The Nation Newspaper

Tag: investment

  • Guide to investment

    Guide to investment

    Book review

     Title: Title: Investing in Nigeria (A Country Business Guide for Multinationals and Entrepre neurs)

    Authors: Oluremi Oyekola, Kofoworola Joseph, Okanlawon Olalekan and Olaleye Bisi

    Reviewer: Joseph Jibueze

    Pagination: 226

     

    Nigeria is Africa’s most populous country, and therefore a haven for investors. With a population of over 150 million, there is no shortage of market for any business.

    With immense opportunities for investments in power infrastructure, transportation, aviation, communication, agriculture, among others, Nigeria remains a country of choice for any discerning investor.

    However, not many potential investors know enough about Nigeria, the commercial climate, its people and what it takes to go into business in the country. There had been a gap in such knowledge.

    To bridge this knowledge gap, the book: Investing in Nigeria (A Country Business Guide for Multinationals and Entrepreneurs), compiled by a team of experts led by the Managing Partner, Oak Chartered Accountants, Mr Oluremi Oyekola, will be launched in Lagos next Wednesday.

    Investing in Nigeria is a 226-page book, with 14 chapters. The first chapter entitled: An Introduction to Nigeria, contains hands-on information about the country, such as location, constitution, postal and courier services, currency, holidays and festivals, religion and language.

    Among the sub-topics in Chapter One is the question: Why invest in Nigeria? Answering the question, the authors said: “In recent times, focus is being directed at non-oil exports and agriculture, which at present account for 30 per cent of the Gross Domestic Product (GDP), to diversify the economic base.

    “Opportunities exist for the exploitation and export of natural gas, bitumen, limestone, coal, tin, columbite, gold, silver, lead-zinc, gypsum, glass sands, clays, asbestos, graphite, and iron ore, among others…

    “Nigeria has enormous resources, most of which are yet to be fully exploited. They include mineral, agricultural and human resources.

    “It also offers the largest market in sub-Saharan Africa, with a population of about 150 million. The Nigerian market potential also stretches into the growing West African sub-region.”

    Among the first concerns of a first-time visitor is how to easily obtain entry permits. Chapter Two of the book provides answers. It discusses requirements for procuring visa and permits, as well as immigration requirements for new companies.

    There is a treatise on gratis (courtesy) visa, visitor and transit visa, business, education and transit visas, temporary work permit, employment visa, return or re-entry visa, among others. The procedure for obtaining them is discussed. Immigration requirements for new companies are also treated, as well as multiple entry visa and alien registration card.

    Businesses do not exist in a vacuum. The authors, in the third chapter, explore legal and regulatory framework, examining institutions such as the Nigerian Investment Promotion Council (NIPC) and their roles.

    The book explains a unit of the NIPC, the One Stop Investment Centre, which provides coordinated and streamlined services for investors. OSIS is said to function with 26 other participating agencies, which are all explained.

    The chapter further discusses the Coporate Affairs Commission (CAC), its structure, processes and functions, as well as cost and other requirements for company incorporations.

    The money market and its institutions; discount houses which intervene in mobilising funds for investments in securities in response to the liquidity of the system; universal banking, commercial banks, community banks, among others, are also discussed.

    Not every investor would want to start a business from the scratch. The fourth chapter, titled: Acquisition of Businesses in Nigeria – Major Legal Issues, discusses the steps for establishing new companies in Nigeria with foreign shareholding, and appointment of directors.

    The fifth chapter: Basic Tax and Exchange Control Issues Relevant for Investment in Nigeria, is an eye-opener. It discusses no fewer than 25 sub-topics on types of taxes payable, as well as issues related to investment taxation. Nothing less is expected from tax experts.

    Having set up or acquired a business, the need for standard accounting practices is crucial. Chapter Six dwells on Accounting Record and Reporting.

    It also explains the Corporate and Allied Matters Act (CAMA) requirements, the annual financial statements and what it must contain.

    Chapter Seven, the heart of the book, gives in-depth analysis of the priority areas of industrial investment and procedure for obtaining relevant licenses.

    They include agriculture, manufacturing industries, export manufacturing, mining and mineral extraction, electric power production, among others.

    The free trade/export processing zone schemes (such as Calabar, Onne Oil and Gas, Kano, Maigatari, Banki and Lekki Export Processing zones) are also discussed, as were the import prohibition order, grant of special licenses, among others.

