, which would have brought the 2015 figure to N2.7 billion, the 2016 figure represents a 3 per cent increase on fourth quarter 2015 and 2.4 per cent improvement over the same period last year. Also, while profit after tax declined by 35 per cent to N2.5 billion as against N3.9 billion in 2015, adjustment for non-recurring items would bring the 2015 first quarter figure to N2.6 billion. This depicts a marginal decline of 2.6 per cent.

    Outlining the bank’s outlook, Managing Director, Sterling Bank Plc, Mr. Yemi Adeola, said the bank adopted a cautious, but progressive approach to business due to the challenging macro-economic conditions.

    He noted that subdued crude oil prices, fuel and power supply disruptions, as well as significant foreign exchange shortages have persisted, increasing the cost of doing business and heightening the pressure on household income.

    He pointed out that as the nation’s inflation rate witnessed an uptick from 9.6 per cent in December 2015 to 12.8 per cent in March 2016, the resultant monetary tightening measures could further challenge the operating environment.

    With these, Adeola said the management of the bank prioritised balance sheet efficiency, cost efficiency and prudent credit risk management, which ensured that non-performing loan remained flat below the regulatory threshold of 5 per cent.

    “We are confident that our goals for 2016 will be met despite the subdued outlook for the Nigerian economy. Our optimism comes from the various investments focus on operating efficiency that the bank had made over the past year, which are now starting to pay off. Our plan for the year is to prioritise operating efficiency, ensure moderate loan growth, while continuing to diversify funding sources as our retail banking strategy matures,” Adeola said.

  • Wema Bank grosses N11.3b in Q1

    Wema Bank grosses N11.3b in Q1

    Wema Bank Plc grew its top-line by a modest 6.1 per cent to N11.3 billion in the first quarter as the commercial bank continued to grow its retail business in spite of the tough operating environment.

    Interim report and accounts of Wema Bank Plc for the three-month period ended March 31, 2016 released yesterday at the Nigerian Stock Exchange (NSE) indicated that gross earnings improved to N11.3 billion in first quarter 2016 as against N10.6 billion recorded in comparable period of 2015. Profit before tax stood at N505.33 million in 2016 as against N615.29 million in 2015. After taxes, net profit stood at N429.53 million as against N522.99 million. Earnings per share closed first quarter 2016 at 4.0 kobo compared with 5.0 kobo in first quarter 2015.

    Managing director, Wema Bank Plc, Mr. ‘Segun Oloketuyi said the bank has continued to grow its business as number of new accounts and card activations have increased by more than 50 per cent while deployment of alternative platforms have also grown by 15 per cent.

    He said the bank would remain focused on keeping its cost profile under check while gradually growing the asset portfolio where it sees optimal opportunities.

    “Despite headwinds, we believe that we will improve our 8.2 per cent growth in interest income over first quarter 2015, which will translate into improved net interest margins and consequently, improving profitability over the course of the year,” Oloketuyi said.

    chief financial officer, Wema Bank Plc, ‘Tunde Mabawonku, noted that while the bank’s trading income has not been immune from the larger macro headwinds, the bank’s diversification strategies have been yielding results as fee and commission income grew by 17.1 per cent to N1.35 billion in 2016 from N1.15 billion in 2015.

    “Our sustained commitment to optimising costs was underpinned by a 2.2 per cent decline in operating expenses to N5.14 billion from N5.25 billion in first quarter 2015 despite inflationary pressures,” Mabawonku said.

  • Shareholders approve N100b new capital raising for Access Bank

    Shareholders approve N100b new capital raising for Access Bank

    Shareholders of Access Bank Plc yesterday authorised the board of the bank to raise up to N100 billion in new capital as part of plan to optimise the balance sheet and capital structure of the bank.

    At the 27th annual general meeting in Lagos on Wednesday, shareholders authorised the bank to raise additional debt capital of up to N100 billion through the issuance of non-convertible loans, notes, bonds and any other instruments either as a stand-alone issue or by establishing a debt issuance programme.

    The resolution empowered the board of directors to undertake the new debt issue by way of a public offering, private placement, book building process, reverse call enquirer or any other method or combination of methods, in such tranches, series or proportions and at such dates, coupon or interest rates within such maturity periods and upon such terms and conditions as may be determined by the board of directors subject to obtaining the requisite approvals of the relevant regulatory authorities.

    The board of the bank explained that the new capital issue was in line with the strategic growth objectives and prudent risk management of the bank with the overall goal of enhancing the bank’s funding, capital base and profitability through an efficient capital structure.

