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Tag: Renaissance Capital

  • Nigeria’s economic outlook bullish, needs more investments, says Renaissance Capital

    Nigeria’s economy has the potential to double its current performance within the next 12 months, but the government needs to support economic growth with more investments in basic infrastructure, especially electricity.

    In its latest primary macro outlook for frontier and emerging markets, Global Chief Economist, Renaissance Capital, Charles Robertson, said improving macro-economic fundamentals place Nigeria on a vantage point to significantly grow its economic performance in the period ahead.

    According to him, with good growth, currency stability and falling interest rates, Nigeria is an attractive frontier investment market.

    “We still think emerging markets (EM) and frontier markets (FM) are less than half-way through a structural bull market. The big shift in our thinking is on the oil exporters. Middle East and North Africa (MENA) is looking much healthier, from Egypt to the UAE in EM. We think Russia and SA can beat IMF GDP forecasts in 2018/2019. Nigeria is a big beneficiary in Africa,” he said in the report.

    The report, however, underscored the need for Nigeria and other African countries to invest substantially in infrastructural development to unlock growth.

    According to the report, with investment of about a quarter of Gross Domestic Product (GDP) in infrastructure, especially electricity, Nigeria can re-enact sustainable high growth that had been achieved by countries such as Bangladesh and Ethiopia.

    “But we need to see electricity supply at least double or treble per capita in East Africa and the rest of West Africa before industrialisation is realistic. Our base case is that countries that can’t industrialise or shift from subsistence agriculture into higher valued-added services can’t grow much above four to five per cent or one to two per cent in per capita terms,” Renaissance Capital stated.

    The report noted that “Africa is on the rise again, but to really take off, needs more investment and electricity in many of the countries”.

    The report pointed out that while there has been dramatic improvement in adult literacy in Sub-Saharan Africa (SSA), there are still acute shortfalls on electricity supply in East African and most of West African countries. Renaissance Capital holds that countries need between 70 to 80 per cent adult literacy to grow fast. The global investment banking firm also holds that countries must also have at least 300 to 500 kWh of electricity per capita to grow sustainably at a fast rate. To put that into perspective, one LCD TV requires about 240 kWh pa.

    While most EM countries meet both targets, including for the first time this decade Egypt and India, the situation is far more mixed in FM. Argentina and Vietnam meet the targets along with the countries in Emerging Europe. Morocco and Tunisia have joined them recently and so has Sri Lanka.

    “There appears to be one exception to this though. If you invest 25 per cent of GDP or more, then Bangladesh, Ethiopia and others demonstrate sustainable high growth can still happen. This is good news for Tanzania and perhaps Uganda but sends a clear message to Kenya, Nigeria, Egypt and Pakistan about their urgent need for electricity and investment,” Renaissance Capital stated.

    The report pointed out that sovereign outlook for the continent is positive, noting that the credit rating downgrade cycle in Africa has basically finished; and sovereign upgrades in 2019 is the story to start thinking about.

  • Renaissance Capital reports strong FY 2017 results

    Renaissance Capital yesterday announced its International Financial Reporting Standards (IFRS) financial results for the full year ending 31 December 2017. During the period, net profit from the core business increased by 43 per cent year-on-year (YoY) to $15.6million.

    In 2017, the Firm grew operating income by eight per cent YoY to $145 million, with Renaissance Capital benefiting from and helping to drive increased capital markets activity in its core geographies. The increased operating income was mainly led by the impressive performance of the Firm’s derivatives business, the revenue of which more than doubled in the reporting period.

    General Director at ONEXIM Group, Dmitry Razumov said: “It’s been ten years since ONEXIM entered into a strategic partnership and invested in Renaissance Capital. During this period we have witnessed a series of important milestones for the Firm including successfully surviving the global financial crisis, fully turning around its operations and returning to profitability, all while fighting off a range of market disruptions and sector challenges. Today, we see a much stronger Firm, an independent, renewed, robust, agile investment bank, truly pioneering in the frontier markets space and providing a unique offering to its global investor client base. ONEXIM Group remains fully committed to further supporting Renaissance Capital and is excited to witness the Firm’s future growth.”

    Chairman at Renaissance Capital, Christophe Charlier, commented: “Since my appointment as Chairman of the Board of Directors last year, I have been privileged to have had the opportunity to meet and work with Renaissance Capital’s team and clients across its core regions. This has granted me an overview of the truly outstanding and varied work carried out by our diverse employees across our offices. At Renaissance Capital, we see a range of excellent opportunities across emerging and frontier markets.

     

    Despite recent market volatility and geopolitical issues, we still truly believe in the underlying value of the Russian market and are confident in its resilience, while we are also excited by Egypt as a truly fascinating growth story set to take off in the years to come.

     

     

    In sub-Saharan Africa, Nigeria and Ghana are expected to be among the strongest performers and Renaissance Capital’s teams on the ground are well-positioned to service our clients in these regions.”

     

  • Renaissance Capital appoints new CEO for Nigeria

    Renaissance Capital, an emerging and frontier markets investment bank, has announced  Temi Popoola as its new Chief Executive Officer (CEO) for Nigeria.