    Several countries are known for tourism, which largely sustains their economies. Nigeria has huge tourism potentials, but investment remains low. Chapter Eight, on Tourism, notes that many of the country’s tourist attractions “are still largely untapped and even in their raw state, are still being enjoyed…”

    It highlights the investment opportunities in transportation, hospitality, tour operations, as well as the regulatory framework, incentives and concession of land. Tourist sites and festivals are also identified. Pictures of interesting places follow, such as a spectacular lagoon front, the first storey building in Nigeria, etc.

    Infrastructure is the theme of the ninth chapter, which highlights investment opportunities in coastal, inland waterways and maritime transportation (as well as shipping and numerous port services); rail, aviation; energy and information and communication technology, etc.

    No business succeeds where the operators do not recognise and respect local customs. With pictorial illustrations, Chapter Ten explains local customs and traditions, language, religion, national pride, the family, communication style and business meetings/etiquette.

  • Ekiti Deputy Governor explains govt’s investment in teaching hospital

    The Ekiti State government has explained why it is investing in the teaching hospital of its varsity – Ekiti State University (EKSU), Ado-Ekiti. Provision of quality healthcare services which is the fifth on the Eight-Point Agenda of the Governor Kayode Fayemi informed it, Deputy Governor Prof Modupe Adelabu, has said .

    She was making a remark to the submission of the members of the management team of Ekiti State University Teaching Hospital (EKSUTH), who visited the deputy governor in her office. The team was led by the Acting Chief Medical Director (CMD) Dr. Kolawole Ogundipe.

    According to Prof Adelabu, the establishment of EKSUTH was not a favour but an obligation to the people, who freely entrusted their mandate to the administration. She also spoke of government’s plan to upgrade facilities at the hospital to world-class standard and make it second to none in the Southwest zone.

    The deputy governor assured the team that the government will give all the necessary supports to the team to ensure that all EKSUTH programmes are fully accredited, saying the Fayemi-administration came into office to serve the people.

    Her words: “The government is ready to support. The governor, Dr John Kayode Fayemi, is very passionate about health, education and the people’s welfare as captioned in his Eight-Point Developmental Agenda. We are here to serve the people. One of the avenues is exposing them to quality healthcare delivery.”

    Urging the management to expose personnel to best practices in healthcare delivery, she lauded the management team for keeping the hospital environment always neat and tidy.

    Speaking earlier, the CMD presented his management’s scorecard and listed the efforts being made upgrade facilities at the hospital.

  • Nigeria puts $200m SWF cash in investment

    Nigeria puts $200m SWF cash in investment

    Nigeria’s Sovereign Wealth Fund (SWF) has made its first investment, handing over $200m to UBS, Credit Suisse and Goldman Sachs to manage a fixed income portfolio.

    The first investment, even if relatively small, adds Nigeria to the small cadre of commodity-rich countries that over the past decade have become one of the most powerful forces in global financial markets through their sovereign wealth funds, according to a report by the Financial Times.

    Uche Orji, chief executive of the $1bn Nigerian Sovereign Investment Authority (NSIA), told the Financial Times the fund gave UBS $50m last week to invest in United States (US) Treasuries. A further $150m is being transferred this week to Credit Suisse and Goldman Sachs to build a US corporate bond portfolio.

    “This is a major milestone for us,” Orji, a former banker who was recruited to set up the fund last year, said in an interview in Abuja.

    Mr Orji said in June that he had delayed making any initial investments due to the volatility in global markets. But yesterday he said he felt the bond market was now “fairly valued”.

    The first investment comes ahead of this week’s crucial meeting of the Federal Reserve. The US central bank is likely to start phasing out its bond buying programme that has kept interest rates at ultra-low levels. “There is more optimism now,” Orji said.

    The Nigeria sovereign wealth fund is the third largest in sub-Saharan Africa, after the $6.9bn Botswana and $5bn Angola funds, though tiny compared to those of oil producers such as Saudi Arabia, Norway and Abu Dhabi, which have more than $600bn in assets each.

