The Nation Newspaper

Category: Money

  • Unified Payments launches Payarena

    Unified Payment Services Limited has introduced a new service platform, Payarena.

    In a statement, it said the product offers customers access to Value Added Services which include purchase of airtime virtual top up, prepaid Personal Identification Numbers, Blackberry subscriptions, data bundle plans among others for all Telcos in Nigeria. It also helps in the payment of bills to major service providers such as PHCN, DSTV, GOTV, Swift Networks etc.

    The product also offers payment collections platform for public institutions for collections of taxes, levies; corporate organisations and religious institutions for collection of tithes and offerings etc. Payarena is also poised to offer funds transfer services in a manner that has not been offered in the industry.

    The platform accepts multiple card schemes such as Visa, MasterCard, UnionPay and carefully designed to accommodate all other local and international card or payment options including contactless payment solution. It is accessible on multiple channels, including Web via www.payarena.com, over 40,000 Point of Sale (POS) terminals and ATMs all over the country. “For the very first time, Visa, MasterCard and UnionPay cardholders can now enjoy Value added services on a single platform,” said Babatunde Okeniyi, Director, Marketing and Sales for Unified Payments.

    Payarena is also available on the Point of Sale (POS) terminal and on the ATM.

    “With Payarena, holders of different card brands and various other payment options are now well taken care of with regards to value-added services that come with electronic payments even as this brings a further boost to the cashless economy policy driven by the Central Bank of Nigeria (CBN)” said Okeniyi.

     

  • CBN: Limit for naira card is $150,000

    CBN: Limit for naira card is $150,000

    The Central Bank of Nigeria (CBN) has raised the limit for naira debit and credit cards use from $40,000 to $150,000 yearly.

    But this is subject to the monthly returns by authorised dealer banks and card issuers to the CBN.

    According to the apex bank, settlement for the cards would remain interbank funds, adding that recipients of International Inward Money Transfers would be paid in naira only.

    It said the exchange rate for conversion of the proceeds would be the interbank rate on the day of payment by the dealer. Also, dealers are required to display the naira exchange rate in their banking halls.

    “Recipients of proceeds of International Inward Money Transfers shall, henceforth, be paid in naira only. The applicable exchange rate for conversion of the proceeds shall be the prevailing interbank rate on the day of payment by the authorised dealer. Accordingly, authorised dealers are required to conspicuously display the prevailing Naira exchange rate in their banking halls,” it said.

    Dealers, the CBN added, would continue to sell foreign exchange cash to Bureau De Change (BDC) subject to a maximum limit of $250,000 weekly per BDC. Dealers are required to conduct Know-Your-Customer (KYC) checks on the BDCs they deal with.

    Furthermore, the apex bank said BDCs are required to render weekly returns on use of funds bought from all sources to the CBN, or sanctions would be imposed.

    Also, importers who wish to pay for import of non-regulated products worth not more than $250,000 per year by telegraphic transfer shall only complete e-Form “M” supported with proforma invoice.

    However, the shipping documents shall be submitted to the bank by the importer not later than 90 days from the date of the transfer.

    It advised dealers to report defaulters to the CBN monthly for sanctions. The selling rate of foreign exchange by dealers shall be the interbank exchange rate plus a margin not exceeding one per cent, while foreign exchange cash bought by BDCs from dealers and the CBN shall be sold to foreign exchange end-users at a rate not exceeding two per cent margin above the buying rate.

     

  • AfDB okays $125m to Zenith for SMEs

    AfDB okays $125m to Zenith for SMEs

    The African Development Bank (AfDB) has approved a $125 million Line of Credit (LOC) to Zenith Bank Plc for lending to Small and Medium Scale Enterprises (SMEs).

    In a report obtained from its website, AfDB said the approval was the fourth to Zenith.

    The facility, it said, would enable the lender gain access to long-term foreign currency funding to generate additional lending to its SME clients in various sectors of the economy, including agriculture and agribusiness, transportation and manufacturing.

    “In approving the LOC, the Board of Directors underscored the fact that the SME sector represents a strategic pillar for Nigeria’s quest to modernise and improve its economy while diversifying away from the heavy dependence on the oil industry,” AfDB said.

