The Nation Newspaper

Category: Investors

  • Financial inclusion will aid economic growth, says SEC

    Securities and Exchange Commission (SEC) has reiterated its commitment to pursuing initiatives that would aid financial inclusion of Nigerians as this is capable of growing the nation’s economy.

    Acting Director General, Securities and Exchange Commission (SEC,) Ms. Mary Uduk stated this in her remarks at the 2018 PEARL Awards Night held in Lagos.

    She said that SEC will continue to highlight and promote developments and trends in the Nigerian capital market and drive financial inclusion aimed at reducing adult exclusion from financial services.

    According to her, innovations in financial technology has made possible the potential of using digital tools to make financial services available to a wider range of consumers and enterprises, promoting financial inclusion and the affordability of financial services.

    “A financially inclusive society will provide increased access to finance, especially for women, help support sustainable growth—and will create million more jobs. The gains of having a more inclusive financial system are enormous, as it helps broaden financial markets and make policies more effective,” Uduk said.

    While commending the efforts of the Board of Governors and management of PEARL Awards Nigeria, for giving consideration to companies with good corporate governance practice in the award nomination process, Uduk also enjoined them that in future editions, emphasis should also be given to companies with technological innovation in the capital market, in the advent of the convergence of finance and technology (fintech).

    Uduk also disclosed that the SEC is implementing various initiatives which are aimed at making our market deeper, vibrant and more effective.

    She noted that the forbearance window for shareholders with multiple subscriptions has been extended by another year from the previous deadline of December 31, 2018 to December 31, 2019, urging those who have not come forward for the regularization of shares purchased with multiple identities to do so.

    “We have also developed a two-pronged approach to addressing the intractable challenges associated with transmission of shares related to the estate of deceased investors. The first step would involve engagement with and enlightenment of the Probate Registry with a view to providing solutions to the cumbersome process of transmitting shares. Secondly, Rules would be developed around the time frame for transmission shares and the fee structure,” Uduk said.

     

  • Diamond Bank leads national drive for financial inclusion

    The Central Bank of Nigeria (CBN), under its National Financial Inclusion Strategy (NFIS), in 2012 set a target of financial inclusion rate of 80 per cent for Nigeria’s adult population by 2020. The CBN initiated the move, actively pushing for more citizens to enjoy access to formal financial services and thereby increase their chances of financial empowerment. The initiative by the apex bank perfectly fitted the banking philosophy of Diamond Bank, which focuses on financial accessibility and availability.

    Diamond Bank, since its inception in 1990, has always been about retail banking, financial inclusion, and catering to the finances of ordinary people. Currently, the bank leads others in financial inclusion by wide margin due to its innovative efforts, growing the market share by offering financial services to 10 million previously unbanked individuals. In recognition of its efforts, the bank was voted “Best Bank for Financial Inclusion” in Nigeria in 2017.

    Diamond Bank has targeted campaigns for Nigerians living in remote parts of the country. One of the campaigns, exclusively targeted at financially-excluded people, helps to put the unbanked population in perspective. While so much has been said about financial inclusion, many people often don’t know what people who need to be banked look like. Diamond Bank partnered African telecommunications giant- MTN Nigeria to roll out its hybrid savings account, Diamond Yello account. This service combines both financial and telecommunications functions.

    Diamond Bank was one of the first Nigerian banks to employ the use of the Unstructured Supplementary Service Data (USSD) for its Yello account, allowing users to open Diamond Bank’s accounts and carry out financial transactions on their mobile phones, without data or credit. Since its launch in 2014, before commercial banks were forced into retail banking, the Yello account has been able to register more than nine million bank accounts, consisting mostly of young people, and women-the demographic most hindered from financial inclusion.

    The Diamond Yello account has solved that conundrum in Nigeria in Northern Nigeria by bringing on board many who have never owned a bank account. Presently, Diamond Bank controls a large share of USSD transaction volume in Nigeria with 40 per cent.

     

     

  • Lagos Commodities Exchange awaits regulatory approval

    The Lagos Commodities and Futures Exchange (LCFE) has concluded arrangements to launch its operations as soon as it receives regulatory approval from the Securities and Exchange Commission (SEC).