    The sovereign fund was set up to safeguard oil revenues for future generations, provide a buffer against external shocks and spur infrastructure development in Nigeria. Despite decades of oil production, the country has never previously had a sovereign wealth fund or any ringfenced method of saving. Nigeria’s government wants to grow the fund by about $1bn a year, but faces opposition from governors, who receive a share of national revenues. Orji acknowledged that new inflows were not guaranteed, but said that the seed capital was enough for now. “$1bn is not inconsequential,” he said. “Not many sovereign wealth funds have started out with that amount.”

    Under the investment policy approved by the NSIA earlier this year, the fund is split into three pools. The stabilisation fund has a 20 per cent share – the $200m handed over to banks this week. Capital preservation is the main aim, with the fund acting as a buffer against short-term economic instability.

    The future generations and infrastructure funds will each receive 32.5 per cent, or $325m, with 15 per cent unallocated. The NSIA has drawn up a long list of financial institutions to manage the future generations fund, which aims for a long-term return of US inflation plus four per cent. Investment options include listed stocks, hedge funds, private equity and real estate.

    Orji said he hoped this fund would be running by the end of March 2014. But he expressed concern about rising valuations in the developed world stock markets. “We find quite a few asset classes, such as US equities, to be a bit rich at the moment,” he said. “We see more value in emerging markets.”

    For the infrastructure fund, which will invest in Nigerian projects in sectors including power, healthcare, transport and agriculture, the NSIA has signed memoranda of understanding with the Africa Finance Corporation and International Finance Corporation to work together on transactions. It also has an agreement with General Electric (GE), and is in talks with Power China about a possible electricity investment.

  • Investment One eyes one-stop investment services

    The regulatory regime of the Central Bank of Nigeria (CBN) that redirected Nigerian deposit money banks to core banking activities created challenges and opportunities.

    CBN’s Scope of Banking Activities and Ancillary Matters No 3, 2010 requires banks to fully concentrate on core banking functions. It requires banks to either sell non-core banking businesses or form a holding company to hold such non-core banking businesses including activities such as insurance, asset management and capital market operations.

    Most banks, including Access Bank Plc, Diamond Bank Plc, Fidelity Bank Plc, Guaranty Trust Bank (GTB) Plc, Skye Bank Plc, Sterling Bank, Zenith Bank, Unity Bank and Wema Bank chose to divest from non-banking subsidiaries. Five banks including First City Monument Bank (FCMB) Plc, First Bank of Nigeria (FBN) Plc, Stanbic IBTC Bank Plc, United Bank for Africa (UBA) Plc and Union Bank of Nigeria (UBN) Plc have adopted the holding company structure, which separates core banking entity from other entities as subsidiaries under a single holding company.

    Altogether, restructuring banks have had to divest from about 80 subsidiaries. The challenges of such massive restructuring included divestments, spin-offs, changes in boards and shareholdings, delisting, listing, relisting, new strategic business plan, rebranding and several other anxious concerns that come with divestment, acquisitions and mergers. The new regime meanwhile created several opportunities too including new investments, prospects of improved professionalism, improved corporate governance and more importantly, financial sectors’ stability.

    However, the main challenge is ironically the main opportunity for the newly divested entities-standing alone after several years of group structure and comfort. For thriving erstwhile subsidiaries, the divestment was an opportunity to scale up and ‘live their visions’. But for others, it was a change too hard to muster.

    Investment One Financial Services Limited, the emergent company from the sale of erstwhile GTB Asset Management Limited (GTBAM), knows the challenges but rather sees opportunities in the changing landscape of investment services. With eyes on gains and the future of the new entity, GTBank had opted for management buy out (MBO) as divestment vehicle for GTBAM. Investment One is now owned by management and staff of the company and few select investors that share the philosophies of excellence and service that form the core values of GTBank and its former subsidiaries, the pedigree upon which Investment One is building on.

    With three acquisitions, three high-profile approvals for new functions and many awards in the past 12 months, Investment One is arguably the fastest growing investment company. In the latest acquisition, regulatory filing showed Investment One has acquired 99.9 per cent equity stake in Kakawa Asset Management Ltd (KAML), a former subsidiary of Kakawa Discount House Limited. The new acquisition brought with it complementary investment management expertise and products. Established in June 2004, KAML is registered by Securities and Exchange Commission (SEC) as a corporate investment adviser and fund manager and it is also dealing member and stockbroking firm at the Nigerian Stock Exchange (NSE). Over the years, it has established a niche as a bespoke provider of investment solutions and shared a common pedigree with Investment One through its affiliation to GTBank.

