Category: Investors

Victor Odiase

Two agencies of the Lagos State Government and four firms have announced a partnership on the construction of five innovation centres across the state.

The initiative was designed to ensure capacity building, competitiveness and ecosystem among start-ups and budding entrepreneurs in the state.

Lagos State Parks and Gardens Agency (LASPARK), Lagos State Employment Trust Fund (LSETF), Versecom Limited, IHS Nigeria, Leadspace by Passion Incubator and Cisco Nigeria would build five innovation centres, including: energy and environment hub, financial inclusion centre, smart city and health initiative, agricultural hub; and logistics and mobility innovation centre. The hubs would be located in various public parks around Lagos.

Co-founder/Chief Executive Officer, Versecom Limited, Mr. Timilehin Odusina, said the consortium has constructed an energy and environment hub, a low–cost initiative at Rafiu Jafojo Park in Shasha, Alimosho Local Government Area.

According to him, the low–cost hub was created to tackle the cost of office and community barrier to business entry faced by most Micro, Small and Medium Enterprises (MSMEs) and freelancers in the country.

“This hub offers a seat at N1, 000 per day, 50 per cent to 80 per cent lower than current market rates. The hub is targeted at idea stage – pre-seed startups and freelancers around Lagos,” Odusina said.

Sales Director, IHS (Nigeria) Limited, Olaitan Ogunbiyi explained that the energy hub would be officially launched on November 1, 2019 describing it as the first-of-its-kind in Nigeria, a feat that made IHS Nigeria the premier sponsor of this initiative.

“The hub will be open to everyone, but the community events, challenges, among others will be tailored only towards Energy and Environment startups. In addition to the 500-seat capacity dome, IHS Nigeria has funded the construction of an energy laboratory with equipment like transformer winder, oscilloscope and others in a bid to remove the barriers inhibiting innovation within the sector,” Ogunbiyi said.

Head, Startups, Lagos State Employment Trust Fund (LSETF), Tosin Faniro-Dada, praised the firms for embarking on the partnership, assuring that the state government would continue to create enabling environment for businesses to thrive.

Versecom Limited, as the initiator would manage the partners, while LASPARK, as the operator of all public parks in Lagos, would regulate the partnership in collaboration with LSETF. Besides, LSETF, through its Lagos Innovates programme, would handle community engagements through its plethora of tech-focused programmes.

IHS Nigeria as the sponsor of the construction of the hub would work with Leadspace by Passion Incubator to manage the hub and help entrepreneurs build sustainable businesses, while Cisco Nigeria would support with Wi-Fi equipment for the hub.

Victor Odiase

A group of business chiefs, entrepreneurs and other leading professionals have launched an initiative to support the development of upcoming businesses in Ogun State.

The Sagamites Club, a group of business executives from various sectors of the economy, will this Sunday kick off its yearly leadership conference and business support initiative during which renowned economic leaders will lead mentoring class for upcoming entrepreneurs and youths in Sagamu, Ogun State.

Sagamites Club President, Mr Seni Adetu, said the group would provide knowledge and experience and funding to qualified aspiring entrepreneurs as part of its commitment to economic renewal and development.

He outlined that the mentorship  would feature business leaders in the private and public sectors, including Prof Toyin Ogundipe, Vice Chancellor, University of Lagos; Mr Tokunbo Talabi, Secretary to the Government of Ogun State, Mr Segun Ogunsanya, Managing Director, Airtel Nigeria Plc and Mr Fatai Folarin, Chief Executive Officer of Deloitte Nigeria & West Africa.

He added that the group would also announce the award of its business support funds to 10 most qualified would-be-entrepreneurs, who will be selected based on merit and business proposition.

According to him, the annual event will create a forum for Sagamu youth to experience practical leadership through sharing  experiences of highly credible and accomplished business leaders in various fields from across the country.

The group will also offer business start-up opportunities to deserving youth within by financially and through commercial guidance, supporting quality business propositions.

“Our commitment to this cause is motivated by our conviction that we have reached a point in our life cycle in Nigeria where the government alone cannot provide all of the economic opportunities required to have self-sustaining citizenry. We can blame the government all day long and sometimes justifiably so, and accuse our youth of being lazy, again depending on your perspective, but our view is that, it’s better to spin our situation positively and change the narrative to what we are doing individually and collectively to make the most of an unpleasant situation. We must create little impact in our own patch leading to a result where the whole is bigger than the sum of the parts,” Adetu said.

