The Nation Newspaper

Tag: MARKET

  • The market is market

    The signs are all too clear and they point to one thing : President Goodluck Jonathan should go. Not too long ago, many of those seeking his exit today were his ardent supporters. They rallied round him when some forces wanted to sideline him in the running of the country when the late President Umaru Yar’Adua died in May 2010. Before Yar’Adua’s death, those who had custody of him prevented then Vice President Jonathan from knowing what was happening.

    Jonathan was in the dark about the health of his boss and about everything that was going on in government. He was number two just in name and as his wife, Dame Patience, later revealed, he was reduced to reading newspapers in the office, while some of the late  Yar’Adua’s aides and his widow, the then First Lady Turai ran the country.

    But the bubble burst when Yar’Adua died. The cabal was exposed for what it was. Since the Constitution states explicitly that the vice president should take over after the president’s death, they had no choice than to allow the law take its course.

    Because of the goodwill he then enjoyed, winning the 2011 election was a piece of cake for Jonathan. But in less than two years in office, he burnt his bridges. Across the country today, the singsong is that Jonathan must go. Why is this so? What offence did he commit? Has he not fulfilled his promise to end irregular power supply? Has he not built or reconstructed roads? Do we still have unemployed graduates roaming the streets? Are our schools and hospitals not functioning well? So, why should anybody campaign against Jonathan’s  return?

    It was easy measuring whether he still enjoys the support of the people with what happened nationwide on New Year’s eve. In their New Year messages, virtually all the clerics hinted that change was in the offing. They were not campaigning against Jonathan; they were telling the people just like former President Olusegun Obasanjo did on Monday ‘’to vote wisely’’. Redeemed Christian Church of God (RCCG) General Overseer Pastor E.A. Adeboye said being an election year, he would not  say much. ‘’But at the end of the year’’, he told his flock, ‘’many of you will say all is well that ends well’’. I leave the decoding of that to you.

    To Mountain of Fire and Miracles Ministry (MFM) General Overseer Pastor D.K. Olukoya, Nigeria will not break up over the coming elections. But the  renowned Enugu based Catholic Priest, Rev Father Camillus Ejike Mbaka, did not mince words in giving his own message. ‘’We need change. Whatever it will be, let it be. This is my golden message to my beloved country…By the grace of God, by the power of the Holy Spirit, we are announcing spiritually,  change! 2015 should not be a year of any hooligan maneouvring to hijack power. This is our New Year message. Listen, when you get home, tell anybody you see that from the oracle of the Holy Spirit, we are announcing change. Can somebody help me to shout change in Jesus Holy name.

    ‘’Once upon a time, the whole country was crying for a leader who would help us to move forward with our economy, have an authentic democracy, give our unemployed youths jobs, enable our power to be steady, who would industrialise Nigeria, who would encourage mass education and agriculturise Nigeria…Then Goodluck met Yar’Adua and Yar’Adua died. Before you know it, the Goodluck met our oil and our oil had a bad luck and poured away. Before we knew it, the Goodluck met our naira, our naira had a bad luck. Where are we going? What is the fate of this country? Shall we continue like this? We need change.’’

    No matter how you look at it,  the Revered Gentleman has said it as it is. We need change. Things cannot be allowed to continue like this. If yesterday, we were shouting hossanah, we did so in ignorance because we thought Jonathan will correct societal ills. With his humble background and most importantly, considering the circumstance of his emergence, we thought he would have the people’s feelings at heart. The country has not benefited from his leadership looking at all indices of development. This is why today, the people are calling for change.

    Those reaping from the system will, of course, say otherwise, but the larger segment of the society that is at the receiving end cannot but wish for change this year. Change does not come easily, it must be worked for. So, Nigerians should be ready to, with their votes, effect a change in national leadership in next month’s elections. Enough of crying in the corners of our homes, lamenting the rot in the system. We can do something to remedy the situation and that is by casting our vote ‘’wisely’’ as  Obasanjo advised.

    You may not like Obasanjo, but you may not fault him at times when he takes his stand on certain issues. Being a former leader, he knows the workings of the economy inside out and the picture that he painted of things on Monday is not palatable at all. Hear him: ‘’Our nation is plagued with insecurity, economic downturn, increase in poverty, corruption and impunity in doing things. People do things because no man can do anything to them, but God will catch them.

    ‘’Our economy should not have been this bad. When I was leaving office about eight years ago, I left a very huge reserve after we had paid all our debts. Almost $25billion we kept in what they call Excess Crude Account. When we left in May 2007, the reserve was said to have been raised to $35billion. But today, that reserve has been depleted.

    “Our reserve after we had paid off this debt was about $45billion. I heard that the reserve increased to almost $67billion before the end of that year. Our reserve now, I learnt, is left with around only $30billion. That is why the naira has been falling against the dollar…’’

    The Southeast which Jonathan considers home seems also to be up in arms against him. In an upcoming interview in The Sun, former Vice President Alex Ekwueme hinted that “Jonathan  may not have maximum support from the Southeast”. This statement is pregnant with meaning. The handwriting is clear on the wall. The chances of Jonathan being rejected at the poll are high. But his loyalists see his chances as bright and are goading him on with such  statement as “in 2015, it is either good luck or bad luck”

    Of course, it will be our good luck if he loses and otherwise if he wins. Well, you do  not tell a blind man that the market is over. He will return home when he no longer hears the noise of the market place.

  • Bearish market upsets companies’ capital raising plans

    The downtrend at the Nigerian Stock Exchange (NSE) is holding up activities at the primary market as many companies that had planned to float new offer and raise new funds fear the continuing decline might undermine the attractiveness of their offers.

    The stock market opened this year, on Monday, with a loss of N241 billion, representing average decline of 2.1 per cent on the first trading day of the year. Equities had lost an average of 16.14 per cent in 2014, with several equities posting substantially higher losses.

    Market sources in know of ongoing supplementary issuance plans said the downtrend has forced many companies to review their capital raising programmes.

    Analysts at FBN Capital also said the bearishness at the secondary market might have adverse effect on the primary market as companies may delay their impending offers.

    Market sources said some companies were favourably disposed to delaying their new issues because of the significant undervaluation of their fundamentals by the losing spree.

    They cited a leading energy group that had opened its application for a rights issue but now trading substantially below its rights price.