    Its Acting Managing Director, Mr. Akin Akeredolu-Ale, said the company was awaiting regulatory approval to begin its operations.

    According to him, there would be immediate activation of trading and people will be able to trade through remote access.

    He said there would be a well-structured and transparent approach to price discovery of various commodities and refinancing mechanism that will create better returns on investment.

    The application followed the successful completion of the capital raising exercise for the Exchange. The LCFE is expected to trade in currency, commodities, oil and gas and solid minerals and it is expected to open up a vast new vista for Nigerian agricultural and economic development.

    The LCFE had recently concluded a successful private placement to raise N500 million initial capital. It had earlier signed a Memorandum of Understanding (MoU) with the Central Securities Clearing System (CSCS) Plc, which will serve as the depository, clearing and settlement house for the new Exchange.

    ASHON had also recently signed a Memorandum of Understanding (MoU) with the Nigerian Stock Exchange (NSE) to deploy its trading on the platform of the NSE.

    “The NSE has strong capacity for trading in equities, derivatives and commodities. The CSCS, which is tightly coupled with the Nigerian Stock Exchange, will enable seamless and smooth operations of the LCFE, “ Akeredolu-Ale said.

    According to him, the NSE has a platform that is globally competitive and up to date as the NSE maintains global international standards and certifications.

    “Therefore, instead of re-inventing the wheels and deploying resources to setting up a new platform, we have decided to engage the Nigerian Stock Exchange as our technical and technological partners. What it does for us is that it collapsed the moratorium period of almost two years it would have been required of us to set-up a system and then set-up a platform and we would have spent millions of dollars in setting up this platform. This MoU is saving us that volume of resources and what this does for us is that the LCFE would be able to hit the ground running,” Akeredolu-Ale said.

     

  • NSE gives shares, cash, computers to essay competition winners

    The Nigerian Stock Exchange (NSE) at the weekend rounded off its 2018 NSE Essay Competition with the presentation of shares, cash and computers to winners and their schools.

    Miss Deborah Lawrence of Good Shepherd School, Ajegunle Village, Atan-Ota, Ogun State, emerged the overall winner. Lawrence clinched the first position ahead of over 20,150 participants across the country, winning N500,000 scholarship for her university education, N250,000 equity investment and a laptop. Her school was also rewarded with a trophy, three desktop computers and a printer.

    Miss Ashiru Oluwalanaayo of Corona Secondary School, Agbara, Ogun State and Master Dominic Charles of GEC Comprehensive College, Ipaja, Lagos State, emerged first and second runners up respectively. Each of them also got a laptop, equity investment and scholarships for their university education. Their schools also got varying number of computers and trophies. Seven other laptops were given as consolation prizes to seven winners.

    Chief Executive Officer, Nigerian Stock Exchange (NSE), Mr Oscar Onyema, said the main goal of the the NSE Essay Competition, which is now in its 18th year, is to build a financially savvy generation by imbuing a culture of wealth creation among the youths.

    According to him, the competition serves as a platform that gives the Exchange the ability to view the perspectives of future leaders on key challenges relating to financial literacy, while providing opportunity to feel the pulse of the spread of financial inclusion in Nigeria.

    Onyema, who was represented by Head of Shared Services at the NSE,  Bola Adeeko, said the youth segment is often recognised as a priority target for financial education because the philosophy of catching them young remains a wise one.

    He, however, pointed out that financial literacy holds great value for all segments of the population and should not be limited to a certain age group as the benefits of a financially literate society are universal and its positive impact can be felt in the promotion of better livelihoods, economic growth, financial systems, and poverty reduction.

    “There is the need to build a platform that will help awaken the interest of our youths and buoy up students to learn and appreciate economic concepts, particularly as it concerns financial literacy and the significance of the capital market to the economy,” Onyema said.

    He noted that this year’s competition topic asked students to discuss “how technology can promote financial literacy and encourage investment habit among youths” as a way of getting future leaders to think about how to adopt technology as a veritable tool for building a financially savvy generation.