Adetu, a former chief executive of Guinness Nigeria Plc, said while individuals and groups could not claim to be government or be able to substitute the government, they could, nonetheless, increase their responsibility and contributions to the community through initiatives that empower the youth and help the community to develop.

Sagamites Club Vice President,  Funbi Dawodu reiterated the commitment of the club to wealth creation and employment generation.

Dawodu said the club was determined to erase the impression of Sagamu as a place with societal vices to an entrepreneurial community.

He said the club, apart from the leadership empowerment initiative, also had a special fund for scholarship.

The cloud of uncertainties in the global markets has made emerging markets like Nigeria and risky assets like quoted equities unattractive to foreign portfolio investors.

FXTM Senior Research Analyst, Lukman Otunuga, said trade disputes among major advanced economies, Britain’s move to exit the European Union and other political and economic concerns have reduced global investors’ appetite for emerging markets and risky assets.

Foreign portfolio transactions in the Nigerian stock market had reduced from N906.86 billion in the first eight months of last year to N594.46 billion in comparable period of this year. Foreign portfolio investors (FPIs) play major roles in the Nigerian stock market, where they account for nearly half of total transactions.Total transactions at the Nigerian equities market had also dropped from N1.88 trillion in eight-month period ended August 2018 to N1.32 billion in similar period of the year.

Nigerian equities closed at the weekend with a negative average year-to-date return of -15.85 per cent as selloffs continued to force the market down, despite a near consensus on undervaluation of several Nigerian stocks.

The International Monetary Fund (IMF) last week downgraded global growth forecast for 2019 to 3.0 per cent, the fifth downward review from its initial 3.9 per cent forecast in mid-2018. This implies that global growth is expected to be at its slowest since the 2008 crisis.

Otunuga said risk-aversion due to global uncertainties will flow back to the Nigerian equities market noting that Nigeria’s dependence on crude oil also makes the country susceptible to global oil shocks.

He urged the Economic Advisory Council (EAC) constituted by President Muhammadu Buhari to focus on measures to diversify Nigeria’s revenues in order to mitigate possible oil shocks, pointing out that the global outlook for crude oil remains bearish despite current upswing.

Otunuga said the managed-float foreign exchange system of the Central Bank of Nigeria (CBN) remains the most viable option for Nigeria given the economic structure.

He said economy as it stands now cannot successfully run a free float foreign exchange system, noting free float policy could have adverse effect on the economy.

According to him, Nigeria needs a combination of a strong foreign exchange reserves and economic stability to absorb possible pressures from free floating of Naira.

He noted that Nigeria’s external reserves has considerable influence on the stability of the Naira.

“I am an apostle of free float but that is not feasible now because the external reserves is not strong enough. Recently, the reserves have been experiencing downturn. At $42.5 billion, the external reserves have been experiencing negative trajectory and with this and coupled with the state of the economy, I will say that free float is not desirable now,” Otunuga said.

He added that before the currency could be allowed to free float, there should be assurance that it will withstand the initial shock that usually accompany free float.

FXTM Nigeria General Manager Abiola Akinyele said the firm is committed to empowering Nigerian investors and traders through adequate knowledge and cutting-edge know-hows.

He said FXTM Nigeria organises  educational workshops and seminars for its clients to ensure they remain abreast of global developments and how such impact on the domestic economy.

 

Stories by Taofik Salako

The Board of Directors of International Breweries Plc has offered new shares to the shareholders at about 40 per cent discount to the trading price of the stock at the stock market as the Ilesa, Osun State-based brewer seeks to raise new equity funds.

In a regulatory filing, the company’s board indicated it would offer the proposed rights issue to shareholders at N9 per share, about 40 per cent below the opening market price of about N12.60 per share at the Nigerian Stock Exchange (NSE).

International Breweries had traded at a high of N33.50 and a low of N9.75 in the past one year, implying that the proposed rights price is at discount to its lowest recent price while it carries a strong potential for capital gains.

Shareholders of the company had last week at their Annual General Meeting (AGM) approved the proposed rights issue and authorised the board of directors to take all steps required to actualise the new capital raising.

Company Secretary, Muyiwa Ayojimi,  stated that other details of the rights issue would soon be decided. Technically, such other details include the size of the offer, the ratio of pre-allotment, offer period and professional parties.

Anheuser-Busch InBev, world’s largest brewer, is the majority core investor in International Breweries. Anheuser-Busch InBev had in 2017 merged its three indirect Nigerian subsidiaries – International Breweries Plc, Intafact Beverages Limited and Pabod Breweries Limited. The merger was done through a scheme of merger with International Breweries subsisting as the post-merger company.