    Companies that had indicated interests in raising new equity funds included Access Bank Plc, Sterling Bank, Presco, Vitafoam, RT Briscoe and Cement Company of Northern Nigeria. Access Bank has already filed its offer documents with the Securities and Exchange Commission (SEC) for statutory review and approval.

    UBA has launched a rights issue of N13 billion at N4 per share, marginally above its opening price of N4.32 yesterday. Access Bank’s share price dropped by 3.33 per cent to N6.38 on the first day of trading at the NSE. Sterling Bank, which had recently held an extraordinary general meeting on a planned new issue, also dropped by 4.72 per cent to close the first trading day at N2.42 per share. Sterling Bank plans to raise about N50 billion in a new round of capital raising. It plans to raise about N20 billion through a special placement to identified strategic investors and more than N30 billion in another yet-to-be-specified instrument.

    According to the resolution at the extraordinary general meeting, the bank plans to issue about 7.472 billion ordinary shares of 50 kobo each at N2.65 per share to Messrs. Silverlake Investments Limited or such other identified strategic investor.

    In another resolution, the board of the bank sought to raise additional capital up to $200 million or its equivalent in Naira. The fund could be raised through any or a combination equity, global depository receipts, quasi equity, convertible loans, medium term notes, bonds and any other debt instrument.

    Presco Plc, which had initially indicated it planned to raise some N3 billion at a price of N35 per share opened yesterday at the NSE at N24.50 per share, significantly lower than its proposed offer price.

    Several analysts’ reviews on the Nigerian banking sector have outlined capital raising as a major theme for the Nigerian banking sector, citing new regulations and emerging business opportunities.

    The Nation had earlier reported that  banks might raise some N400 billion in the current capital raising phase to strengthen their capital base in view of the impending implementation of the Basel II.

    The Basel II is the second global standards of capital adequacy issued by the Basel Committee on Banking Supervision under the auspices of the Basel, Switzerland-based Bank for International Settlements (BIS), the oldest international financial organisation that coordinates central banks and standards for the international financial markets.

    The Basel Committee has issued three sets of the global standards including Basel I, Basel II and Basel III, which increased and stricter capital risks and exposure management requirements from one level to another.

    Basel II seeks to strengthen banks’ risk and capital management through three main areas, otherwise known as pillars. The first pillar deals with minimum capital requirements, the second pillar deals with supervisory review process while the third pillar deals with processes relating to market discipline. The pillars ensure that the greater the risk to which a bank is exposed, the greater the amount of capital and required supervisory framework.

    After initial delay, Nigeria has set October 2015 as the cut-over date for the implementation of Basel II.

    Investment banking sources had indicated that many banks have started the process of raising funds, a new level of activities that is expected to increase the momentum of the phase of fund raising, which gathered pace in 2013.

    Several pundits in the know of undercurrents in the capital market indicated that banks might raise some N400 billion to boost their capital base and strengthen their compliance level in view of the stricter requirements under Basel II.

    According to the sources, although the average capital adequacy ratio in the banking industry is high and most banks are above regulatory benchmark, banks might need to support their adequacy ratios, which are expected to fall after the cut-over.

    The sources indicated that banks might combine debt and quasi-equity instruments with outright equity issues with focus on both tier I and tier II capital.

    Head, Research and Investment Advisory, Sterling Capital Markets, Mr. Sewa Wusu, however, said in as much as the changing price dynamics at the NSE will affect pricing of new issues, some offers may come at premium to the market prices since the prices were based on fundamental valuation.

  • 300 shops razed in Zaria market

    No fewer than 300 shops were on Saturday burnt at Sabon Gari Zaria main market in Sabon Gari Local Government Area of Kaduna State.

    It was gathered that many property worth millions of naira were destroyed in the incident.

    An eyewitness told our Correspondent that the cause of the fire was not yet known, but it was suspected that might have been caused by an electric spark.

    The eyewitness who identified himself as, Lawal Isa said. started in the early hours of Saturday, when the market was already closed.

    He said, “It was good Samaritans and men of the fire service worked very hard to put off the fire and prevented it from getting to other side of the market.”

  • 2015: A year of changes at the capital market

    2015: A year of changes at the capital market

    2015 will witness a lot of changes at the capital market. From the regulatory agencies to operators and investors, the New Year will see many twists and turns, writes Capital Market Editor Taofik Salako

    For the capital market, next year will witness many changes. Against the backdrop of negative return in 2014, the expected tight macroeconomic condition in 2015 and the resultant fiscal and monetary adjustments will serve as the mixer for a mixture of political, operational and regulatory variables, which are expected to moderate the market’s performance and investors’ return in 2015.

    The year is starting with the expiration of the tenure of the director-general of the Securities and Exchange Commission (SEC), Ms Arunma Oteh. The reappointment of Oteh or appointment of a new director-general will dictate the pace for many market developments, including the recapitalisation of capital market operators.

    Ms Oteh resumed as director-general in January 2010. Her tenure ends  January 2015. The Investments and Securities Act (ISA) 2007, the law regulating the capital market, provides for a five-year tenure for the director-general, in the first instance, renewable for a similar term of five years only.

    Section 5, subsection 1 stipulates that the director-general and the three full time commissioners shall be appointed by the President upon the recommendation of the minister and confirmation by the Senate. Section 5, subsection 2 states that “the Director-General shall hold office for a period of 5 years in the first instance and may be reappointed for a further period of five years and no more”.

    However, subsection 5 states that “Notwithstanding the provisions of subsections (1) and (2) of this section, the President may extend the tenure of office of the director-general and any of the Commissioners whose term of office has expired until a successor to such director-general or commissioner is appointed”.

    In the alternative, the director-general may be requested to appoint one of the commissioners to supervise activities in her absence. Subsection 7 stipulates that “the director-general or, in his absence, one of the commissioners nominated by the director-general shall be responsible for the day to day management and administration of the Commission and shall be answerable to the Board of the Commission”.