    The acquisition of KAML brought its Kakawa Guaranteed Income Fund (KGIF) into the portfolio of bespoke investment products under Investment One. KGIF is a premium unit trust scheme that delivers minimum return indexed to CBN’s Monetary Policy Rate (MPR), currently 12 per cent, and it makes dividend payment twice a year. Besides, a potential investor can earn additional return of 35 per cent of the net income of the fund. Investors can also use their funds in KGIF as collateral to borrow loans, finance children education and bequeath assets to children. The combined assets of Investment One and KAML amount to more than N50 billion in funds under management.

    Earlier, Investment One had acquired fund and management rights the Nigerian International Growth Fund (NIGFUND), a mutual fund of over N3billion, from Fidelity Bank Plc.

    Last month, it added Royal Trust Pension Fund Administrators Limited (RTPFA) as one of its subsidiaries following acquisition of 99.9 per cent shareholdings in the pension fund administrator. RTPFA already looks forward tom leveraging on the scale and expertise to enhance its profile in the pension industry. Managing Director, Royal Trust Pension Fund Administrators Limited (RTPFA), Mr Charles Sanni being a part of Investment One would enable the company to offer world-class products and services to its clients.

    According to him, RTPFA would leverage on Investment One’s core values of market insight, innovation and service excellence to achieve its vision of being Nigeria’s foremost pension manager.

    Besides the many acquisitions, Investment One’s stockbroking subsidiary, Investment one Stockbrokers International Limited has secured three high-profile additional functions at the stock market. It was appointed as one of the six Fixed Income Market Makers (FIMMs), companies that will provide two-way quotes for the sale and purchase of government and corporate bonds on the NSE to retail investors who do not meet the N100 million per transaction volume requirements of Primary Dealers-Market Makers (PDMMs). PDMMs deal mostly with banks and discount houses. It was also appointed as one of the 12 Supplementary Equity Market Makers (SMMs). Investment One Stockbrokers will provide two-way quotes and regular liquidity to a basket of 10 stocks including United Bank for Africa (UBA), Access Bank, Zenith Bank, Flour Mills of Nigeria, Mansard Insurance, Julius Berger, May and Baker Nigeria, CAP Plc, Total Nigeria and Red Star Express Plc.

    Investment One Stockbrokers was also recently appointed as one of the 14 Designated Advisers (DAs) for emerging stocks at the stock market. With this appointment, the company will act as advisers to companies listed on the Alternative Securities Market (ASeM) of the NSE. ASeM is primarily a vehicle to provide amenable access to capital for small and medium enterprises with good prospects, but still immature for the more rigorous requirements of the main board at the NSE. Investment One Stockbrokers’ arrays of new functions further confirmed its profile as one of the main market-driving stockbroking firms. It had emerged as one of the top 10 stockbroking firms by volume and value on the NSE in 2012.

    Besides immediate strategic positioning, Investment One recognises the importance of growing Nigeria’s investors’ base. It has launched a SEC-approved online investment education platform, Virtual Investment Simulator, which encouraged participants to learn about how to make informed investment decisions as well as enhance knowledge of the financial market. It allows investors to form exclusive investment clubs within the portal whereby participants can invite friends and colleagues to join, compete with one another as well as share ideas and post comments on the portal’s blog page. It had recently presented N500, 000 as star prize to the pioneer winner of the simulated investment game.

    With all these, Investment One was recently recognized as one of top 50 Fast Growing Companies in Nigeria. It was one of the three financial Sector companies recognised in the award category, which took into consideration the awardees’ growth rate of not less than 100 per cent per annum, employment of more than 6,500 people, business spread and business incubation records.

    The acquisitions and new functions, coupled with aggressive corporate development initiatives, have broadened Investment One’s one-stop investment services vision. Primarily licenced by the NSE and SEC to provide a wide portfolio of capital market services including investment management, trusteeship, issuing house, financial advisory and securities brokerage, additional functions and subsidiaries would enable Investment One to provide individual and institutional investors a holistic investment experience.

    Speaking recently, managing director, Investment One, Mr. Nicholas Nyamali, said the name ‘Investment One’ mirrors the company’s desire to be a one-stop shop for comprehensive investment services and the first point of call for insightful and innovative financial solutions.