With the business combination, Anheuser-Busch InBev’s majority equity stake in International Breweries Plc, increased to 75.1 per cent. The merger was seen as a major strategic move by Anheuser-Busch InBev to upend competition and consolidate its Nigerian base for further expansion into the Sub-Saharan Africa (SSA).

A total of 5.302 billion ordinary shares were issued for the merger. With the supplementary listing of 5.302 billion ordinary shares, the total issued and fully paid up shares of International Breweries increased from 3.294 billion to 8.596 billion ordinary shares.

The merger was believed to be a major competitive move by Anheuser-Busch InBev to give its operations a major nationwide push to increase its market share. International Breweries is located in Ilesa, Osun State in the Southwest region. Intafact Beverages’ brewery is situated in Onitsha, Anambra State in the Southeast region while Pabod Breweries is located in Oginigba, Port Harcourt, Rivers Sate in the Southsouth.

A Professor of Finance and Banking, Faculty of Management Sciences, University of Port Harcourt, Chinaecherem Nwakanma, in this interview with Capital Market Editor, TAOFIK SALAKO, speaks on capital market and national economic development

Aschool of thought believes capital market studies should be made compulsory in tertiary institutions. What is your view on that?

There is this talk about financial literacy. In fact, I had participated in a workshop organised by owners of micro finance banks in the country in the past, where I spoke on ‘Financial Literacy as a Vehicle for Mobilising Funds for Investment and Efficient use of Resources in the Capital Market’. In my view, financial literacy issues should not been seen as a fire brigade activity, rather, it should be a structured and systematic effort towards inculcating financial discipline in the average Nigerian. As it is always said, ‘catch them young’. It should even start, if possible, at the rudimentary level from primary school to secondary and at the university level. We can expose them to critical issues such as prudent management of personal finance.

There was a time I gave a talk on corporate social responsibility. I said without the individual being personally or individually responsible as a citizen, his position in the office will not change. In that case, any organisation he or she is managing cannot be socially responsible. If, at a young age, people have been taught the principles of managing personal finance, they will carry the same culture on when they have opportunity to manage organisational resources.

But in what practical way can this be done in the tertiary institutions?

As a concept, financial literacy should be taken in university as one of the general studies (GST) courses in the first year for university undergraduates.That way, every person passing through the university system will have the opportunity to know what financial literacy is, what the capital market is, the various opportunities in the capital market and how to optimise these services and facilities for his own benefits. By so doing, they will extend it to their homes and to their communities and the whole system will galvanise towards greater financial economic management of resources in the society.

What is your own impression of the capital market?

The capital market is dynamic. It has come a long way since its inception in 1960, following the establishment of the Lagos Stock Exchange and the changes that have taken place over the years.These changes were made possible by the various reforms introduced by the government aimed at harnessing the enormous potential of the capital market to grow the economy. The private sector has responded positively by taking up the challenge and working assiduously towards ensuring that we have a vibrant capital market in Nigeria. The efforts of the Chartered Institute of Stockbrokers, in continuously upgrading the standards of professionalism, would surely improve the effectiveness and efficiency of the capital market, a sine qua non for achieving the desired economic development of the country.

As Nigeria yearns for development, how can the government leverage capital market opportunities in financing its fiscal operations?

First of all, the government should create an enabling environment that would stimulate activities in the capital market by opting to fund its infrastructural development projects through the capital market. To make this possible, the government should improve on the degree of fiscal responsibility by ministries, departments and agencies (MDAs) in their operations. Upholding fiscal responsibility should cut across all the strata of governance in the country- federal, state and local government to build the needed trust in government as a responsible user of financial services.

For example, government should improve on its credibility by ensuring that it pays its debt whether for recurrent or capital expenditures as at when due. A situation where most government functionaries treat their contractual financial obligations with levity promotes fiscal indiscipline and cripples the desired development of the financial markets in Nigeria. I don’t see the rationale in a state government owing workers’salaries for several months and expect economic activities to thrive in that state or independent contractors and service providers who are hamstrung to meet their obligations to their creditors because government has reneged on its obligation.