    The choice of the chief executive for the nation’s apex capital market regulator is already keeping the market on the edge. Discussions were in hushed tones at the Abuja headquarters of SEC and within the major financial centres of Customs Street and Victoria Island. Opinions are divided on Oteh’s continuity and otherwise.  Oteh’s reappointment will give verve to her reforms, especially in  corporate governance, disclosures and enforcements. She will step on with the recapitalisation of capital market operators, which has pitched her against the multitude of small and medium operators. She may also have another chance to push for her unrealised targets of full dematerialisation, unclaimed dividend management, new complaint management framework, demutualisation of the Exchange and review and promulgation of many laws that could aid market developments. Most important, she will be able to drive the long-term master plan for the capital market, a blueprint she had championed and launched in Abuja in the last quarter.

    But Ms Oteh faces stiff oppositions from sundry market operators, investors and stakeholders groups, including staff of the SEC. She has major obstacles in the National Assembly, which has subsisting orders against her and had blocked subvention to SEC. The Presidency  ignored the legislative resolutions but it will have to return to the National Assembly to get approval for any appointment into the office of SEC’s director-general. Several stakeholders want to see a new chief executive who could draw on the capacities of the various constituents, including the National Assembly, to push for major changes that could alter the market development. They cited inability of Ms Oteh to put the capital market forward as the vehicle for government’s divestitures in the power sector and absence of legislative supports for the market.

    Ms Oteh, who had been accused of conflict of interest, is also unsuitable to supervise the demutualisation of the Exchange, some alleged.

    The General Secretary, Independent Shareholders Association of Nigeria (ISAN), Adebayo Adeleke, is canvassing for a new chief executive, an opinion he said mirrored the feelings of the average retail Nigerian investor. Their grouse was the takeover of three quoted banks by the Central Bank of Nigeria (CBN) without whatever consideration for retail investors and lack of enforcement actions against the indicted executives in the banks’ malfeasance. Oteh’s reappointment will kick-start the implementation of the recapitalisation of capital market operators.

     

    New capital, new operators

    January 1, 2015 is a signal date for capital market operators. That’s the take-off date for the new capital new capital base for various functions prescribed by SEC as well as the minimum operating standard (MOS) requirements prescribed by the Nigerian Stock Exchange (NSE). With the December 31 deadline for compliance, 2015 will be a decisive year for the sifting the capital market operators. While there is ongoing intense lobby for extension of the recapitalisation deadline, it’s almost certain that capital requirements will play decisive roles in the classification of market operators going forward. SEC had in December 2013 announced new minimum capital requirements for all capital market operators, with a compliance deadline of December 31, 2014 and effective take-off on January 1, 2015. Under the new capital requirements, minimum capital base for broker-dealer was increased by 329 per cent from the existing N70 million to N300 million. Broker, which currently operates with capital base of N40 million, will now be required to have N200 million, representing an increase of 400 per cent. Minimum capital base for dealer increased by 233 per cent from N30 million to N100 million.

    Also, issuing houses, which facilitate new issues in the primary market, will now be required to have minimum capital base of N200 million as against the current capital base of N150 million. The capital requirement for underwriter also doubled from N100 million to N200 million. Trustees, rating agencies and portfolio and fund managers had their minimum capital base increased by 650 per cent each from N40 million, N20 million and N20 million to N300 million, N150 million and N150 million respectively. A  Registrar will now have a minimum capital base of N150 million as against the current requirement of N50 million. While the minimum capital base for corporate investment adviser remained unchanged at N5 million, individual investment advisers will have to increase their capital base by 300 per cent from N500,000 to N2 million.

    Stockbroking firms under the auspices of Association of Stockbroking Houses of Nigeria (ASHON) have already called for a deferment of the deadline. Many wanted the suspension of the recapitalisation altogether. President, Association of Stockbroking Houses of Nigeria, Mr. Emeka Madubike, said the stockbroking firms have made a case for extension or deferment of the deadline. According to him, the recapitalisation, as it is now, is not in the best interest of the market and should be reviewed.  “For me, I believe that whatever we are doing, we are doing it in the interest of the market. So, if whatever you are doing doesn’t seem to be in the interest of the market, you need to restrategise. What we are asking for is a deferment of the deadline,” Madubuike said. Many stakeholders feel that the new minimum capital requirements may adversely impact the market penetration and financial inclusion programme.

    But the NSE has already indicated it will stick to the December 31 deadline for its reclassification programme for stockbroking firms based on the operating capacity of the firms. The new MOS standards relate to all the three classes of dealing members including broker-dealers, brokers and dealers and address the five broad areas of manpower and equipment; organizational structure and governance; effective processes; global competitiveness; and technology. The Nation had reported that a circular was dispatched to stockbroking firms on the eve of the Yuletide holidays affirming the deadline and outlining the implementation framework for the MOS. Under the MOS, stockbrokers will be reclassified under four categories according to operating capacity in 2015 while other stockbroking firms that fail to meet requirements for any of the four categories will be exited from the market. Also, existing stockbrokers that fail to meet the first three levels of operating standards will be reclassified as sub-brokers, partially recognised operators, and they will lose their membership of the Exchange.

    With effect from March 31, 2015, each dealing member of the NSE is required to submit a final MOS compliance level report in the prescribed templates previously provided by the Exchange. Dealing members that do not comply by March 31, 2015 will immediately be suspended from trading until they comply. Also, commencing in April 2015 and until the beginning of the fourth quarter of 2015, the Exchange will conduct thematic reviews and examinations to evaluate each dealing member’s level of compliance with the MOS. Following the thematic reviews and examinations, stockbrokers that are not in compliance with the MOS by the fourth quarter of 2015 will be advised to reclassify from broker-dealer status to a classification with lower MOS requirements. These include splitting the functions and becoming either a broker or dealer or becoming a sub-broker, a quasi operator with no membership of the NSE. Other stockbroking firms that fail to meet any of the four categories will be directed to “exit the market in an orderly manner”.  Head, legal and regulation division, Nigerian Stock Exchange, Ms Tinuade Awe, said the objective of the minimum operating standards is to transform the operators into more competitive and compliant operators. “We intend to ensure that the broker dealers, brokers and dealers have very robust controls, strong governance framework and sustainable operations that will enable them compete on a global scale for the benefit of the investors and the Nigerian capital market,” Awe said.

    Analysts’ estimate indicates that not less than 200 stockbroking firms may be affected by both the recapitalisation and the MOS scheme. This may further pressure the delicate overall market situation, which is under extraneous influence of the global crude oil crisis and resultant national monetary and fiscal adjustments.

