Afrinvest West Africa has outlined investment outlook for 2023 and how investors can explore the opportunities and guide against threats expected in the new year.

Speaking during the investor parley held on Wednesday in Lagos with theme: ‘Soft or Hard Landing’, Group Managing Director, Afrinvest West Africa, Ike Chioke, said the event was to engage with clients on the 2023 outlook from the investment perspective.

He said that issues around inflationary trend, Covid-19, commodity prices, Russia and Ukraine war, among others are key considerations in investing in the new year and investors have to be guided to explore opportunities presented by these key events around the world.

“These happenings have made investment experts come together to look at our own crystal ball of what we see from an investment perspective next year. So, this forum is just to engage with clients, asset managers, pension funds managers, mutual funds managers to engage and compare notes on what we do,” he said.

According to Chioke,  Afrinvest Consulting manages the investment research unit, and its fixed income, equities and digital space experiences put it in a good position to advise on the investment in 2023.

“The interaction is giving us the rationale to talk to our clients to tell them to be well positioned for the market come 2023.

We are saying- Is it going to be a hard landing, or soft landing? In either scenario, investors need to be ready and decide when to enter the market and when to exit.” He stated.

He explained that it is one thing to enter into the market, and another thing to have good returns and make some profit for the year. “So, 2022 is pretty much done, we are looking at 2023 and what it portends for investors. I think that from our perspective from the forex point of view, we still have a complex exchange rate policy in our view, with multiple windows through which investors can access dollars,” he said.

Chief Business Officer, Optimus by Afrinvest, Ayodeji Ebo, said that a high interest rate environment presents opportunities to investors.

He said that it may present a negative position to the borrower but looking at it from the investor’s perspective, it means higher returns, which will reduce the bleeding that most investors suffer as a result of higher inflation.

“So, we know where the interest rate was in the early part of this year, but we see that that gap is reducing. The negative real return on investment is reducing. So, we believe that from the fixed income angle, risk free investment such as the treasury bills presents opportunities,” he stated.

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He said such instruments will present higher returns to investors, remain safe because the government will not default on its obligation.

“We believe that investors are safe in investing in government instruments and blue chip commercial papers. From the equity’s perspective, there are still a lot of volatilities, so there is that negative relationship between the fixed income and the equities which is normal. The equities become less attractive when the fixed income interest rate is going up and is attractive,” he disclosed.

Ebo said investors can also look at it from a dividend yield perspective which is the return on investment.

He said that for investors that go through the conservative approach, dividend yields have increased to an average of about 12 to 15 per cent for the stock as a result of the decline in prices.

“When you look at the financial performance of the companies, if they sustain last year’s dividend relative to current price, the yield will be close to 15 per cent. So that’s another opportunity that investors can explore,” he stated.

Encouraging more people to invest their funds, Ebo said that inflation is real, and reduces people’s purchasing power.

“So even if the interest or the return you’re getting on your investment is not as much as inflation, doing nothing will make you worse off. By investing, you are likely to reduce the impact of inflation on your savings and investments,” he stated.

Managing Director, Afrinvest Consulting, Abiodun Keripe, said the end goal of the event is to intimidate market participants both at the buy and sale sides, with some of the trends in 2022 and provide insight and perception about 2023 in terms of how to allocate portfolio, strategise and plan for the investment climate in 2023.

He said the platform is to tell the average Nigerian to be very cautious because we are basically going into an election year where there will be some sort of elevation in uncertainties.

Keripe said that investment decision making can be influenced by so many variables, hence the need for investors to be cautious about how to invest.

He said although inflation is running far ahead of returns, that should not deter investment. “Assuming you are able to make an investment where you earn between 10 to 20 per cent, what that means is you have been able to cut down your actual cost of living by 10 per cent. In real terms, your exposure to inflation is moderated by the extra income from investing, which is more important than you just taking inflation 100 per cent, “ he added.

Also speaking, Chief Investment Officer, Afrinvest Asset Management Limited, Robert Omotunde, said that in terms of diversifying your portfolio from a currency perspective, it is one of the critical strategies that investors need especially in an environment where inflation is hyper, we talk about hyperinflation within countries.

Such a move, he said, would enable investors to beat inflation and make good returns on their investments.

Although there are laws within the country that prevent dollarization of the economy to avoid putting pressure on the local currency, for investors with dollar inflows, such investment is advisable.

“It makes sense to take advantage of dollar investment opportunities for investors with dollar inflows. There are a number of portfolios or opportunities that you can take in different asset classes,” he said.