Second, the problem of funding capital expenditure by the government has been a critical concern to many patriotic Nigerians, who think that the level of capital projects implementation is less than desirable, hardly exceeding an annual average implementation rate of about 60 per cent. The government has often linked this inadequacy to the funding gap. Funding gap could be a serious constraint where the socio-economic benefits of capital projects lack critical appraisal in terms of its cost-benefit analysis, factoring in the financing sources, as a pre-requisite. Let’s face facts; it is unthinkable in this age of financial market-driven economy for MDAs to think that they can develop a bankable infrastructural programme without involving the operators of the capital market and hope to succeed with their plan. Several financing options that can be tailored to suit different infrastructural projects abound. By working with seasoned professionals in the  capital market space, the success rate of conceptualising and implementing capital projects would certainly improve. Even the use of Public-Private Partnerships (PPPs), which appears as an alternative to direct government financing, can be enhanced by engaging capital market professionals in their conception and implementation.

What was your response when you were shortlisted for the Executive Conversion Programme (ECP) of the Chartered Institute of Stockbrokers (CIS)?

I see it as very commendable and a step in the right direction. I believe the Executive Conversion Programme (ECP) provides an opportunity to marry theory and practice. The programme shall have a salutary effect on the development of the practice of securities and investment business in Nigeria.

I was happy to be offered the opportunity. I saw it as something that would be of interest and challenge to me. It will assist to further deepen my knowledge of the securities and investment industry and also be of value to my career as a lecturer in the university. It will also impose on me the responsibility of strengthening my research base in the capital market operations. I should avail myself of the opportunity of access to the practical angle to make my students more interested in the securities business. By this, they can have viable career to pursue.

Research is critical to the academia. How would you leverage your background in research to assist the capital market?

Actually, I have always been keenly interested in the capital market. When I did my Master of Business Administration (MBA) several years ago, I conducted a research on ‘Pricing of Securities in The Nigerian Capital Market. This gave me a lot of insights into the happenings in the market. One of the issues I came across in my literature survey was that the level of professionalism was so low. Most of the practitioners then, that was over 20 years ago, were not really skilled in the theoretical aspect of investment analysis. I have been looking for an opportunity to be a participant in the capital market and to deal with securities issues. This is an opportunity for me because I am going to learn more about the nuances of the capital market.This will enrich my data base. For instance, I had conducted series of analysis on the efficiency of our local stock market and the findings had been mixed. By coming closer to what is happening in the industry, I will be more privileged to blend theory with practice.

What benefits did you derive from Executive Conversion training and how would it impact on your professional skills and your students?

I have come to see the difference between what is normally referred to as hands-on experience and theory. This is because, I listened to practitioners as they identified some of the practical issues that take place in the securities business and these were interesting. Though, they might not be theoretically correct so to speak, they expanded our horizon of knowledge to appreciate the differences between what is practice and the theory that we teach in the school. By the time we bring to bear the knowledge acquired in this rigorous training, we shall be able to communicate better to our students and also give them an insight into what to expect if they should elect to pursue careers in the securities business. I found the training a very useful experience, learning from those who have been in this business for so many years, people who had weathered the storms of the securities industry in Nigeria.

What is your motivation to become a chartered stockbroker?

As a researcher in the capital market, the opportunity to become a chartered practitioner will enable me to gain greater insight into the nuances of the practice and sharpen my understanding of the intricacies and peculiarities of our capital market, thereby adding value to the operations of the market.

From your experience, are students so much interested in making career in the capital market?

The students are not quite conversant with the prospects of the capital market industry in Nigeria. Many of them do not see it as something they can benefit from since they consider the field as too narrow and limited to buying and selling of stocks on behalf of clients. Given the low level of financial literacy about the capital market level and apathy of many Nigerians to stock ownership, they see the future as bleak.

How would you help in correcting this impression by students?

First, as a teacher and having understood the broad range of financial services being offered by professionals of the Institute, I’m in a better position to tell my students about career opportunities as investment professionals and encourage them to plan towards becoming professional members. Second, I will intensify my research into aspects of the capital markets that will improve informational and transactional efficiency. I will also look at the bottlenecks regarding the allocational efficiency of the market and attempt to proffer solutions for the attention of those concerned.

What is your advice for the CIS?

The institute should endeavour to expedite action on the change of its name that we understand is in the pipeline. This will remove the misconception of our students about the institute as a professional association with limited career prospects. The institute should organise talk shows that will improve on financial literacy and the prospects and risks of investing in the capital market. A good platform should be created to engage the government on the need to source medium and long-term funds from the market to execute development projects such as infrastructure. The continuing professional development programme should be made to blend the theory and practice of investing for the benefit of members.