     

    Another difficult year

    Head, Equity Research, FBN Capital Limited, Olubunmi Asaolu, said 2015 could be another difficult year for investors given the global crude oil crisis, a variable that has served as triggered for a chain of reactions, including tight monetary and fiscal policies. “Given the challenges which the oil price decline is posing, we expect next year to be another relatively difficult year for the equities market, though we don’t expect it to be as bad as this year,” Asaolu, a chartered financial analyst (CFA) said. Nigeria earns more than 70 per cent of its national revenue from crude oil.  With a steep decline in global crude oil, by some 40 per cent, rocking the national economy, the Central Bank of Nigeria (CBN) had responded with increase in monetary policy rate (MPR) from 12 per cent to 13 per cent, the first change in three years. It also devalued naira exchange rate to N168 per dollar with a band of +-5.0 per cent, that is, N160-N176. It was previously at N155 per dollar with a band of +-3.0 per cent, that is, N150-N160. Many analysts said they expected the apex bank to further devalue the Naira in the New Year. The increase in interest rate, the devaluation of Naira and expected spike in inflation rate are expected to combine to further constrained corporate earnings in the New Year. This will also be compounded by the unrelenting violence in the Northern region. Already, the International Monetary Fund (IMF) has cut its 2015 growth estimate for Nigeria to five per cent, as against initial 6.9 per cent estimated for 2014.

    A worsening macroeconomic outlook, especially with regards to reactive monetary policies, could proof to be fatal for the capital market in 2015. The Nigerian capital market is dominated by foreign investors, whose initial concerns about the macroeconomic performance had sustained decline all through the second half of 2014. Latest Foreign Portfolio Investment (FPI) by the NSE showed that foreign investors had taken away more than N101 billion from their portfolio investments in Nigeria by October 2014. The October report indicated that Nigeria recorded a net foreign portfolio deficit of some N101.41 billion over the past 10 months as divestments significantly outpaced investments by foreign investors. The NSE report is generally regarded as a credible gauge of foreign portfolio investments in Nigeria as it coordinates data from nearly all active investment bankers and stockbrokers. Nigeria operates a mono stock exchange, which makes the NSE the sole gateway to the nation’s stock market and the NSE’s benchmark indices, the country indices for Nigeria. Foreign portfolio outflow was N676.67 billion as against inflow of N575.26 billion during the 10.-month period, representing a net deficit of N101.41 billion. While the ratio of foreign-domestic investors participation fluctuate month-by-month, trading data have established firmly that foreign investors are the largest and most dominant bloc in the Nigerian capital market.  In October 2014, foreign investors accounted for 87.5 per cent of total market transactions.

    Head, research and investment advisory, Sterling Capital Markets, Mr. Sewa Wusu, said anxieties over Nigeria’s macroeconomic and monetary outlook in the light of the declining global oil prices and rising economic risks would combine with political risks to moderate the performance of the market.

    Head, financial advisory, GTI Capital Limited, Mr. Kehinde Hassan, said the 2015 general elections hold strong influence on the performance of the market going forward. Both Wusu and Hassan agreed that either way, the politics of 2015 will modulate the market performance. According to the analysts, a change in government in the February 14 presidential election and renewal of ongoing presidential term will influence the economic direction and investors’ reaction.

    Besides, the expected cut in banks’ earnings in the New Year could have strong sectoral influence on the market. Banking stocks are the most active stocks and they have influence on the overall market situation. The progressive reduction in Commission on Turnover (COT) will again reduce this charge from N2 per N1,000 in 2014 to N1 per N1,000 in 2015, halving banks’ earnings from this source. Impending capital adequacy ratio (CAR) changes are also expected to impact cost and earnings. Large commercial banks classified as systemically important banks (SIBs) are required to have an additional 100 basis points on the general benchmark of 15 per cent, that is, 16 per cent CAR with effect from April 2015. Nigerian banking industry will be adopting Basel II Capital Accord with effect from October 2015. “The adoption of Basel II essentially means additional capital charge for market and operational risks,” Head of Finance, FBN Holdings Plc, Mr Oyewale Ariyibi said.

    There is also the fear that the large exposure of banks to the oil and gas sector may have a pronounced impact on their bottom-line. While Ariyibi allayed the fears of burgeoning non-performing loans, he agreed that the exposures to the sector could impact on margins. “If the fundamentals of the obligors’ businesses do not change, loans do not go bad; however, temporary macroeconomic challenges might impact margins and profitability,” he said.

    Asaolu noted that the performance of the market may not be as worse as in the outgoing year. Head, Research and Intelligence, BGL Plc, Mr. Femi Ademola said although the volatile political situation is likely to scare investors away from the market, expectation of strong year end results and attractive corporate actions by listed companies could still lead to positive sentiments for the equity market. He noted that the recent reversal in oil price from below $60 to about $62 per barrel with a one year outlook of about $65 per barrel would also help to stem exchange rate volatility and thus attract portfolio investment to the country, post-election.

    “Empirical evidence suggests that Nigerian market usually recover strongly once elections have been settled and the likely policy stance of the new administration established. Therefore, we are optimistic of a positive outlook for the market in 2015, albeit modest,” Ademola said.

    Whichever twist, whichever turn, the New Year is loading, and it will throw up many challenges and opportunities.

  • Ogun inaugurates farmers’ market

    The Ogun State government has  opened the first-ever modern farmers’ market, Oja Agbe, at Asero, Abeokuta, the state capital.

    The Governor, Senator Ibikunle Amosun, said the objective of the farmers’ market is to bring healthy food close to the people at affordable prices.

    Amosun said the government was collaborating with  some foreign and local agricultural experts to  impact their knowledge on the state farmers.

    He added  that his administration was committed to returning  the lost glory of the sector,explaining that increased agricultural production could lead to job generation, wealth creation, poverty reduction, feeding of the masses and serve as source to finance to other social services within the state.

    “In the days of our fore-fathers,our economy was stable even though there was no oil,their major source of livelihood was farming and we are  back to the roots to restore the old glory of the agricultural sector. This Sstate is blessed with fertile land and we are going to continue exploring it,”Amosun said.

    The Governor said his administration  was proposing to replicate the Farmers market in the remaining 19 Local Government Areas in the state.