    According to the Federal Office of Statistics, SMEs account for 97 per cent of all businesses in Nigeria, contributing 50 per cent of employment and output in the non-oil sector. This compares unfavorably with many peers, reflecting a relative underper-formance of the SME sector in the country.

    One of the major impediments to SMEs’ growth and development, it said, is limited access to bank credit. It regretted that despite banking reforms aimed at salvaging the real sector, access to credit for the SMEs is still severely constrained. The proposed LOC will therefore contribute to filling this critical financing gap.

    “The LOC aligns with the renewed strategy of the Nigerian Government to revitalise the economy by developing its SME sector. It also aligns with the lender’s country assistance strategy to support private sector led growth in Nigeria.

    “Furthermore, it is consistent with the AfDB’s strategy to support SMEs through sound and reputable financial intermediaries as well as its new inclusive growth priority by supporting SMEs in critical sectors of the Nigerian economy,” it said.

  • FBN Holdings, others seal $170m financing deal for gas assets

    FBN Holdings and Ecobank Nigeria Limited have provided $170 million to Seven Energy International Limited towards the energy group’s acquisition of the gas assets and entire issued share capital of the East Horizon Gas Company (EHGC) Limited.

    The multi-party financing deal will provide Seven Energy’s wholly-owned subsidiary-Accugas Limited, with part of the funds to complete its $250 million acquisition of the entire issued share capital of the East Horizon Gas Company.

    FBN Holdings participated in the financing deal through its subsidiaries-FBN Bank (UK) Limited and FBN Capital Limited. The $170 million medium-term acquisition finance facility were being financed by FBN Bank (UK) Limited and Ecobank Nigeria Limited.

    FBN Capital Limited acted as structuring bank, sole initial mandated lead arranger, financial modelling bank and global facility coordinator. Aluko& Oyebode acted as lenders legal counsel, Royal HaskoningDHV Nederland BV represented the lenders on environmental and technical due diligence matters while UUBO and Addleshaw Goddard acted as the borrower’s local and international legal counsels respectively.

    EHGC was established by Oando Plc with the intention of constructing and operating an 18-inch, 128 km gas pipeline that connects with the Obigbo-Alscon pipeline at Ukanafun to supply gas to an industrial offtaker located in Mfamosing, Cross River State, and to meet the needs of other industrial users in the Calabar region.

    Seven Energy stated that its acquisition of EHGC is in line with its strategic plans to expand its gas infrastructure assets in the south east Niger Delta. Through its assets and subsidiary, Accugas, Seven Energy has a number of infrastructure projects in the region, including a gas processing facility at the Uquo Field and a gas pipeline network, which will have the capability to supply gas in the Port Harcourt, Aba and Calabar areas.

    Managing director, FBN Capital Limited, Kayode Akinkugbe, said the deal demonstrated FBN Holdings commitment to financing growth and development of the Nigerian oil and gas sector.

    “FBN Holdings Group feels a strong sense of responsibility towards fostering growth in the power; gas pipeline and oil and gas sectors and we will continue to deploy our extensive debt arranging experience and structuring expertise in executing robust transactions in record time,” Akinkugbe said.

    Director and Head Debt Solutions, FBN Capital Limited, Patrick Mgbenwelu, added that FBN Capital remained committed to further strengthening and supporting Seven Energy in realising its various financing goals and objectives.

    Commenting on the transaction, Chief Executive Officer, Seven Energy International Limited, Phillip Ihenacho, said the financing deal was a landmark transaction as it will enable the company to expand its midstream operations in Nigeria.

    “It is a perfect fit to our strategy of investing in core midstream infrastructure assets in the south east region of the country. I would also like to thank the entire team for their achievement in bringing this important financing transaction to a close,” Ihenacho said.

    According to the him, in consolidating the gas infrastructure assets of Accugas and EHGC, Accugas aims to strengthen its distribution platform, increase efficiency and broaden its geographical reach, furthering Seven Energy’s intention to create a leading gas distribution business in Nigeria.