    According to him, the name also reflects the firms’ strategic positioning as a service-oriented firm that is responsive to the investment needs of its customers while its payoff-forward thinking investment solutions, underscores its commitment to delivering financial services solutions backed by its long-standing core values of service excellence, innovation and market insight to individual and institutional investors.

    “The company is uniquely positioned to provide comprehensive services to meet our customers’ investment requirements. Whether to advise, execute, manage or transfer wealth to future generations, our customers will find the full compliments of investment solutions in our one-shop location – we call this the 360° Investment Partnership,” Nyamali said.

    According to him, the company is reputed for its ability to discover and generate new ideas to meet the diverse needs of its clients with a wide array of products and services including local and offshore equities and fixed income securities as well as alternative investment such as real estate securities, commodities and derivatives.

    “Our primary objective in meeting clients’ expectations is built upon three service benchmarks- execution, performance and efficient reporting. We execute clients’ mandates speedily and generate regular market reports that serve to update our clients about the status of their transactions,” Nyamali noted.

    With all these, Investment One appears to be well-positioned in the competition-driven realignments of operators and products and services in the Nigerian capital market.

     

  • Investment One to train investors

    Investment One Financial Services Limited has concluded plans to educate institutional investors on the intricacies of the capital market and strategies to ensure the continuous growth of their investments.

    In a statement in Lagos, Investment One, formerly known as GTB Asset Management Limited, said the second technical session for institutional investors would serve as a platform for interaction between institutional investors and market makers.

    According to the firm, the interactive session would engender understanding and enlightenment with a view to ensuring continuous growth of the market.

    The session will hold on June 26, 2013 in Lagos. Expected speakers at the session include Head of Research, Nigerian Stock Exchange, Ms. Yvonne Emordi, Dr. Doyin Salami of Pan African University and former managing director, ARM Pensions Limited, Mr. Funsho Doherty.

  • Bank to boost investment in Jigawa

    Diamond Bank Plc has expressed its readiness to bring forth prospective clients that will invest in agriculture, healthcare and Export Processing Zone (EPZ) in Jigawa State.

    In a statement, the bank said a senior official of the bank, Alhaji Muhammed Lawan Shuaibu, spoke at the Jigawa Economic and Investment Summit.

    It added that the bank is partnering with the state government for its first-ever Jigawa investment summit.

    The theme of the summit was: Mobilising investments for sustainable development and it was attended by different stakeholders – investment advisors and analysts, bankers and statesmen, among others.

    The state Governor Sule Lamido said: “We want to announce to the whole world with all the noise we can muster that we are ready and our doors are now opened to take Jigawa to the next level.”

    The Chairman of the summit Lord Paul Boateng said he had the conviction that the state has great potentials.

  • ‘Laws to grow investment in power sector needed’

    ‘Laws to grow investment in power sector needed’

    An energy law expert, Ayodele Oni, has called for new laws to create more incentives for investment in the “power value chain.”

    He said Nigeria also needs a few new regulations on “renewable” and on other engineering standards, cabling, among others.

    Oni, who holds an LL.M in Energy Law from the University of Calgary, Canada, is a Senior Associate at Lagos law firm Banwo & Ighodalo.

    He spoke at the presentation of his new book on the power sector: Nigerian Electric Power Sector: Policy, Law, Negotiation Strategy, Business.

    He said the problem with the energy sector, and the power subsector in particular, is not the dearth of laws, but the lack of enough action to attract private sector investments.

    According to him, if a sector of any economy is not profitable, private sector participants would not invest; and if the structure is not bankable, financiers such as banks would not provide finance to would-be investors.

    So, the problem, he said, is not the inadequacy of laws, but the structure of the market, lack of bankability and poor pricing. Other issues, he added, include the insufficiency of gas which is the fuel used by most power plants in Nigeria.

    “It is, therefore, my view that the challenge has not got much to do with the adequacy or otherwise of legislation, but other practical issues.

    “Indeed, it is the case that the Nigerian Electricity Regulatory Commission has been proactive and has been very actively issuing crucial regulations. As such, there is really no issue of inadequacy of laws or statutory instruments.

    “At the moment, a committee is currently updating the engineering and equipment standards regulations made pursuant to the repealed NEPA Act and Electricity Act respectively,” Oni said.

    He believes it is unnecessary to undertake any comprehensive law reform in the power sector, as that had been done in 2005.