    He said  good and motor able roads would be made available  to enhance transportation of farm produce and enable investors have access to various farm locations and markets.

    Earlier, the Commissioner for Agriculture, Mrs Ronke Sokefun said the daily market is made up of 24 open stalls and one main lock-up shop, explaining that the open stall will serve as display for sale of fresh farm produce  such as fish, egg, fruits, vegetables, while the lock-up shop will be used to sell packaged farm products lisuch as smoked fish among others.

    Sokefun reiterated that the market is one of the projects implemented by the administration to develop the agricultural sector, as she recalled the successful implementation of Oja Irorun at Oke-Mosan for the public servants.

    The Senior Special Assistant to the President on National School Agricultural Programme (NSAP), Dr.Baraka Sanni ,said she was happy to associate with an agriculturally developing state such   as Ogun and assured the people of continous support of the Federal Government.

    Earlier, Chairman, All Farmers Association of Nigeria (AFAN) Ogun State Charpter, Chief Segun Dasaolu expressed profound gratitude on behalf of all farmers to the State government for the fulfilment of its promise in opening a farmers’ market.

    Dasaolu applealed to the Governor to interact more with the farmers as this would avail them the opportunity to meet with stakeholders in the  sector.

    In his remarks,the secretary of Ogun State Leaqueof Federated FADAMA, Mr. Abiodun  Oyekan assured the government of continous farmers’ market.

     

  • Today at Oshodi market

    Tomatoes and pepper are on sale at the popular Oshodi market this week. However, prices of these staple food items remain the same. Despite that more restaurants, businesses are open within the market, sellers say they rather sell at the usual price of N100 per medium size tray.

    Second on the list is rice, a must have in every home. Its price range is between N7,500 and N10,000 per bag. The most sorted brand is the special rice. Honeywell Semolina sells compared toWheat, people are buying more white garri than Yam flour.

    In the oil section, Palm oil patronage tops that of Vegetable oil. Indomie noodles is leading in its category. Oloyin (honey beans)  leads Olotu and drum, cow meat sellers as well as Frozen fish sellers welcome more visitors compare to their goat meat and frozen chicken counterpart.

    The market records more people buying tubers of yam and bunches of plantain, particularly the unripe plantain.

  • Kuje market for upgrade to check fire

    The Kuje Main Market will be upgraded with modern facilities to, among other things, check fire incidents. The modernisation project will be carried out under a build, operate and transfer contract.

    The chairman of Kuje Area Council, Hon. Ishaku Shaban Tete signed the contract.

    The multi-million naira project is a partnership between the Kuje Area Council and Greenhouse International Ventures Limited.

    In the Memorandum of Understanding signed by both parties, Greenhouse International Ventures Limited will rebuild the market and transform it into a market of international repute.

    According to a statement signed by the Managing Director of Greenhouse International Ventures Limited, the company is expected to rebuild the market, manage it for twenty five years and later transfer it to the Kuje Area Council.

    It reads: “It is expected that the developer will be able to recoup its financial resources put into the project within these twenty five years.

    “This contract is a great example of the Federal Government’s public, private Partnership initiative designed to promote the development of infrastructure in the country. When completed, the market will have facilities such as 532 lock up shops, two warehouse, 500 open shops, 72 Plaza stores, one modern Abattoir, Day care center, Medical Center, places of worship, police post, toilets and conveniences, one bank, fire service post, organized car park, central refuse evacuation point, modern and well secured gates, security cameras and other convenient facilities which will uplift the statues of the market.

    “The market under this new arrangement will cater for the needs of different categories of traders thereby giving the market a cosmopolitan profile. Even though the land area housing the market is limited to about 3.2 hectares, it will be designed to have most modern infrastructure that traders will be proud of because of the centrality of its location.”

  • EU’s finance chief to unveil capital market plan

    The EU’s new financial services chief has pledged to set out his plans for a pan-European capital market by the middle of next year, aiming to reduce companies’ reliance on banks and help revive the bloc’s fragile economy.

    Jonathan Hill, the European Commissioner for financial services, said he was seeking to create an integrated capital market over the next fives years and would develop a plan by next summer following a public consultation.

    “We still do not have a fully functioning single market for capital,” Hill told a conference of EU officials and business leaders. “I will be bringing forward proposals to deliver a capital markets union; a project for all 28 EU Member States.”

    Channeling more money into small companies is seen as crucial for Europe’s efforts to avoid economic stagnation because small and medium enterprises provide two out of every three private sector jobs in the European Union.

    Following the worst financial crisis in a generation, banks are reducing riskier lending, a problem in a continent where banks account for 80 percent of corporate loans.

    A capital markets union would mean the EU moving beyond public subsidies and loans to coordinate financing for companies and infrastructure through project bonds, public-private partnerships and infrastructure funds.

    Hill said his first steps would be to push a proposal for European long term investment funds for infrastructure and businesses, to develop a framework for securitisation and to carry out analysis of private placements – the sale of securities to a small number of chosen institutional investors.

    “I am interested in ideas for more market finance instruments – but not just in safe short-term debt, but in longer term stable debt that encourages long term investment, and in real risk capital that encourages innovation.”

    The European Central Bank is at the heart of wider efforts to create a capital markets union by trying to revive securitization, or the bundling of loans into bonds to raise cash for companies to invest.

  • Insecure, polluted Karmo market

    Insecure, polluted Karmo market

    ITS fame does not match its challenges.

    Karmo Market in Abuja Metropolitan Area Council (AMAC) is like any other in any rural area. It is one of the largest markets in the Federal Capital Territory (FCT) but lacks basic infrastructure.

    It is located almost near the centre of the town a few kilometers away from the Central Business District (CBD). Not only do residents troop in every Tuesday to buy or sell, traders from neighbouring towns and states, especially Zuba in Niger State, also visit the market to sell their wares.

    While Karmo town still grapples with lack of good road infrastructure, safety remains a thing of concern for residents and traders. Traders are either wracked by the fear of the unknown or they are worried about demolition, a common trend in the FCT Department of Environmental Control.

    Apparently, one of the challenges Karmo traders experience is that of renting standard shops. This is even as they complain over losses incurred on goods worth millions of naira due to lack of proper structures. The traders also wonder why the Abuja Metropolitan Area Council (AMAC) demands N5,000 fees annually and N200 extra charge on every market day and yet refused to develop the market.