According to Omotunde, there is no over emphasizing the point that investors that are going to beat inflation, and get superlative return, more so as 2023 beckons, such investors need to consider diversification by currency and US dollars is a major currency diversification that we preach.

 

Interswitch has partnered with the Committee of e-Business Industry Heads (CeBIH) to host the 2022 CeBIH conference tagged ‘Leveraging Ecosystem Synergy to Combat Fraud’. 

The one-day conference, which drew a wide array of stakeholders from Nigeria’s financial services sector, was aimed at charting the course for mitigating fraud in the payments soace, and securing Nigeria’s payments ecosystem.

The collaboration between Interswitch and CeBIH underscores Interswitch’s commitment to spearhead conversations around payments especially with its recent efforts around the innovative solutions it provides to curb fraud associated with e-payments.

According to financial reports culled from Nigerian banks in first half of 2022, three tier-one banks recorded over 26,877 fraud cases in the first six months of the year. This figure recorded, represented a 56.45 percent decline from the record between June and December 2021.

Reiterating the company’s focus on supporting and partnering with platforms that share in its vision to foster a greater, more inclusive ecosystem in Nigeria and on the African continent, Vincent Ogbunude, MD, Payment Tokens (Verve) at Interswitch, said, “Now is the time for us as leaders in the payment infrastructure space to collaborate and explore ways to take full advantage of the current technological revolution to reduce gaps that hold back truly inclusive and sustainable development in our sector, including the ubiquitous monster called fraud/cybercrime. Indeed, one of those key solutions we rolled out this year (Fraud-As-A-Service) is well aligned with the core theme of this year’s CeBIH conference.

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Griffith Ehebha, Executive Vice President, Risk & information Security, Interswitch Group, also speaking during a panel session at the conference stated that if appropriate measures are put in place, fraud can be minimally reduced in the financial services industry.

He said “To mitigate fraud, Interswitch focuses on ensuring operational efficiencies, daily reconciliation, and tightened internal controls. While the issue of standardization is often taken for granted in many organisations, it is important that we maintain global standards in safeguarding our customers and businesses from fraud. This thinking forms the bedrock on which our products and solutions are built. We take pride in our automated systems, which are built in a way that it is able to detect any form of fraud,” he said.

While addressing attendees at the event, Celestina Appeal, Chairman, CeBIH said “The focus of this year’s conference is apt, considering the increase in volume and value of fraud incidents which seeks to undermine our collective efforts as an industry. The theme also underscores a major focus for the current leadership of CeBIH which is an effective combat against fraud through collaboration with all stakeholders, be it public or private sector.”

Platforms such as the CeBIH conference provide Interswitch and other industry players the opportunity to engage with key stakeholders and collaborators from the financial system with a view to improving their offerings to customers amid market demands, global trends, and insights from the operating environment.

The Securities and Exchange Commission (SEC) has reiterated its commitment to further create enabling market for the debt market in order to boost investors’ participation.

The Director-General, SEC, Mr Lamido Yuguda, stated this at the Capital Market Correspondents Association of Nigeria (CAMCAN) annual workshop held in Lagos.

The theme of the workshop was: Nigeria’s Public Debt and the Capital Market.

Yuguda who was represented by the Executive Commissioner, Operations, SEC, Mr Dayo Obisan, said the apex capital market regulating body is engaging the Minister of Budget and Finance, Mrs Zainab Ahmed, to create a level-playing field for debt market.

“By nature, the debt instrument is low risk,” he said.

Yuguda said that the commission would continue to fulfil its mandate of protecting investors and creating an enabling environment for market operators.

The Divisional Head, Business Support Services, Nigerian Exchange Limited (NGX), Mrs Irene Robinson-Ayanwale, in her goodwill message, commended CAMCAN for selecting the theme for the 2022 workshop.

Robinson-Ayanwale said the debt capital market is dear to the Exchange.

She acknowledged the support the Debt Management Office (DMO) has granted to the Exchange over the years.

“Exchange always visits the DMO for different proposals and they are always granted. We hope the joint collaboration and support will continue because it is very key to the debt capital market,” she added.

Mr Charles Egbunonwo who represented the Chairman, Association of Securities Dealing Houses of Nigeria (ASHON), Mr Sam Onukwue, said the theme selected was a topical issue in Nigeria’s economy.

According to him, “We are all aware of what is happening in terms of revenue and growing debts level in the economy.”