    “This need is underscored by the growing scale of regulatory headwinds and economic realities which have further put demands on capital. This is further strengthened by the fact that from 1 July 2016, the Capital Adequacy Ratio for Systemically Important Banks (SIBs) is being increased from 15 per cent to 16 per cent,” the board stated.

    Shareholders also approved payment of a final dividend of N8.68 billion in addition to earlier interim dividend of N7.23 billion, bringing total dividend for the 2015 business year to N15.9 billion. The breakdown of the dividend recommendation indicates that shareholders will receive a final dividend per share of 30 kobo, in addition to interim dividend per share of 25 kobo, bringing total dividend per share to 55 kobo.

    Shareholders who spoke at the meeting generally commended the resilience of the bank in the face of macro and industry headwinds.

    National Coordinator, Independent Shareholders Association of Nigeria (ISAN), Sir Sunny Nwosu noted that the bank has remained resilient in the face of harsh operating environment.

    He said the performance of the bank was a pointer that the future is promising, urging the bank to improve on the dividend payouts in the coming years as it has all it takes to surpass other lenders in the country.

    Chairman, Access Bank Plc, Mrs. Mosun Belo-Olusoga assured on the prospects of the bank notwithstanding the changes in the macroeconomic environment.

    “The bank is in a position of strength for the future-we have a solid franchise that allows us to continue to succeed during difficult economic times. We have a conservative risk profile that has placed us in a position of advantage amidst the economic storm and we are investing for long-term growth, which will allow us to capitalise on opportunities as we eventually emerge from the downturn,” Belo-Olusoga said.

    Chief executive officer, Access Bank Plc, Mr. Herbert Wigwe said the bank remained committed to delivering value to its shareholders as it continues to maintain and sharpen focus on the execution of its strategy to create a large diversified bank with a strong retail base.

    “We are well-positioned to leverage promising market opportunities in target sectors and to enhance our digital banking capabilities, with the ultimate goal of delivering superior service to customers and sustainable returns to investors. Access bank will cautiously maximize its strong capital position to realise the full value of its network, with the aim of attaining strategic objectives,” Wigwe said.

    Key extracts of the audited report and accounts of Access Bank for the year ended December 31, 2015 showed considerable growth across the key indices. Gross earnings rose by 37.5 per cent from N245.38 billion in 2014 to close at N337.40 billion in 2015. Operating income rose by 39 per cent to N234.8 billion in 2015 as against N168.4 billion in 2014. Profit before tax grew by 44 per cent from N52.02 billion to N75.04 billion. Profit after tax improved by 53.3 per cent to N65.9 billion in 2015 as against N42.98 billion in 2014. Earnings per share thus improved from N1.85 in 2014 to N2.62 in 2015. Return on average equity (ROAE) improved to 20.4 per cent in 2015 as against 16.5 per cent in 2014.

  • Dangote Sugar Refinery’s shareholders get N6b dividend

    Dangote Sugar Refinery’s shareholders get N6b dividend

    Shareholders of Dangote Sugar Refinery (DSR) Plc yesterday approved the recommendation of the board of director to distribute a total of N6 billion as cash dividends for the 2015 business year.

    At the annual general meeting in Lagos, shareholders lauded the performance of the company in spite of the economic downturn noting that the dividend per share of 50 kobo underscored the commitment of the company to shareholders.

    Key extracts of the audited report and accounts of DSR for the year ended December 31, 2015 showed that total turnover rose from N94.86 billion in 2014 to N101.06 billion. Gross profit also improved from N18.63 billion to N20.73 billion. Operating Profit increased to N15.85 billion in 2015 as against N13.59 billion in 2014.

    Also, the company recorded a profit before tax of N16.55 billion in 2015, representing an increase of eight per cent on N15.27 billion recorded in 2014. After taxes, net profit however dropped marginally from N11.64 billion to N11.54 billion. Earnings per share followed the trend, dropping slightly from 97 kobo in 2014 to 96 kobo. Total assets rose to N102.62 billion in 2015 as against N92.80 billion in 2014.

    The highlights of the company’s operations in 2015 showed that season sugar production at Savannah was 6,610 tonnes, up from 6,333 tonnes in 2014. The full year refinery production at Apapa stood at 740,350 tonnes, down from 832,660 tonnes the previous year. Group sugar sales improved from 781,319 tonnes in 2014 to 782,120 in 2015. The company added 100 trucks to the fleet under its management.

    In his address, chairman, Dangote Sugar refinery (DSR) Plc, Alhaji Aliko Dangote, said the company remained committed  to delivering  superior returns to its shareholders as shown with the N6 billion dividend for the year ended December 31, 2015.