    What has become a daily nightmare for motorists and a major concern for traders in the market is the unavailability of parking spaces for vehicles. As a result, motorists stop by the roadside to pick, drop passengers or offload goods at the detriment of other motorists as it most times results in traffic disorder.

    This is also compounded by traders who conduct business transactions by the road side. They prefer to push their wares closely to the single-lane road which links it with the popular Berger Roundabout to Die-Die/Kubwa Expressway. This, according to a commuter, is to attract customers.

    On the security situation in the market, traders often times lament the illegal operation of security officials.

    Investigation by our correspondent revealed that security officials deployed to some areas in the market allegedly extort money from commercial drivers, an act far from their official duty which is to ensure protection of lives and properties.

    Despite these unpleasant situations, Karmo Market appears to be the favourite choice for buyers and sellers among other local markets in the territory.

    Its proximity to the town and affordable cost of commodities could be reason for its popularity.

    It is a place of choice for residents who cannot afford to visit the popular Exclusive Stores and Malls.

    When markets in developed societies are provided with basic infrastructure such as power, effective water supply; security and horticultural designs, little or none of these are found in ‘Karmo’ and other market premises across the territory.

    However, as good as it may appear, a visit to the market revealed urgent need of adequate security for the people, especially on every market day.

    Meanwhile, Chairman of the market association, Mr. Michael Ifemenam said about 10, 000 traders visit the market weekly.

    Obviously, the conditions in the market indicate that the traders are susceptible to danger, even in the current security situation in the country.

    There is the presence of a handful of security operatives mainly at the entry and exit of the market while few security officials were seen patrolling the road, with the sole aim of easing traffic congestions.

    However, some of the traders who spoke to our correspondent demanded adequate security in the market.

    A dealer in DVD, audio and tapes who identified himself as Ayotunde said: “Insecurity in Abuja will be a child’s play when compared to what may happen if there is any bomb blast in this market; the death toll will be outrageous. That’s why we need serious security here. It’s very important.”

    Another trader, Austin Seal who deals in phone accessories said he had been operating at the market for over three years, adding that the issue of insecurity was never a concern until the recent bombings in the FCT.

    He further said there was the need for commitment on the part of security officials saying.

    He said: “I don’t think government is bothered about security in the market, but the market association provides security every market day. There is a police station nearby. The officers also go round to monitor any breach of the peace.”

    On his part, John Paul, a student who trades in used phones at the market, accused security officials of unlawful extortion of money from drivers who stop-by to pick passengers.

    He added that security of lives and properties in the market was of little or no interest to them.

    He said: “Most of the security officers are interested in extorting money from commercial drivers and care less about the security of people inside the market. They need to ensure that there is no one carrying something that can harm another person.

    Mrs. Sarah Eniola also who demanded adequate security said: “The market is not that dangerous if there is security. So, government should increase the number of security personnel in the market. We have been under God’s protection.

    “With what is happening in the country currently in terms of insecurity, we are not safe, but we hope God will be by our side.”

     

    Request forhygienic environment

    While the issue of insecurity remained a huge challenge for the traders, they also have issues with the unhygienic condition of the market.

    Some who spoke to our correspondent in confidence expressed worry over the persistent collection of taxes and issuing of tickets by AMAC, even as the market remained undeveloped.

    The officials of AMAC are being accused of coming with some fake government documents to collect taxes. It was gathered that any trader who fails to pay will have his goods seized and taken away and may not be retrieved.

    The traders also lamented that while the taxes are collected, there is no tangible development in the market. The unhygienic situation of the market has seemingly taken its toll on sellers of edible food commodities. This is as they lament shortage in patronage from customers who are weary of filthy condition of the market.

    Some source said: “Sometimes they even come with police. I don’t know if operating with police personnel is legal or not. If you don’t pay, they will seize your goods and go away like that without minding to tell you where to come and reclaim the goods. It is too bad.

    “It is not a healthy place for people to come and do business. It is also not a healthy place where people should sell eatable things. This is a part of Abuja; they need to improve on this.”

    Emeka Ukewize, who sells footwear, also expressed his displeasure on how the filthy environment has affected volume of his sales. He said: “Imagine what you are seeing around. Look at how everywhere is dirty. The road is bad and everywhere is littered. The environment is unhygienic.

    “Despite the fact that we are selling food items, the environment is so dirty. Some people will not want to patronise us because of the dirty environment. So, we need permanent shops so that we can sell our goods and services.

    “We pay AMAC N50 and some N200. Upon the money we are contributing, the entire market is dirty and unhealthy.

    “Sometimes, government will just come with bulldozer and demolish shops for no just cause. It’s not as if they are ready to erect any good structures. They will just demolish the entire place and it becomes empty. I don’t understand the kind of government we have.”

     

    Need for appropriate market structure

    There is also the demand among the traders for appropriate market structure. This they considered most important, aside from security; perhaps, because of the losses they recorded during demolition of their kiosks and the effects of downpour during rainy season.

    The traders urged the government to provide them with standard shops.

    “If government can provide a place for us to sell our goods, it will be most appropriate. If they cannot, they should provide us with land.

    So, anyone that has money to build shop can do so,” Ayotunde said.

    Mrs. Eniola said: “We need shops that the traders can rent, especially during this rainy season. The rain has destroyed our goods. So, government should come to our aid.”

    Chairman of the Market Traders’ Association, Ifemenam said demolition of their shops is the major threat, even as he said proper market structure should be provided for the traders.

    He said: “Demolition is our major challenge here. It is not up to three months they came to demolish this place. They came with soldiers, police and other security agents to destroy our properties.

    “They always come every three months. There are neither roads nor shops. So, if we decide to build, they will come and destroy what we had built. We have lost millions of Naira in this place. About three months ago, it was the Divisional Police Officer (DPO) who helped us to prevent the officers who came to demolish our shops. She told the officers to provide an alternative place for us before demolishing our properties.

    “Government is not doing anything here. They don’t even know that there are people here, except when it is time to pay the annual N5, 000 fees. Apart from that, every trader during market days pays between N50 and N200 to government.”

    Mr. Ossai Sunday, who sells palm oil, urged the Federal Capital Territory Administration (FCTA) to provide the needed infrastructure in the market.