    In her keynote address, wife of Ogun State governor, Mrs Olufunso Amosun, who was represented by Mrs. Yemisi Durojaiye, commended the NSE for the initiative, which sought to bridge the gap between classroom learning and practical knowledge required for long-term personal financial responsibility for societal development.

    “It is also heart-warming to note that over 40,000 young people in more than 8,000 secondary schools across Nigeria have benefited from this completion,” Amosun said.

     

  • ‘Nigeria has huge potential in fintech’

    Nigeria has huge potential to use financial technology (fintech) to improve access to financial services and business opportunities.

    Executive Director, Systemspecs Limited, Mr. Aderemi Atanda, said Nigeria has achieved several feats in fintech and still has potential to achieve more. He spoke recently at the Centre for Financial Journalism (CFJ)-Association of Corporate Affairs of Managers of Banks (ACAMB)’s Business Forum in Lagos.

    According to him, Nigeria can really lead the entire world by being at the forefront of fintech, providing veritable model for others to follow.

    He explained that fintech was part of the digital age which evolved partly as a result of revolution in mobile telecommunications.

    Dwelling on the theme of the Business Forum Fintech and Financial Services Delivery in the Digital Age, he said fintech, which is driven by data, is transforming the ways financial and business transactions are now carried out.

    He noted that pay-tech is just one aspect of fintech, and virtually the only aspect that we are still dealing with now as there are many other aspects that are yet to be integrated into the entire architecture of fintech.

    According to him, it is not only the banking sector that requires the services of fintech providers.

    He said insurance, pension schemes, medical services, oil and gas and agriculture require fintech to drive them.

    “There is huge potential yet untapped that can help to move the entire system forward to new stage of development,” Atanda said.

    According to him, many things have happened in the fintech landscape in Nigeria that have not happened elsewhere in the world.

    However, he lamented that the success stories in this area has not been adequately captured and celebrated.

    He advised that Nigeria should understand the paradigm that shape narratives and such can capture the successes achieved so far in the fintech landscape.

    He said despite the successes achieved so far, even well acknowledged by advanced countries, there is still a lot of room for improvement.

    He advised the media to consciously look for success stories in Nigeria and Africa in the fintech space that can serve as the narrative for the rest of the world to follow and learn from.

    “Many things will still shape and re-shape the future we see before us. We should be ready to be part and indeed, at the forefront of the global movement in fintech space,” Atanda said.

     

  • Nigeria, South Africa lead as Africa’s FDIs rise

    Nigeria, South Africa, Morocco, Kenya and Ethiopia accounted for 40 per cent of total foreign direct investments (FDIs) in Africa as foreign investors increased stakes on emerging  economies.

    In its latest report, Africa Attractiveness, Ernst & Young (EY) found that South Africa, Morocco, Kenya, Nigeria and Ethiopia remained the dominant anchor economies within their respective regions and accounted for 40 per cent of the continent’s total FDI projects.

    The EY 2018 report, ‘Turning tides’, provides an analysis of FDI,  into Africa over the past 10 years. The 2017 data showed that Africa attracted 718 FDI projects, up by 6.0 per cent from the previous year. This was in line with a recovery in the continent’s economic growth, following a difficult preceding year.

    The report indicated that Africa attracted 718 FDI projects in 2017, representing an increase of 6.0 per cent on the previous year.

    The four major sub-regions each attract similar FDI when measured by project numbers. For the first time ever, East Africa became the single largest beneficiary of FDI with 197 projects or 27 per cent of total projects. However, Southern Africa fared lowest of the four major regions with 162 projects or 23 per cent of total projects.

    According to the report, Nigeria is leading the growing momentum in West Africa as the region’s FDI project announcements rose by 12 per cent from 2016 levels.

    “In line with its recovery from recession in 2017, Nigeria garnered 25 per cent more FDI projects. According to the World Bank, Nigeria was among 10 economies globally with the strongest improvement in their business environment last year. The country jumped 24 places on the Ease of Doing Business index, thanks to concerted government efforts to tackle red tape, mismanagement and corruption,” the report stated.

    The report noted that United States’ investors were particularly confident about the Nigerian economy in 2017, launching 22 projects during the year as against 10 projects in the previous year. South African, Chinese and United Kingdom investors also increased their FDI activity into Nigeria.