    He pointed out that the immediate past business year was a very challenging  year as the political transition and economic slowdown impacted consumer spending and the global oversupply of crude oil weakened the naira, leaving an average Nigerian consumer with less purchasing  power than in the past three to four years.

    He said directors of the company would continue to ensure prudent financial management in view of the company’s investment requirement for the backward integration project(BIP) and building of a sustainable financial future for the company.

    In his remarks, Acting Managing Director, Dangote Su) Plc, Abdullahi Sule said 2016 commenced on a good footing as the company continued to increase its market share while implementing various initiatives and projects towards the actualisation of its target within the next five years.

    “Achievement of the backward integration projects (BIP) targets remains our priority, and this will eliminate our reliance on foreign exchange as well as volatility of raw sugar prices, the highest single driver of our production cost,” Sule said.

    He expressed confidence that DSR can continue to  help Nigeria reach its near-term goal of sugar self-sufficiency by achieving its target of 1.5 million metric tonnes of refined sugar from locally grown sugar cane in the next 10 years.

  • Dangote Cement assures shareholders of better returns

    Dangote Cement assures shareholders of better returns

    Chairman, Dangote Cement Plc, Alhaji Aliko Dangote, has assured shareholders that the company would continue to deploy strategies to increase profitability in spite of the prevailing harsh operating climate. Dangote spoke at the company’s annual general meeting in Lagos yesterday.

    He said with the measures put in place, the foreign exchange volatility would not affect the operations of the company significantly, noting that other African plants of the group are operating maximally and yielding positive results to cushion the effect of the scarce foreign exchange in Nigeria.

    “We have good strategy in place; the volatility of the foreign exchange will not affect our operations. I am not an advocate of devaluation of our currency, even if that had happened; it would not have affected your company,” Dangote said to the applause of excited shareholders.

    He noted that diversification was key to the group’s strategy and that was why it has intensified its expansion.

    According to him, the way the company has gone about its expansion, it would appear it has over invested in capacity expansion in Nigeria given that it has 29 million metric tonnes per annum (mtpa) and another 12 million mtpa capacity plants under construction, but the fact remains that investments can never be enough in Nigeria.

    “The World Bank estimates that Africa needs to invest $337 billion a year on new infrastructure in power, roads, transport, and water and then spend a further $35 billion a year on operations and maintenance. This indicates the size of opportunity for a cement manufacturer operating in Africa,” Dangote said.

    Shareholders approved distribution of N136.3 billion as cash dividends for the year ended December 31, 2015. Breakdown of the dividend recommendation indicated that shareholders would receive a dividend per share of N8 for the 2015 business year, 33.3 per cent increase on N6 distributed for the 2014 business year. The dividend will become payable tomorrow.

    Key extracts of the audited report and accounts of Dangote Cement for the year ended December 31, 2015 showed that turnover rose by 25.56 per cent from N391.6 billion in 2014 to N491.72 billion in 2015. Gross profit increased by 16.63 per cent to N289.92 billion in 2015 as against N248.58 billion in 2014. Profit before tax inched up to N188.29 billion compared with N184.69 billion in the previous year. After taxes, net profit rose by 13.68 per cent from N159.50 billion in 2014 to N181.32 billion. Earnings per share thus increased by 15.2 per cent from N9.42 in 2014 to N10.86 in 2015.

    Dangote Cement grew its total assets to N1.11 trillion in 2015, 12.82 per cent above N984.72 billion recorded in 2014. Total liabilities however rose by 18.68 per cent from N392.84 billion to N466.22 billion. Shareholders’ funds also grew by 8.9 per cent from N591.9 billion to N644.7 billion.

  • Unilever Nigeria grows sales by 12.5% in Q1

    Unilever Nigeria grows sales by 12.5% in Q1

    Unilever Nigeria Plc grew its sales by 12.5 per cent in the first quarter of this year to N16.78 billion.

    Unaudited report and accounts for the first quarter ended March 31, this year showed that the company grew by 12.5 per cent from N14.9 billion in first quarter of last year to N16.78 billion in first quarter of this year. Cost of sales increased by 9.1 per cent to N10.7 billion for the period ended March 2016 from N9.8 billion recorded in the corresponding period in 2015. Net finance cost reduced by 35 per cent to N488 million for the three months ended March 31, 2016 compared to N757 million reported for the corresponding period in 2015.

    The report showed that net finance cost as a function of operating profit improved significantly to 26 per cent as against 47 per cent in first quarter 2015, reflecting sustained improvements in cash management. Profit after tax for the period increased significantly by 76 per cent from N590 million in first quarter 2015 to N1.04 billion in first quarter 2016.