    “We already have regulations for the protection of consumers and the challenge is largely that of enforcement. Issues like disconnection of power (de-energisation) of consumers have regulations dealing with them. There is no doubt, however, that we need to strengthen those regulations. We do not need full scale laws a little bit,” Oni said.

    On how he thinks Nigeria’s perennial power problem be solved, Oni said the government needs the political will to do so, adding that the strategy of paying lip service to issues relating to electric power should stop.

    He said: “The government should continuously provide an enabling socio-economic environment to encourage private sector investments in the sector. Apart from that, the government has made promises to the core investors in the PHCN companies being privatised; it should keep its promises.

    “Furthermore, gas supply issues should be properly dealt with so that there is sufficient gas to fire the power plants. The government should work with the management contractors to develop a robust national grid that can wheel larger volumes of electric power whilst developing a super grid and smart grid solutions.

    “Finally, pricing issues should be continually reviewed and the right people should always be given the opportunity to be at the places of authority such as, at the NERC and the Ministry of Power so that the best decisions in terms of policy and regulation are taken. We should not allow such delicate positions to be occupied by people who are merely politicians,” Oni said.

    A partner at the Banwo & Ighodalo, Mr Asue Ighodalo, who unveiled the book, praised Oni for “doing something that is truly wonderful.” He said the book has “a lot of fathers” in public officials who laid the foundations for the power sector reform.

    “There was a major gap in this sector. Ayodele has bridged that gap with this book. He is a great lawyer and a great mind. He showed that the mathematical skills needed to be a lawyer is in him. His tenacity, focus, analytical capacity and understanding of the sector is unparalleled. Where he finds the time to write, I don’t know,” Ighodalo said.

    The reviewer, Dolapo Kukoyi, described the book as elaborate and well-researched.

    “The language is simple, clear and easy to understand. The reader can appreciate both the scientific and technical sides. I recommend it to anyone who wants to know what the power sector is all about. I think it is timely. Thank you Oni for taking that initiative,” Kukoyi said.

  • Federal Govt seeks more investment in oil refining

    Federal Govt seeks more investment in oil refining

    Vice President Namadi Sambo said at the weekend that decreasing oil sales to the United States have provided the opportunity to create jobs by building refineries and developing markets closer home.

    Nigeria, a major member of the Organisation of Petroleum Exporting Countries (OPEC), lacks refining capacity and depends on imported fuel to meet domestic demand.

    Nigeria’s position as Africa’s biggest crude producer is threatened by Angola whose oil output is at par with what Nigeria produces.

    For the first time since 2009, Nigeria’s shipments to the U.S. slid to 194,000 barrels a day in February, the lowest in more than 18 years, according to the U.S. Energy Information Administration.

    “Part of our policy now, as a result of this, is that we’re attracting more foreign direct investment in processing the crude oil in Nigeria,” Sambo said told reporters in Yokohama, Japan. “That creates more jobs, and it creates wealth within the country.”

    The U.S. is Nigeria’s biggest crude buyer, importing cargoes valued at 724 billion naira ($4.6 billion) in the fourth quarter of last year stated the National Bureau of Statistics. The U.S. imports from Nigeria rebounded in March to 376,000 barrels a day, according to EIA data published May 30.

    Sambo is in Japan for the Tokyo International Conference on African Development, the largest African development forum outside the continent.

    Angola is poised to overtake Nigeria as the continent’s top producer of crude as oil thieves sabotage pipelines in the oil-rich Niger River delta. Nigeria pumped 1.87 million barrels a day in May, the same as Angola, according to data compiled by Bloomberg. Both belong to the Organization of Petroleum Exporting Countries.

    International producers including Royal Dutch Shell Plc (RDSA), Exxon Mobil Corp., Chevron Corp. (CVX), Total SA (FP) and Eni SpA (ENI) — in joint ventures with the state-owned Nigerian National Petroleum Corp. – pump about 90 per cent of the country’s output.

  • IPMAN advises members on strategic investment

    The Western Zone of the Independent Petroleum Marketers Association of Nigeria (IPMAN) has urged its members to embark on strategic investment to inprove the association, the downstream sector and empower themselves.

    Its ex-Chairman, Satellite Depot, Ejigbo, Mark Alaba Obu, who was a guest speaker at a one-day seminar organised for newly elected officers of IPMAN depots and zones, held in Ibadan, Oyo State, gave the advice while delivering his paper ,tagged ‘IPMAN: past, present and future.’