    The report further noted that countries with business-friendly policies, with countries reforming to become more business-friendly, are most successful in outperforming their peers in attracting foreign investment.

    With this, governments will need to increasingly become more focused on policy reform and drive an agenda that stimulates and supports private sector economic activity.

    According to the report, recent initiatives in Ethiopia, as well as gains by Kenya and Nigeria in the World Bank Ease of Doing Business scores, illustrate that more Africa’s leaders are starting to prioritise the need for reform.

    The United States (U.S.) remains the single biggest country investing in Africa, while Western Europe is by far the biggest regional investor. After the US, three of the remaining top five investors are European countries, including the United Kingdom (UK), France and Germany. Of the 10 largest investing countries in Africa, six are from Western Europe.

    The higher project numbers were driven by interest in ‘next generation’ sectors, including manufacturing, infrastructure and power generation. Despite the rise in FDI, project numbers remain below the 10-year average of 784 projects per annum.

    The report also highlighted the countries with the strongest FDI gains, with Ethiopia, Kenya and Zimbabwe experiencing a major uptick in FDI during 2017. By contrast, South Africa, Egypt, Mozambique and Cote d’Ivoire experienced declines in FDI projects in the same year.

    Chief Executive Officer, Ernst & Young (EY) Africa, Ajen Sita, noted that 2017 was in many respects a key year for the continent as it saw multiple changes in leadership across a number of countries, including South Africa, Zimbabwe and Angola.

    He pointed out that changes in leadership have in turn led to a renewed urgency to implement fresh policies as new administrations move to address slow economic growth.

    Sita said there were major opportunities that the continent could benefit from after the recent leadership changes it had witnessed, but such opportunities require emboldened leadership to drive renewed policy reforms and implement new initiatives, which encourage inbound investment flows.

    According to him, there are some outstanding examples of how this emboldened leadership has already worked in some countries, not least Rwanda, which is able to attract FDI well ahead of other economies of similar size, and indeed, ahead of much larger economies.

    “By focusing on improving public sector efficiencies and finances, minimising bureaucratic processes and partnering the private sector on major projects, more countries can stimulate much needed FDI. In addition, they should continue to focus attention on increasing their scores on the ease of doing business and global competitiveness rankings,” Sita said.

  • SEC, NSE, others for PEARL Awards

    The 2018 PEARL Awards will provide opportunities for capital market regulators and other key players in the economy to further interact on many developmental issues facing the capital market and the economy.

    Organisers of the Awards have confirmed that the event would be graced by the Acting Director-General, Securities & Exchange Commission, Ms. Mary Uduk, President, Nigerian Stock Exchange (NSE), Abimbola Ogunbanjo and elderstatesman, Ambassador Shehu Malami.

    Chairman, Senate Committee on Local Content, Senator Solomon Olamilekan, a Fellow of the Institute of Chartered Accountants of Nigeria as well as President, Chartered Institute of Stockbrokers of Nigeria, Mr. Ademola Adekoje, and President, Chartered Institute of Bankers of Nigeria, Dr. Uche Olowu, will also be among guests of honour.

    The event will also host chairmen, chief executives and top officials of major players in the capital market, captains of commerce and industry, regulators, diplomats and top government functionaries.

    Chairman, PEARL Awards’ Board of Governors, Dr Faruk Umar, said the award in the past 20 editions has grown in relevance and has become a major barometer for measuring the pulse of the Nigerian capital market.

    He stressed that the board and secretariat of PEARL Awards are pleased with the confidence reposed in the PEARL Awards by major stakeholders of the capital market  over the past more than two decades of rewarding corporate excellence with fairness, objectivity and integrity.

    President, PEARL Awards Nigeria, Mr Tayo Orekoya, said the 2018 edition is a major morale booster for firms whose effort in the post-recession Nigeria has kept key market index inching upwards, in spite of market and economic challenges.

    “There is no better time and platform for the performing organisations to be rewarded for wading through the low moments of the Nigerian economy than now and at PEARL Awards,” Orekoya said.