    Chief Financial Officer, Seven Energy International, Bruce Burrows commended the lenders-FBN Bank (UK) Limited and Ecobank Nigeria Limited, for their support and dedication to ensure that the completion of the EHGC acquisition process was in line with the sponsors’ timetable.

    He also noted FBN Capital’s role, particularly in working closely with Seven Energy, the lenders and the various independent consultants in concluding the transaction.

     

     

  • Analysts say Seplat’s $500m IPO expensive, risky

    Analysts at Morgan Capital Group have expressed concerns over what they described as possible risks and overvaluation of the $500 million initial public offering (IPO) of SEPLAT Petroleum Development Company Plc.

    An equity research made available by Morgan Capital at the weekend indicated that Seplat’s IPO pricing range might be overvalued by more than 200 per cent and there are many inherent risks. The report however noted that Seplat is a good company.

    SEPLAT had commenced the book building for its IPO with indicative price range of N535 and N700. However, the final price will be determined by the bid prices. The minimum order for individual investors is set at 25,000 shares, implying minimum investment of N13.375 million and N17.500 million at the indicative price range of N535 and N700. Also, the minimum order for institutional investors is set at 85,000 shares, which implies minimum application size of N45.475 million and N59.50 million at the bottom and ceiling prices.

    The initial offer size is expected to raise gross proceeds of approximately $500 million, equivalent to £300.9 million and N82.5 billion. SEPLAT plans to list its ordinary shares on the London Stock Exchange (LSE) and Nigerian Stock Exchange (NSE) after the IPO. With this, and based on the mid-point of the price range, SEPLAT’s implied market capitalisation upon listing would be about £1,200.9 million, equivalent to $ 1,995.5 million and N329.5 billion.

    Morgan Capital stated that it undertook a fundamental valuation of SEPLAT and got a target price of N173.25, after the investment banking firm has factored tax and earnings risks.

    According to the report, while SEPLAT made 65 per cent tax provision in 2011 and 63 per cent tax provision in 2012, it reported a tax credit of $93 million in 2013. The exclusion of tax provision consequently boosted the profit recorded in 2013.

    SEPLAT in the prospectus indicated that with effect from January 1, 2013, the company was granted the pioneer tax status incentive by the Nigerian Investment Promotion Commission (NIPC) for a five-year period. For the period the incentive applies, the company is exempt from petroleum profits tax on crude oil profits, corporate income tax on natural gas profits and education tax of two per cent.

    “We do not see the justification for the NIPC to grant pioneer tax status incentive to SEPLAT for acquiring already existing assets that the previous owners were already paying the Petroleum Profit Tax (PPT) on, before the sale to Seplat, except there is a newly developed ingenious technology for mining crude oil that is yet to be disclosed to the public,” Morgan Group stated.

    Analysts noted that if NIPC sets this precedence, it will give rise to similar claims from other companies who have acquired similar assets and the already fast depleting Federation account will bear the brunt of the largesse. The list of potential litigants includes other upstream players who will see this as unfair advantage and even state governments whose allocation will suffer as a result of this leakage.

    The report underlined a caveat in the IPO Prospectus which notes that “there can be no assurances that current or future governments will not revoke these tax incentives prior to the end of the five-year period or seek to recover taxes waived under the scheme from the company and or Newton Energy in the future”.

    Morgan Capital also cautioned that there is a strong likelihood for potential litigation, considering that SEPLAT was granted a tax waiver which puts them at an advantage among their peers citing the 400 per cent increase in profit after tax rise in 2013.

    According to the report, the likelihood that other players who have invested in assets similar to that of SEPLAT and even stakeholders, like state governments whose allocations are dwindling and Nigerian citizens, may contest this waiver is very high.

    Analysts said any litigation or possible revocation of the waiver will lead to massive sell down on the shares as most investors will seek to exit their positions even before any ruling is made.

    The equity report also noted that while the absence of cash flow and profit forecasts in the SEPLAT prospectus may be within the ambit of waivers by the Securities and Exchange Commission (SEC) and NSE, it may diminish the ability of analysts to project future earnings of the company.