    He stressed the need for government to provide good roads across the market and put in place health facilities in case of emergencies.

    “Some people collect N50 from us at every market day. At times, they

    demand N200 as money to build modern market for us. But up until now, we have not seen anything. They have the right to collect such money but it should be

    used for the right purpose,” he said.

    Efforts made by our correspondent to speak with security officials at the nearby police station were futile as they said the person competent to speak on the matter was not available. However, a police source said the police are aware of the present security situation.

    “We are aware of the security challenges. As you can see, our officers are all over the place controlling traffic and ensuring that the traders are safe,” he said.

     

    AMAC ignorant ofmarket ticketing

    Investigation revealed that AMAC was aware of the extortions but unaware about the collection of taxes. There were indications that several groups who are not staff of AMAC had been extorting money from the innocent traders. It was an entire

    blame-trade when AMAC accused Karmo traditional ruler of alleged extortion. Incidentally, the traditional ruler alleged it was AMAC that extorts money from traders through its personnel.

    In an effort to further seek clarification on the matter, Head of Information and Communications, Mrs. Patience Olaloye referred our correspondent to the council’s Head of Marketing. Efforts were also made to reach the Director of Revenue of the council which did not yield any positive result as at the time of filing this report.

    Several calls were put through to the AMAC Head of Marketing who was identified as Madam Christy. She explained that AMAC only demanded N50 from the traders on every market day and not N200 as claimed. She also denied collection of annual N5, 000 tax from the traders.

    Christy alleged Karmo traditional ruler and youths in the area might be responsible for the exploitation.

    “We know the Chief of Karmo and other youths in the area do collect money from them but we, in AMAC only give out N50 ticketing to all traders,” she said.

    On provision of a permanent market structure, she said AMAC had begun talks with the FCTA and efforts are being made to build a permanent market in the area. According to her, the council did not have a temporal location for the traders but it was inappropriate for them to carry out their trading activities in the area.

    “There is no temporary place for them now. FCTA has promised to make available a permanent place for them. So, the process is currently in the pipeline,” she said.

    Responding, Karmo traditional ruler, Alhaji Suleiman Adoga told

    our correspondent, through Suleiman Ishaka that AMAC was responsible for the annual tax. He said AMAC sent some officials to every shop in the community to demand the N5, 000. Who then is reaping off the traders?

  • In search of new capital market investment

    In search of new capital market investment

    The biting economic crunch has made it almost impossible for many companies listed on the Nigeria Stock Exchange to go for new initial public offerings (IPO). Bukola Afolabi in this report looks at the issues

    The flurry of activities and otherwise of any stock exchange remains one of the cardinal fundamentals for gauging investors’ confidence, market pulse, liquidity and health of the market as regards to its primary responsibility to the economy as a whole.

    However, since the Nigerian capital market witnessed a downturn in 2008, companies have not been making initial public offerings (IPOs) for a number of reasons, chief among which is the fear that such venture might fail due to low investor confidence in the market as against rights issues and bonds.

    Hitherto, many investors preferred investing in IPOs because of their capital gain potential just as it is believed that shares offered through IPOs are under-priced and have the potential to rise after listing. Hence, investors always swoop on such shares. However, the IPO market has been dormant since 2008.

    Sadly, a cross-section of financial experts who spoke with The Nation said the Nigerian market will remain inactive until second half of 2015.

    For instance, Head, Equity Primary Markets, Africa, India and Middle East at the LSE, Mr. Ibukun Adebayo, told The Nation  that the driving force for capital raising across Africa now is debt, explaining that equity IPO raising, will become active in 2015.

    “It (IPO) is a question of time. The driving force for capital raising, not just Nigeria but across Africa now is debt. Companies are inherently underleveraged in Nigeria so we are going to see more debt issuance before you see equity issuance. Companies have to come because the balance between the interest of the investors and the company moving forward. So we expect   more of   IPOs taking off from the second half of next year,” Adebayo said.

    A stockbroker, Mr. Ayo Oguntayo, said the return of retail investors would encourage companies to issue IPOs in the very near future.

    The primary aim of the Nigerian capital market is to mobilise long-term funds. The Nigerian Stock Exchange (NSE) is the centre point of the capital market while the Securities and Exchange Commission (SEC) serves as the apex regulatory body. It provides a mechanism for mobilising private and public savings and making such funds available for productive purposes. The exchange also provides a means for trading in existing securities. To enable small as well as large-scale enterprises gain access to public listing, the NSE operates the main board for relatively large enterprises and the Second-Tier Security Market (SSM) where listing requirements are less stringent for small and medium-scale enterprises. The exchange which started with only 19 securities traded on its floors in 1961 now has about 198 equities with a total market capitalisation of more than N13 trillion.

    The major instruments used to raise funds in the market include equities, debentures, bonds and stocks. The capital market is classified into two segments, namely primary and secondary. The primary market is for new issues of securities. The mode of offer for the securities traded in this market includes offer for subscriptions, rights issues, offer for sale, private placement etc; while the secondary market is a market for trading in existing securities. This consists of exchanges and over the counter deals where securities are bought and sold after their issuance in the primary market. Activities in the secondary market have increased substantially over the years. The number of stock brokers trading on the exchange increased from 110 in 1991 to 140 in 1994.

    NSE and the economy

    However, the key drivers of the Nigerian economy hardly feature on the exchange; Agriculture, oil and gas, power and telecoms each constitute less than five per cent of the market capitalisation of the NSE.

    According to data obtained from the CEO of NSE, Oscar Onyema’s keynote on “Re-awakening the capital market through participation of key players in the economy’ in February 2012 showed that agriculture contributed nearly 44 per cent to GDP, yet was less than 0.3 per cent of market capitalisation; oil and gas was over 14 per cent of GDP but a mere three per cent of market capitalisation; power (specifically, electricity), at just over 3 per cent of GDP, is not represented on the market at all; while telecoms, with 5.5 per cent of GDP (not to mention almost 90 million GSM subscribers), was a meager 0.5 per cent of market capitalisation.