Also speaking, the 1st Vice President, the Chartered Institute of Stockbrokers (CIS), Mr Oluropo Dada, who represented the President, Mr Oluwole Adeosun, noted that there was nothing wrong with government borrowing.

In his words, “If the government does not borrow again, how do I sustain my profession? We have issuers that secure these securities and trading platforms.

“Without trading platforms, we can’t have stockbrokers. So, there is nothing wrong in government borrowing. The issue all around the world is whether these debts are sustainable.

“If our debt-to-GDP is doing well, what about service ratio to revenue that is over 90 per cent? What happened to the GDP?

“We seem to be comparing ourselves to big economies and the market capitalisation of five companies in the US is larger than the entire GDP of Africa.

“Why are we comparing ourselves to bigger economies? We cannot compare ourselves to the US and other bigger economies because there are some fundamental issues. The fundamental issue is the role of government to provide an enabling environment.

“Provide infrastructure, security among other things. If the government does not solve the issue of enabling the environment, it will be difficult to solve our problem of revenue and debt service.”

Africa’s richest man, Aliko Dangote has bagged a lifetime achievement award from the Nigeria Employers Consultative Association (NECA), the umbrella body of employers in the Organised Private Sector (OPS) in the country.

It was a night of honour for Dangote during the 2021 Employers Annual Excellence Award held in Lagos as his pan-Africa conglomerate, Dangote Industries Limited (DIL) was named the “Best Company in the Chemical and Non-Metallic Products Sector”.

The awards were received on the industrialist’s behalf by a team of top management Officers led by the Group Executive Director, Strategy, Portfolio Development & Capital Projects, Mr. Devakumar Edwin.

President, Nigeria Employers Consultative Association (NECA), Mr. Taiwo Adeniyi said Dangote was recognised for his huge contributions to nation building and economic development through his various investments and the attendant job creation opportunities.

He described the business magnate as a torch-bearer in the private sector and commended his doggedness in investing in sectors that are capable of improving the nation’s economic wellbeing and transition from importers to net exporters.

Adeniyi explained that the Employers Excellence Awards meant to celebrate outstanding contributions of enterprise to national development are geared towards promoting and encouraging best practices in corporate performance, people management and industrial relations practices amongst employers in Nigeria.

“The annual award provides a platform for identifying, ranking and celebrating the resilience, doggedness and outstanding performance of employers in Nigeria.

“It is to recognise and publicly award enterprises that have exhibited excellence in leadership, governance, innovation, corporate performance and human resource management (HRM) amongst others and provide a platform for discussion and agenda setting on the need to embrace best practices in corporate performance, people management and industrial relations through a well branded, presented, and organised event.

“This annual event equally provides feedback to participating employers on their status regarding attainment of best practices in corporate performance, people management and industrial relations,” Adeniyi said.

Edwin while receiving the award described NECA as a dispassionate organisation that promotes leadership, good governance, innovation, productivity and corporate performance, adding that Dangote cherishes the award coming from a quarter like NECA.

“NECA continues to remain a partner in progress, rewarding deserving companies for their contribution to national development.  The Dangote Group will continue to contribute its quota to nation building and promote responsible business all sectors we operate,” Edwin said.

He said the Dangote Group’s effort in addressing Africa’s agricultural and energy crisis included the bold step in constructing the second largest fertiliser complex in the world, a 1,100km sub-sea gas pipeline, and the multi-billion dollar 650,000 barrels-per-day refinery.

Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, who was represented by the Permanent Secretary, Ministry of Finance, Mr. Nebolisa Anako, praised the employers’ body for providing a platform for identifying, ranking and celebrating the resilience, doggedness and outstanding performance of employers in Nigeria.

Other winners in various categories include British American Tobacco (BAT) in Food, Beverages and Tobacco sector; TGI Group in Agro & Agro Allied Services; Cadbury in Food and Beverage Food Sector; while Nestle won the Award for Innovation and People Centric Culture; Fidson won an award for the Pharmaceutical sector, and Nigeria Foundry won in the Metallic/ Steel Sector.

Dangote Group, headed by global philanthropist, Aliko Dangote has a presence in 10 African countries, providing employment for tens of thousands of young Nigerians and Africans.

Accurate and complete financial statements are necessary to sustain investors’ confidence in the capital market.

Executive Commissioner, Legal and Enforcement, Securities and Exchange Commission (SEC), Mr. Reginald Karawusa yesterday said that with the plethora of Ponzi schemes plaguing the nation, accurate financial statements are essential for the vitality of financial markets and by extension the economy.