    Unilever Nigeria assured stakeholders of continued focus on key business drivers to ensure sustained growth in the company’s operations to improve returns on investments.

    “Although the challenges in the operating environment are yet to ease, we have continued to see momentum behind recent initiatives taken by Management. We will continue to focus on driving cost efficiencies, growing market share across key categories and reinvesting behind our brands,” the company stated.

    The management of the company said they were addressing the issue of finance costs through a number of initiatives and efforts are on-going to sustain the improvements coming through in first quarter.

    Unilever Nigeria noted that the consistency in performance over the last two quarters demonstrates strong resilience and resolution to win despite the various economic challenges in the operating environment.

  • SEC extends capital market operators’ recapitalisation deadline to Dec 2016

    SEC extends capital market operators’ recapitalisation deadline to Dec 2016

    •Investors get 150 additional days for free e-dividend registration

    The Securities and Exchange Commission (SEC), Nigeria’s apex capital market regulator, has granted an extended window of 15 months to capital market operators that failed to meet initial recapitalisation deadline to comply with the new minimum capital requirements for their functions.

    Director General, Securities and Exchange Commission (SEC), Mr. Mounir Gwarzo, at a briefing yesterday in Lagos on the deliberations at the Capital Market Committee (CMC), said capital market operators that were unable to meet the September 30, 2015 initial deadline for new capital requirements have been given a 15-month grace to recapitalise.

    Also, operators who were disqualified for non-compliance or inability to substantiate claims of compliance by the audit firms will be allowed to come back to the market once they show evidence of compliance within the stipulated period.

    “We have given a grace of about 15 months from the initial deadline of September 30, 2015 to December 31, 2016. Operators who did not meet the requirement within this period will have their operating license cancelled” Gwarzo said.

    SEC had in December 2013 announced major increases in minimum capital requirements for capital market functions under a new minimum capital structure that was initially scheduled to take off by January 1, 2015. It however extended the deadline to September 30, 2015.

    Minimum capital base for broker/dealer was increased by 329 per cent from the existing N70 million to N300 million. Broker, which currently operates with capital base of N40 million, will now be required to have N200 million, representing an increase of 400 per cent. Minimum capital base for dealer increased by 233 per cent from N30 million to N100 million.

    Also, issuing houses, which facilitate new issues in the primary market, will now be required to have minimum capital base of N200 million as against the current capital base of N150 million. The capital requirement for underwriter also doubled from N100 million to N200 million. Trustees, rating agencies and portfolio and fund managers had their minimum capital base increased by 650 per cent each from N40 million, N20 million and N20 million to N300 million, N150 million and N150 million respectively. A  Registrar will now have a minimum capital base of N150 million as against the current requirement of N50 million. While the minimum capital base for corporate investment adviser remained unchanged at N5 million, individual investment advisers will have to increase their capital base by 300 per cent from N500,000 to N2 million.

    Gwarzo said SEC has also decided to extend the deadline for free e-dividend registration by 150 days.

    He said SEC would bear the cost of registration on behalf of any investor who registered within the 150 days grace period noting that at the expiration of the grace period, subsequent registration of an investor would attract a fee of N100.

    He noted that the e-dividend management system which was launched last year by the Commission in collaboration with the Central Bank of Nigeria (CBN) and Nigeria Interbank Settlement System (NIBSS) to enable investors have direct access to their dividends has enjoyed high level of compliance from the investing public.

  • Lafarge Africa launches new bid to take over Ashakacem’s minority shares

    Lafarge Africa launches new bid to take over Ashakacem’s minority shares

    Lafarge Africa Plc has secured the approval of the Securities and Exchange Commission (SEC) to proceed on a new tender offer to acquire the entire equity stakes held by minority shareholders in Ashaka Cement Plc. Minority shareholders hold 392.864 million ordinary shares in Ashaka Cement, representing 17.54 per cent of the entire issued share capital of the Gombe State-based cement company.

    The entire minority shareholdings were valued at N7.68 billion at Ashaka Cement’s closing price of N19.56 per share yesterday at the Nigerian Stock Exchange (NSE).

    A regulatory filing signed by company secretary, Ashaka Cement Plc, Zainab Umaru, filed at the NSE yesterday indicated that Lafarge Africa, which holds the majority equity stake in Ashaka Cement, had secured the approval of SEC to proceed with the tender offer.

    Already, the board of Lafarge Africa has notified the board of Ashaka Cement of its intention to proceed with the tender offer to all minority shareholders of the company.