    With the rebasing of the GDP, the director -general of the Securities and Exchange Commission (SEC) Ms Arunma Oteh recently said “Our market capitalisation to the GDP which is very low at 30 per cent has now declined further to 16 per cent after the exercise, compared in ratio to some of our peer countries like South Africa with market capitalisation to GDP being at 230 per cent, Malaysia 159 per cent, United States of America 118 per cent, China 75 per cent and India 69 per cent. So we have got our work cut out for us. Rebasing should wake us up to the urgent need to ensure that more companies list, so that market capitalisation can indeed better reflect our GDP.”

    Oteh however projected that the Nigerian Stock Exchange would  target 500 companies for initial public offerings over the next five years to reach a $1 trillion market capitalisation by 2016.

    She pointed out that the bourse needs oil and gas, power and telecommunications companies to list stocks to meet its market-value objective. “There are a number of large, significant companies that are preparing to come to the market,” Oteh said.

    She said that talks are being held with telecoms companies on encouraging them to trade their shares.

    Going back in the history, and particularly of IPO’s in the NSE, the primary market section experienced the strongest initial public offering activity between 2006 and 2008, which helped boost investment appetite from the retail end of the market, with the NSE recording 88 transactions from IPO activities.

    During this period, retail investors and institutional investors increasingly felt confident in the capital market.

    New listings in 2014

    In 2014 so far, two new listings have been witnessed, as Seplat Petroleum Development Company listed its 543.28 million ordinary shares of 50 kobo each at N567 after a successful IPO on April 14, 2014 while Caverton Offshore Support Group became the second firm to get listed in 2014 specifically on May 20, 2014, with 2.35 billion units at N9.50 which it issued through private placement since 2008

    Capital market performance

    According to some market analysts, the inability of the exchange to inspire primary market activities can be seen in the performance of the secondary market as illiquidity persist in the market. The secondary market indicator, the Nigerian Stock Exchange (NSE) All-Share Index, which is the barometer of the market movement gained for the first five months in the year 145.21 basis point or 0.35 per cent from the 41,329.19 points it opened the year to close at 41,474.40 on May 30, 2014.

    The market capitalisation, which opened the year at N13.226 trillion closed on May 30, 2014 at N13.694 trillion, gaining N468 billion. However, in 2013 Nigeria capital market gained 47.2 per cent but market analysts are still optimistic that the market in 2014 will close higher than 2013.

    Although, the primary market has shown, sign of rebound through the rights issue as quoted, substantial major investors’ holdings are falling back on the existing shareholders to bridge equity financing gaps and reduce dependence on short-term loans.

    Not less than six companies have initiated plans to float rights issue in the past three weeks. Shareholders of Diamond Bank, Sterling Bank, UBA Capital, Africa Prudential and May & Baker have approved plans by their companies to raise new funds through rights issue. Shareholders of Oando Plc have also mandated their board to float a rights issue while Consolidated Breweries has informed the NSE of its intention to access funds through rights issue.

    Unity Bank is currently running a right issue of N19 billion. Unity is issuing 38.45 billion ordinary shares of 50 kobo each at N0.50 per share. The right issue is expected to close on June 18, 2014. While Evans Medical has concluded a rights issue of 486.47 million ordinary shares of 50 kobo each at N2.50 per share in April, raising N1.22 billion from the market

    According to analysts, rights issue implies significant financial commitment by the core investors as expectation of more companies filing for rights issue as the years go by remain high.

    Analysts’ views 

    Analysts are of the view that companies recourse to raising additional capital from existing shareholders (Rights Issue) who are members of the company rather than going to the primary market appears to be the thing to do.

    “What they have been doing is to raise money through right issues. You have to understand why this is so. You will recall that the market went through a very distressing phase for the past four years when we all witnessed the downslide of most of the share prices listed companies,” said an analyst who asked not to be named.

    He added that while the primary market remained in limbo, many listed companies explored the already saturated option of sourcing cheap funds through right issues.

    He maintained that it is only when activities in the primary market of the Nigerian capital market are rejuvenated that the Nigerian capital would be said to have started to breathe again.

    The General Manager of Lambeth Trust & Investment Company Limited, Mr. David Adonri, noted that the crisis of confidence in the secondary market arising from the global financial meltdown of 2008/2009 had contagion on the primary market, noting that the door’s becoming dormant due to massive erosion of investors’ confidence.

    He also observed that the restoration of investors’ confidence in the secondary market will automatically lead to revival of the primary market.

    Managing Director of Dependable Securities Limited, Mr. Chineye Ayanwu, said investors are not keen on investing in the primary sector because investors who bought into public offers earlier have not gotten returns on their investments and the bearish market had eroded the share value of their stocks.

    He also noted that the secondary market determines what happens in the primary market, although the secondary market is recovering, investors’ confidence in the primary market is still low due to investors’ scare of investment due to financial turmoil.

    Another investment expert who asked not to be named observed that the low activities in the primary market is also a reflection of development in the secondary market.

    He urged the capital market regulators to put more effort towards the rebounding of the market and when the market rebound then every stock will now reflect true value and that will attract investors to price the new stock appropriately.

    “The primary market is hinged on the market rebounding, right now the value of most of the stocks is considered to be below their book values,” he added.

    In an attempt to restore investors’ confidence in the primary segment, he said that the NSE had set up a new department to encourage companies that have done private placement in the past to come and list as this will give leverage to the primary market.

    Shareholders’ views

    Shareholders have called on the companies that raised private placement during the boom in the market to come and list as they promised.

    The President of Association of Avid Shareholders, Mr Abayomi Obabolujo, said, “there are myriads of primary market activities without anyone asking questions on what happened to the initial funds raised by the companies and private placements that had not been listed.”

    General outlook of the market

    Market analysts are optimistic that the new issues recently approved by the NSE would revive the primary market and the successful IPO carried out by Seplat in January, 2014.

    According to the General manager of Compass Investment & Securities Limited, Mr Sam Ndata, the new issues would deepen the market and revive the primary market.

    He advised shareholders to prove to new investors that there was still hope in the nation’s capital market by taking up their shares in the rights issue exercise.

    While, the head, international primary markets, South Asia, Middle East, Africa at the London Stock Exchange (LSE), Mr Ibukun Adebayo, recently said the volatility in the Nigerian stock market has eased to a level that would attract more local firms to raise fresh capital through IPO.

    “The market has become wider and more diversified. We have the small capital market launched which is the alternative securities market. And we also have series of different measures that have been put in place by the regulator to strengthen the market,” he said.