    Obu urged the executive members to look beyond the group’s present investment and take the association to the next level, by re-engineering the association and and strtegise on how to empower the members rather than seeking self interest.

    He said IPMAN could build and buy new depots. “It is better late than never. We can still embark on building, or buying, or taking over a depot that can be controlled by IPMAN, which will be purely owned by us.”

    He said the importation of petrol and kerosene should not be a challenge for members if the association has committed leaders at the zonal level. Such leaders can muster at least 200 members who will be able to commit a deposit of N1 million each to fast-track importation of kerosene and petrol for the benefit of members.

     

     

     

  • Investment experts predict tough outlook for Q2

    Investment pundits expect the stock market to witness moderation in the second quarter, as investors contend with expected increase in inflation rate and uncertain direction of the monetary policy committee (MPC) of the Central Bank of Nigeria (CBN).

    Average return at the Nigerian equity market closed the first quarter ended March 31, 2013 at 19.4 per cent, implying capital gains of about N1.8 trillion within the three-month period.

    Analysts at leading investment and research companies however said they expected a moderation in the performance of the stock market in the second quarter.

    In its preview of the second quarter, Cowry Asset Management Limited stated that though expectations of corporate benefits fromblue chips and improved quarterly earnings could initially further drivetherally in Nigerian equities market, a temporal price correction after the earnings seasonshould impact negatively on the overall performance of the second quarter.

    Analysts at Cowry Asset Management said they expected that the “secondquartershouldcloselower”.

    Cowry Asset Management hinted that current overvaluation observed in some blue chip companieson the Nigerian Stock Exchange (NSE) might triggera short term run on “hotmoney” therebymounting a temporal downward pressure on the Naira.

    Financial Derivatives Company (FDC) in its latest economic flash report noted that the uncertainty in the direction of the MPC of the apex bank, which sets the Monetary Policy Rate (MPR), would make fixed-income traders and portfolio managers to take short positions.

    According to the report, although the decline in inflation rate to 8.6 per cent in March has raised expectations and clamours for reduction in benchmark interest rate from current level of 12 per cent, the likelihood of revenue shortfall may make the MPC to keep the MPR at current level.

    “The depreciating value of the naira can be linked to the falling oil revenue resulting from the state of the oil sector where oil output is plummeting and global oil prices are falling below estimates. The MPC will meet on May 20 and 21 and most indicators are in favor of a rate cut. However, the threat of a revenue shortfall and widening fiscal deficit due to the decline in oil price and production may tilt the balance in favor of maintaining the status quo once again,” FDC stated.

    Analysts underlined the importance of keeping the expected rise in inflation rate in the months ahead in view, which would further reduce the real returns on securities.

    Analysts at FSDH Merchant Bank Group estimated that though inflation rate is expected to remain in single digit throughout 2013, inflation would overshoot March’s 8.6 per cent level in April and May on account of base effects from last year.

    FSDH, however, indicated revised average inflation rate forecast of 8.6 per cent for 2013, a target that should encourage the apex bank to lower the MPR.

    “Rates and yields on fixed income securities may no longer trail inflation rate in the short term on account of other macroeconomic threats to the economy,” FSDH noted.

    Analysts pointed out that the stock market has not shown much enthusiasm to earnings reports and dividend recommendations in recent times because investors had factored the expected earnings into the pricing of these stocks.

    “As more result trickle into the market in subsequent weeks, we are most likely to see a haphazard trading pattern. We urge investors to stick to stocks with good fundamentals,” FSDH stated.

    Equities had glided through the first quarter with mouth-watering returns that dwarfed the celebrated performance of the stock market in the previous year. With three-month returns as high as 231 per cent, the first quarter of 2013 was the most resurgent first quarter in recent years.

    The All Share Index (ASI), the common value-based index that tracks all equities quoted on the Nigerian Stock Exchange (NSE), closed the first quarter at 33,536.25 points as against its index-on-board of 28,078.81 points for the year. This represented a three-month return of 19.44 per cent.

    Reflecting the value inherent in the ASI movement, aggregate market capitalisation of all equities rose by 19.6 per cent from 2013’s opening value of N8.974 trillion to close the first quarter at N10.733 trillion, indicating increase of N1.76 trillion.