    The tender offer, if successful, will make Ashaka Cement a wholly-owned subsidiary of Lafarge Africa Plc, and may lead to delisting of the cement company from the NSE. The board of Lafarge Africa was silent on the post tender-offer status of Ashaka Cement as well as the terms of this new tender offer.

    The latest tender offer is the second attempt by Lafarge to buy over the entire shares held by minority shareholders. It had earlier launched a mandatory tender offer (MTO) to acquire the 41.4 per cent equity stake held then in Ashaka Cement by minority shareholders immediately after the 2014 consolidation of Lafarge’s cement businesses in Nigeria and South Africa to form Lafarge Africa Plc. The MTO recorded partial success, reducing minority equity stakes in Ashaka Cement to 17.54 per cent, which Lafarge Africa now seeks to acquire.

    Following the consolidation of Lafarge’s businesses in Nigeria and South Africa into Lafarge Africa, Lafarge Africa had acquired 58.61 per cent majority equity stake in Ashaka Cement. The majority equity stake was previously held by Lafarge Nigeria (UK) Limited. The acquisition was done through a block trade at the NSE.

    The acquisition thus triggered the mandatory tender offer (MTO) provision of the Section 131 of the Investment and Securities Act (ISA) and Rule 445 of SEC, which make it mandatory for any institution or person that acquires at least 30 per cent of a company to make an MTO to other minority shareholders.

    Under the terms of the MTO, Lafarge Africa offered 261.58 million ordinary shares and N1.85 billion as equity and cash consideration for the takeover of the 41.39 per cent equity stake held then by minority shareholders in Ashaka Cement.

    Lafarge Africa offered 57 ordinary shares of 50 kobo each in exchange for 202 ordinary shares of 50 kobo each of Ashakacem. In addition, Lafarge Africa paid N2 for every acquired Ashakacem’s share.

    Minority shareholders then held 927.009 million ordinary shares of 50 kobo each in Ashakacem, representing 41.39 per cent of the cement company’s total outstanding shares.

    Lafarge had on July 9, 2014 received shareholders’ approval to consolidate its cement businesses in Nigeria and combine these with South African operations to create a leading sub-Saharan building materials giant to be known as Lafarge Africa Plc. The consolidation was done by transferring Lafarge’s assets in South Africa and Nigeria to Lafarge Cement Wapco Nigeria Plc.

    Under the transaction, Lafarge Group transferred its direct and indirect shareholdings in Lafarge South Africa Holding Limited of 72.4 per cent and its equity stakes in three other cement companies in Nigeria-United Cement Company of Nigeria Limited, 35 per cent, Ashaka Cement Plc, 58.61 per cent and Atlas Cement Company Limited, 100 per cent to Lafarge Wapco for a cash consideration of $200 million and the issuance of some 1.4 billion Lafarge Africa shares to the Lafarge Group.

  • Fed Govt to revitalise commodity exchange

    The Federal Government plans to revitalise commodity exchange in Nigeria as part of a comprehensive development programme for the nation’s agricultural sector.

    Vice President Yemi Osinbajo made this known last weekend at the First National Economic Forum organised by Vintage Press Limited, the publishers of The Nation Newspapers, in collaboration with CEEDEE Resources at Lagos Airport Hotel, Ikeja, Lagos.

    Osinbajo said the government would develop the commodity exchange system to support the development of the agricultural sector.

    He said government would revitalise the Abuja-based Nigeria Commodity Exchange (NCX) and other infrastructure and operators in the whole commodity exchange value chain.

    According to him, a functional commodity exchange would ensure that Nigerian farmers receive good prices for their products.

    Osinbajo said the government also plans to introduce a Minimum Price Guarantee scheme under which the government will set floor prices at which it would buy agricultural produce from farmers.

    He noted that a Minimum Price Guarantee scheme would encourage the farmers to scale up their production to their highest capacity with the assurance that government will be ever ready to buy the farm produce at guaranteed prices.

    It should be recalled that the NCX had introduced a pilot electronic warehouse receipt system (e-WRS) in 2014. Under the e-WRS, farmers will be able to place their commodities at an NCX-accredited warehouse in different parts of the country and will be issued an electronic receipt stating details such as commodity type, quality and quantity, owner and other relevant information. The depositor will have the choice of using the receipt as collateral to obtain bank loans or for trading on the Exchange. Another option is to keep such commodities in the warehouse until their prices stabilise or appreciate.

    The new initiative would encourage the provision of standard storage facilities for operators in the agricultural value chain and make the warehouse receipts a prime tool of trade while facilitating access to finance. The e-WRS is also expected to strengthen small scale farmers and agro-allied businesses while creating jobs and sustainable economic growth.