According to him, once investors no longer have confidence in the accuracy and completeness of companies’ financial statements and other disclosures, they will naturally be unwilling to invest, and the financial markets will certainly suffer as is currently experiencing in the country.

Karawusa spoke during a training on internal controls over financial reporting, an implementation of Section -60-63 of the Investment and Securities Act 2007, organised by the SEC in collaboration with the Nigeria Capital Market Institute (NCMI). The training commenced yesterday in Lagos.

He noted that following the approval of the framework, it became apparent that its implementation would require extensive improvements in the internal processes of some reporting entities leading to additional responsibilities placed on certain key persons within the entities.

He added that it was decided that efforts would be made to engage with companies and sensitize identified role holders on their responsibilities under the framework.

“As you may recall, the outbreak of accounting scandals in the 1990s and corporate frauds of the early 2000s highlighted the need for the development of a coherent framework of systems of control and policies to identify, measure, mitigate and disclose risks.

“Securities regulators in a number of jurisdictions acted in lockstep with the United States by introducing requirements that would strengthen controls within companies and enhance the quality financial reports issued by such companies. In line with this global effort, the Federal Government provided under Sec. 61(1) of the Investment and Securities Act 2007 that “a public company shall establish a system of internal controls over its financial reporting and security

of its assets and it shall be the responsibility of the board of directors to ensure the integrity of the company’s financial controls and reporting.

“The International Organization of Securities Regulators (IOSCO) has noted that Internal Controls are intended to ensure fulfilment of corporate’s goals. They also ensure an efficient deployment of corporate resources and assets, avoiding and mitigating operational deviations that could affect business continuity and the achievement of company’s goals.

“Some of such boards lacked effective risk and audit committees, where members ought to have challenged management’s approach to risk. These officers neither have the means to ensure that board decisions and policies were effectively put in place let alone to scrutinize decisions collectively taken,” Karawusa said.

He disclosed that in response particularly to corporate scandals of the 1990s/early 2000s, the United States passed the Sarbanes-Oxley Act of 2002 which introduced significant auditing and financial regulations for public companies as safeguards to protect shareholders, employees and other stakeholders from accounting errors and fraudulent financial practices.

Managing Director, Nigeria Capital Market Institute (NCMI), Dr Emomotimi Agama said that the starting point to evaluate the sufficiency of an ICFR program should be with a financial statement risk assessment.

“The risk assessment, which includes specific financial reporting objectives and identification of risks to achieving those objectives, answers these fundamental questions: Which controls are necessary to address the company’s risks? How many controls does the company need? What is “just enough” for the company’s ICFR programme?

“A risk assessment that integrates the right people, processes, tools, and techniques serves to identify the relevant risks of material misstatement (ROMMs). The risk assessment also includes the selection of controls and the evaluation of the design of the control, It’s through the risk assessment process that a company can report with confidence the number and types of controls necessary to have an effective ICFR system,” Agama said.

He said management’s focus on ICFR should start with determining whether the company’s risk assessment process is sufficient to identify and assess the risks to reliable financial reporting, including changes in those risks.

He listed proactive steps management can consider to include: refreshing the risk assessment program to incorporate the right people, processes, and technologies to unlock the hidden value.

He said integrating data analytics and visualization to improve the quality of the data analysed to support robust risk identification and report results succinctly to key stakeholders.

According to him, this, in turn, can rationalize risks of material misstatement to a level of granularity to focus on what could truly be a material misstatement.

“In all of this, education is essential and the essence of this program is to provide that education to help companies comply with Sec 60-63 of the ISA 2007,” Agama said.

After rallying N1.7 trillion last week, Nigerian equities opened this week on a profit-taking spree as investors sought to lock in recent capital gains.

Benchmark indices at the Nigerian Exchange (NGX) yesterday indicated average decline of 0.25 per cent, equivalent to net loss of N65 billion.

The All Share Index (ASI)- the common valued-based index that tracks share prices of all quoted equities at the NGX, dropped by 0.25 per cent to close at 47,436.45 points as against its opening index of 47,554.34 points. Aggregate market value of all quoted equities also declined from its opening value of N25.901 trillion to close at N25.837 trillion.

With more decliners than advancers, the negative overall market situation was due to widespread profit-taking transactions across the sectors.