     

  • SEC, stakeholders review market situation

    Regulators, operators and other stakeholders in the Nigerian capital market are scheduled to meet today to discuss key initiatives that could impact on the recovery and long-term growth of the market.

    The third meeting of the Capital Market Committee (CMC) in 2018 under the auspices of the Securities and Exchange Commission (SEC) is scheduled to hold today at the Federal Palace Hotel, Victoria Island, Lagos.

    At the meeting, the CMC will consider reports from many of its technical committees and review the outlook for the Nigerian capital market in light of emerging developments. During the meeting, issues bordering on implementation of the 10-year capital market master plan as well as others relating to the capital market and the economy would be discussed and the outcome made known to the media.

    The 10-year master plan for the Nigerian capital market, which is expected to refocus the market and help double its size over time and grow the economy, was unveiled in November 2014.

    The CMC, chaired by the Director-General, Securities and Exchange Commission (SEC), comprises chief executives of all registered capital market operators, including stockbrokers, solicitors, custodians, fund managers, issuing houses, rating agencies, registrars, reporting accountants, trustees and consultants, among others.  Other members included chief executives of the Chartered Institute of Stockbrokers (CIS); Nigerian Stock Exchange (NSE); Abuja Securities and Commodity Exchange (ASCE) and Central Securities Clearing System (CSCS).

    The CMC also included two members each from observer groups, which included Asset Management Corporation of Nigeria (AMCON); Central Bank of Nigeria (CBN); Corporate Affairs Commission (CAC); Debt Management Office (DMO);  Federal Ministry of Finance; Federal Mortgage Bank of Nigeria (FMBN); Federal Inland Revenue Service (FIRS); Nigerian Deposit Insurance Corporation (NDIC); Investment and Securities Tribunal (IST); Nigerian Investment Promotion Council (NIPC); National Insurance Commission (NAICOM); National Pension Commission (PenCom) and FSS2020.

    The CMC was established to serve as a medium for exchange of ideas among market stakeholders as well as for feedback on how to continuously improve the market activities and regulation. The CMC meets every quarter to deliberate on various issues affecting the market and other policy matters.

     

  • Akin-Olugbade bows out at AFC

    Africa Finance Corporation (AFC) has said Dr. Adesegun Akin-Olugbade will be leaving the corporation at the end of his contractual term on December 31, 2018, after 11 years of service to the corporation.

    Akin-Olugbade served as pioneer General Counsel and Corporate Secretary between 2007 and 2008, Executive Director, Corporate Services and General Counsel between 2009 and 2014, and as Executive Director, Chief Operating Officer and General Counsel since 2015.

    A decade after its establishment, AFC has earned an enviable reputation in the infrastructure space internationally.  As a member of AFC’s Executive Committee, Akin-Olugbade, played a key role in the corporation’s adoption of strong corporate governance principles, systems and structures; expansion of AFC’s country membership;  growth of the balance sheet from $1.1 billion to $4.3 billion with operations in 28 African countries, and the attainment of AFC’s investment grade credit rating – all of which have contributed to the success of the institution.

    He has served over 30 years in the legal profession and financial services sector, having worked at both the technical and management levels, in the public and private sector, for leading commercial law firms, development banks and international financial institutions.

    He was previously General Counsel and Director at the African Development Bank (AfDB) and the first Chief Legal Officer and Head of the Legal Services Department of the African Export-Import Bank (Afrexim Bank).

    AFC Chief Executive Officer, Mr  Samaila Zubairu commended Akin-Olugbade for the key role played in the evolution and growth of AFC to being a leading multilateral financial institution on the continent.

    Chairman, AFC, Dr. Okwu Nnanna, also commended Akin-Olugbade for his immense contributions to the board and development of AFC.

    Ms Nana Eshun, AFC’s current Director, Legal, who is a project finance lawyer with over 25 years experience, will assume the role of General Counsel in acting capacity with immediate effect.

     

  • ‘ Insurance sector needs consolidation for growth’

    The Nigerian insurance sector needs higher capital requirement to raise underwriting capacity and regulation to enforce compulsory insurance, a report has shown.