    “We have placed a sell rating on the shares of SEPLAT because we consider it over priced, given the inherent tax waiver issue and the uncertainty of the cash flow. We think this is a play on tax which may not be sustainable, since government can always revoke and or recover any previously waived taxes, even as already disclosed in the Prospectus. We however see SEPLAT as a good company and a fair price of N173.25 is in our opinion, achievable on the floor of the NSE in the coming months,” Morgan Capital added.

     

  • West African capital markets adopt integration protocols

    West African capital markets adopt integration protocols

    National authorities, capital market regulators and stock exchanges in the West African region have approved the guidelines, processes and procedures for the first phase of the integration of the region’s capital markets.

    The adoption of many resolutions on the capital market integration paved ways for the take-off of the first phase of the integration. At the 4th ordinary meeting of the West African Capital Markets Integration Council (WACMIC) in Abidjan, Cote D’Ivoire, chief executives of capital market regulators and stock exchanges in Nigeria, Ghana, Sierra Leone, Benin, Burkina Faso, Cote d’Ivoire, Guinea, Mali, Niger, Senegal and Togo agreed on the framework for the first phase of the capital market integration. Also at the meeting were the central banks of Guinea and Liberia, ECOWAS Commission and West African Monetary Institute (WAMI).

    The meeting reviewed the recommendations that would enable dealing firms in member states to trade securities and settle in markets other than theirs through local dealing firms in those markets by means of Sponsored Access.

    Members subsequently passed a resolution for the adoption of the sponsored access framework and related agreements to be approved by all member regulators, signaling the commencement of the integration of capital markets in West Africa.

    The sponsored access phase is the first phase of the region’s capital market integration and it is expected to take off in April, this year. Under this phase, brokers within the member countries can trade securities and settle in markets other than theirs, through local brokers in the other member jurisdictions. The interrelationship between the brokers will be guided by memoranda of understanding (MOU), which is duly recognised by each regulator in each WACMI member jurisdiction.

    All national authorities and stock exchanges at the meeting also agreed to ensure that the appropriate processes and systems are put in place in the respective jurisdictions to facilitate the implementation of the sponsored access, thus enabling jurisdictions to launch as they complete their processes and obtain all the requisite approvals.

    The meeting also agreed on the guidelines and procedures for approving applications under the sponsored access framework.

    Besides, the meeting deliberated on the importance of harmonised listing requirements and minimum standards of corporate governance within the region to facilitate the second and third phases of the integration.

    In a communiqué issued after the meeting, members recognized the importance of not only harmonizing minimum listing requirements to ensure that they are at par with international best practices, but also aligning corporate governance standards of listed entities with the Organisation for Economic Cooperation and Development (OECD) principles. To this end, jurisdictions will set minimum requirements which will be enforceable by the regulators.

    The meeting also adopted the guidelines for the issuance of common passports for capital market operators to trade across the region while urging countries without training and certification institutes to immediately come up with some form of acceptable regime for qualifying and admitting brokers in the short term with a view to developing a curriculum for training their operators.

    The “Common passport” is the legal and regulatory framework approved and adopted by WACMIC to allow capital market operators to operate outside their jurisdictions. A “Common Passport” empowers market regulators to mutually recognise an operator registered outside their market and extend them the same rights, privileges and obligations as one of their own.

    The meeting also the need to have a body responsible for ensuring that all training and certifying institutes within the region maintain a harmonized curricula and standardized examination.

     

     

  • Access Bank supports national identity scheme

    Access Bank Plc has provided project office for the National Identity Management System (NIMC) card scheme.

    A statement from the bank said the Federal Government approved the implementation of a unified identity Management System for Nigerians.

    The new integrated data system which will capture all Nigerians from the ages of 18 and above will also bring down the cost of data processing and storage by the different agencies in the country.

    Managed by the NIMC and executed in conjunction with different agencies of government which keep their own separate identity data, the National Identity Management System (NIMS) also has the National Identity Smart Card (NISC) component.

    The bank said this will be the largest roll-out of an electronic payment solution in the country and the broadest financial inclusion initiative of its kind in Africa.

  • ‘$10b ‘hot money’ in foreign exchange reserves’

    The foreign exchange reserves which stood at $37.87 billion as at April 3, has about $10 billion of it as hot money, Managing Director, Financial Derivatives Company Limited, Bismarck Rewane has said.