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There were 15 gainers to 17 losers. Beta Glass led the losers’ chart by 9.90 per cent to close at N39.60. McNichols Plc followed with a decline of 9.68 per cent each to close at 56 kobo. SCOA Nigeria  lost 9.40 per cent to close at N1.06. Jaiz Bank dropped by 6.82 per cent to close at 82 kobo while Coronation Insurance dipped by 5.71 per cent to close at 33 kobo per share.

On the positive side, Prestige Assurance recorded the highest price gain of 9.30 per cent to close at 47 kobo. NEM Insurance followed with a gain 9.22 per cent to close at N4.50. Courteville Business Solutions rose 8.70 per cent to close at 50 kobo. Thomas Wyatt Nigeria rose by 8.33 per cent to close at 39 kobo while unity Bank chalked up 7.55 per cent to close at 57 kobo per share.

Total turnover stood 279.283 million shares valued at N1.56 billion in 3,781 deals. Regency Alliance Insurance topped the activity chart with 97.635 million shares valued at N23.434 million. Jaiz Bank followed with 65.421 million shares worth N53.673 million. United Bank for Africa (UBA) recorded 22.926 million shares valued at N167.354 million. Fidelity Bank posted 12.420 million shares valued at N50.930 million while FBN Holdings traded 10.292 million shares worth N112.343 million.

Investors are making last-minute efforts to meet application deadline as the offer period for the ongoing sovereign Sukuk by the federal government ends today.

A survey of receiving agents yesterday showed increased levels of activities on the sovereign Sukuk, with many stockbroking firms said they were not expecting extension of the offer period.

The federal government is seeking to raise N100 billion to fund additional road projects across the country.

The N100 billion Series V Sovereign Sukuk is a 10-year Sukuk; a non-interest, alternative instrument designed in a form of a lease with rental rate. Application list for the N100 billion Sukuk will close next week. The Sukuk will be listed on the Nigerian Ehange (NG) and FDQ Seurities Ehange after opletion

The Debt Management Office (DMO) which oversees Nigeria’s government debt issuances and management, indicated that the government is raising the new capital through a special purpose vehicle- FGN Roads Sukuk Company 1 Plc, which will apply the net proceeds of the Sukuk to development of identified roads.

The DMO outlined that the net proceeds from previous issuances had been used to finance the rehabilitation and construction of road projects, which were identified by select federal government’s ministries.

According to the DMO, as at June 2022, 25 projects had been funded from the earlier sovereign Sukuk including the dualisation of Lokoja-Benin Road, Abuja-Abaji- Lokoja Road sections one, three and four, construction of Oju-Loko-Oweto Bridge over River Benue , the rehabilitation of Enugu-Port Harcourt dual carriageway section two, Onitsha to Enugu Expressway and rehabilitation of Enugu to Port Harcourt Road section four.

The federal government had in 2017 launched its sovereign Sukuk issuance as a strategic initiative to support the development of critical infrastructure, promote financial inclusion and deepen the domestic securities market.

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Sukuk as an alternative instrument to conventional bonds and it is based on the tenets of Islam which prohibits usury or lending with interest payments.  Sukuk does not indicate the existence of any debt obligation as the issuer uses the proceeds from the certificate to purchase an asset, of which the investor also receives partial ownership.

Nigeria’s N150 billion third sovereign Sukuk issuance had recorded oversubscription of N519.12 billion, sustaining a trend of oversubscription that started with the maiden issuance 2017. The Federal Government had in June 2020 issued a N150 billion seven-year Ijarah Sukuk due June 2027 with approximate rental of 11.200 per cent per annum.

The Federal Government had in September 2017 floated its first sovereign Sukuk, a N100 billion seven-year issue with a rental rate of 16.47 per cent. It was oversubscribed by 5.8 per cent. Government followed in 2018 N100 billion seven-year tenored Sukuk Al Ijarah (Lease) with annual rental rate of 15.743 per cent. It was also oversubscribed.

Office (DMO) Ms Patience Oniha, had said the government recognised the need to issue more Sukuk bonds given the increasing success and strong investor’s appetite for the alternative non-interest bonds.

According to her, the Sukuk initiative by DMO, which oversees national debt management, has been increasingly successful given the strong level of awareness that has been created.

She attributed the success of the Sukuk issuances to the increased confidence from market participants given that the Sukuk bonds are tied to specific projects that can be tracked.

“Looking ahead, we recognise the need to upscale issuances to include other standalone projects beyond road infrastructure, but more importantly, we are looking to support projects that are revenue generating to service the Sukuk” Oniha said

She added that there must be a focus on growing and diversifying the investor base for the Sukuk as well as other investment products.