    In the special report on the insurance sector released at the weekend, analysts at Afrinvest West Africa concluded that the insurance sector needs massive consolidation as had happened in the banking sector.

    The Central Bank of Nigeria (CBN) had in 2005 increased minimum capital base for banks from N2 billion to N25 billion, leading to reduction in the number of banks from 86 to 25.

    The report noted that the new risk-based capitalisation requirements which has been proposed by the National Insurance Commission (NAICOM) is insufficient to address the problem of undercapitalisation and could further lead to fragmentation. Faced with resistance from insurance stakeholders, NAICOM recently suspended the risk-based capital requirements.

    According to the report, despite growing at a faster pace than the economy, the insurance sector is still one of the most underdeveloped compared to peers.

    Analysts however noted that despite the underwhelming performance of the sector, it has huge opportunities as improved capital buffers to increase capacity, innovation in micro insurance to deepen penetration, adoption of bancassurance by players and investment in takaful insurance will drive performance of the industry.

    Analysts highlighted the key role regulation plays in buoying the performance of the industry, but also noted that increasing population size and growing middle class are factors that support growth.They said weak underwriting, cultural and religious beliefs, premium leakages, weak mortgage culture and slow pace of adoption and enforcement of compulsory insurance may weigh down performance going forward.

    “After careful analysis, we believe all segments of the sector are viable options for investments as all currently operate at sub-optimal levels. In non-life, it is evident that players are largely undercapitalised to underwrite big ticket transactions in oil and gas, marine and aviation; hence, forfeiting the opportunities in these segments. Whilst we note that the new capital requirements by NAICOM compel companies seeking to play in these segments to raise capital, we believe there will be a need for mergers and acquisitions to strengthen underwriting capacity to adequately capture ‘big ticket’ and profitable transactions,” Afrinvest stated.

    The report further noted that technological disruption to insurance has started in advanced climates with the introduction of various platforms such as Auto Claims Direct, E-brokers in the United States and Bima operating across Africa and Latin America.

    According to the report, insurance is going digital and technological solutions – insurtechs – with abilities to increase penetration, eliminate brokers or fasten claims verification processes are investment opportunities to position in. Insurance companies or insurtechs with a model to drive insurance operations through mobile technology are positioned to be industry leaders in the near term.

    “We also believe micro insurance is a sweet spot in the industry as it possesses the ability to deepen penetration and produce positive returns in the mid to long term. Fresh injection of patient capital and a model that encourages the use of mobile technology and unconventional sales channels are likely to produce better results,” the report stated.

    The report showed that the insurance sector suffers from poor pricing with industry’s price to book at 0.7 times, lower than relative peers such as South Africa with 2.9 times, Egypt, 1.3 times and Ghana, with 1.3 times.

    The report urged investors to look for value creation in the insurance sector while awaiting the necessary reform to drive industry growth.

    With a population estimated at 196.1 million people, a growing middle class and increased life expectancy rate for Nigerians-54.5 years average for men and women in 2017 from 53.4 years in 2016, the potential for growth in the Nigerian insurance sector is significant. At optimal state, industry gross premium should be comparable to overall consumption expenditure in the economy, since insurance is a risk mitigating strategy.

    However, at 0.3 per cent, Nigeria has the lowest insurance penetration level -measured as insurance gross premium written as a proportion of GDP, compared with notable African countries – South Africa, 14.7 per cent; Kenya, 2.8 per cent; Angola, 0.8 per cent and Egypt, with 0.6 per cent.  Similarly, the Nigerian insurance sector’s insurance density of $6.2-a measure of industry gross premium per capita, is still one of the lowest when compared to peers – South Africa, $762.5, Egypt, $22.8, Kenya $40.5 and Angola, with $30.5.

    The insurance industry in Nigeria is segmented into life, non-life and re-insurance, with non-life insurance accounting for 48.7 per cent of total gross premium written while life and re-insurance account for 30.1 per cent and 21.2 per cent respectively. Further analysis of insurance market structure shows de-concentration in what fits a monopolistic competitive market structure in both life and non-life insurance while the re-insurance market structure operates in an oligopolistic (duopoly) system.