    Rewane, who spoke at the Lagos Business School breakfast meeting, explained that ‘Hot money’ is the flow of funds or capital from one country to another in order to earn a short-term profit on interest rate differences and/or anticipated exchange rate shifts.

    He said these speculative capital flows are called “hot money” because they can move very quickly in and out of markets, potentially leading to market instability.

    He said reversal of capital flows will intensify, further depleting external reserves.

    Rewane said there would be further external sector imbalances in a run-up to 2015 elections even as equity market imbalance is likely to increase with stock market correction continuing.

    He said spill over from Russia-Ukraine crisis poses downside risks for neighbouring countries and Europe with 20 per cent of European Union’s energy consumption is from Russia with 32.5 per cent of Nigeria’s imports coming from the Eurpean Union (EU).

    He said countries that have tried to prop up their currencies stand the risk of depleting their foreign exchange reserves adding that Nigeria’s Gross Domestic Product (GDP) growth is estimated to spike to 7.22 per cent during the past quarter as against 7.72 per cent recorded last December.

    GDP rebasing is expected to boost Nigeria’s estimated size by about 70 per cent and is almost certain to push it ahead of South Africa to become Africa’s biggest economy.

    The National Bureau of Statistics (NBS) changed the base year for calculating Nigeria’s GDP to 2010 from 1990 to reflect changes in the economy of Africa’s most populous nation, and more accurately assess the size of its current output.

    Most governments overhaul GDP calculations every few years to reflect changes in output and consumption, but Nigeria has not done so since 1990, meaning sectors such as the Internet, telephones and even the “Nollywood” film industry have had to be newly factored in to give a truer picture.

    He said Nigeria’s GDP growth is accelerating but hampered by insecurity, which currently has five to eight per cent negative impact on nominal GDP.

    Rewane also said contraction in money supply growth would continue with CBN’s tight monetary policy stance.

    He said Nigeria’s trade balance declined to $9.86 billion in third quarter of 2013 from $10.6 billion in second quarter of last year.

  • Enterprise Bank inaugurates boost account

    Enterprise Bank Limited has launched a new product called Enterprise Boost Account to boost the growth of Small and Medium Scale Businesses (SMSBs).

    In a statement, the bank said the product is fulfillment of its desire to continually satisfy the aspirations of her customers.

    The product, it said, was designed to immensely reduce the cost of doing business given the great environmental challenges that SMSBs face both in their operations, such as unstable power supply, poor transportation systems, paucity of skilled manpower, among others.

    It said the Enterprise Boost Account is in two major categories, namely, Classic Boost Account and Premium Boost Account with opening balances of N20,000 and N50,000. While the Classic account is targeted at SMSBs with annual turn-over of N240million the Premium boost account is for businesses with yearly turnover of N480million.

    Other high point benefits of the new product are access to a MasterCard debit card, free monthly e-statement of accounts, flexible account management, own company’s website at a discounted rate, access to short/long term loans, internet and mobile banking facilities as well as wide network of branches nationwide.

    According to the statement, the latest development is part of the efforts of the bank to support small scale businesses and build them up to solid enterprises so as to contribute their quota as the engine of economic growth in our society.

  • African Mobile Money revenues to hit $3b

    African Mobile Money revenues to hit $3b

    Mobile Money operators’ revenue will rise to $3 billion by 2015, a study by Pyramid Research has shown. Although Safaricom’s M-Pesa in Kenya has long been the lone success story in the mobile money universe, successes are being recorded in Nigeria, Uganda and Tanzania with similar mobile money offerings.

    MTN Uganda’s Mobile Money service accounts for three per cent of all airtime sold on its networ­k, and Vodacom’s M-Pesa service in Tanzania currently has six million subscribers with exponential growth of 600 per cent experienced in the past year alone.

    Currently, mobile money offerings remain limited and are concentrated in just 22 of the more than 50 African countries.

    Analysts said the African mobile money market has the potential to grow to a money-making market, but operators, banks and regulators need to work toward developing an enabling environment for business models that meet service providers’ revenue demands.