    In his new role, Popoola will focus on equities and growing the investment banking side of the business, as well as overseeing a 25-strong team in Lagos. He will report to Igor Vayn, CEO, and Ruslan Babaev, Chief Business Officer, with additional reporting lines to Ben Samuels, Global Head of Equities, and James Friel, Global Head of Investment Banking.

    Popoola joined Renaissance Capital in July 2015 and has been working closely with the sales team, traders and research analysts both locally and across the Firm’s network of offices to drive the Nigerian equities business.

    He has over 13 years of international experience in equities and derivatives in emerging markets. Prior to joining the Firm, he played a key role in building a successful equities business at CSL Stockbrokers/FCMB in Lagos, enabling the company to become the number two by market share on the NSE in 2014.

    Mr. Popoola began his career as an asset manager in London in 2002, before joining Bank of America Securities in New York in 2006 as a trader in equity derivatives. He then moved to Lagos three years later to join the United Bank for Africa as Head of New Products and Investments. Mr. Popoola was also the co-founder of Centurion Capital Partners, an asset management firm based in New York.

    He holds a First Class degree in Chemical Engineering from the University of Lagos and obtained a Master’s Degree from the Massachusetts Institute of Technology.

  • FG targets 65% reduction in recurrent expenditure

    FG targets 65% reduction in recurrent expenditure

    FG targets 65% reduction in recurrent expenditure – Okonjo-Iweala

    The Federal Government on Monday said that it planned to reduce the recurrent expenditure by 65 per cent in 2015 to boost economic growth.

    The Minister of Finance, Dr. Ngozi Okonjo-Iweala, who disclosed this at the Renaissance Capital Fourth Annual Pan-Africa Investor Conference in Lagos, said the capital expenditure would also go down by 40 per cent.

    Okonjo-Iweala said that the gains from the reduction would be redirected at critical areas of the economy to ensure economic growth and reduction in unemployment rate.

    “We are correcting our past fiscal lapses to achieve the desired result and we will continue to slide down on recurrent expenditure.

    “The major challenge of the government is the rising unemployment rate currently at 23 per cent and all economic reforms are geared toward job creation,” the News Agency of Nigeria quoted the minister as saying at the forum.

    Okonjo-Iweala, who is also the Coordinating Minister for the Economy, said the government would reduce domestic debt in 2013 with the issuance of N100 billion redeemable bonds.

    According to her, the economy has been growing at an average of seven per cent in the past decade in spite of the challenges.

    She said that plans were on to establish a development finance institution to provide long-term finance for businesses and strengthen economic growth.

    The minister commended Renaissance Capital for its confidence in Nigeria and Africa, adding that the company had brought in a lot of investors.

     

  • RenCap forecasts drop in Nigeria’s growth

    RenCap forecasts drop in Nigeria’s growth

    Nigeria’s economy is expected to grow at a slower rate of 6.3 per cent in 2012, compared with 7.4 per cent year-on-year in 2011, Renaissance Capital (RenCap), an investment and finance firm has forecast.

    According to the firm, slower growth is positive for inflation, but it argued that there was no need for rate reduction yet.

    In an emailed report, tagged: ‘Nigeria: 2012 GDP growth – Soft growth, moderating inflation, but no cuts yet,’ RenCap said pressure on the consumer is evident from the significant slowdown of the wholesale and retail sector in the first half of 2012.

    This, it said, remained a fair indicator of consumer demand and would lead to a decline in demand-driven inflationary pressures, this year.

    The investment firm, said the slowdown in consumer demand was countered by increased cost pressures, partly due to the partial removal of the petrol subsidy, and to a lesser extent, the June electricity tariff hikes.

    “Aside from the July increase in import tariffs on grains, which has increased the input costs of some agro-processers, we expect cost pressures to soften in the second half of 2012. We think the strengthening of the naira over the past two months to N157.60, from N160.75 at end of July, will soften input costs, which is positive for inflation,” it said.

    Last month’s slowdown in inflation to 11.7 per cent, from 12.8 per cent year-on-year, it said, partly reflected the decline in cost pressures.

    The firm, said it was too early for Nigeria’s monetary Policy Committee (MPC) to cut the monetary policy rate, partly because core inflation remains high at 14.7 per cent.

    “We believe cutting rates now may undermine the recovery and stability of the naira, on the back of improved forex reserves. Moreover, recent comments from the CBN suggest that it believes monetary policy needs to remain tight, despite the recent respite on inflation, owing to accommodative fiscal policy and structural constraints,” it said.

    RenCap said the slowdown in the rate of the oil and gas sector’s decline reflects an increase in oil production to an average of 2.38 million barrels per day (mb/d) in second quarter of 2012, from 2.32 mb/d in first quarter of 2012, according to data provided by Nigerian National Petroleum Corporation to the National Bureau of Statistics (NBS).

    The slowdown in the rate of the oil and gas sector’s decline, it said, was timely, as such development, helped counter the softening of the non-oil sector’s growth to 7.5 per cent in second quarter, from 7.9 per cent in the previous quarter.

    “As the oil and gas sector continues to be undermined by oil theft, in particular, we expect the sector’s performance to remain subpar in second quarter of 2012,” it said.

    The firm explained that softer agriculture growth resulted in slowdown in non-oil sector growth, adding that with Nigeria’s agriculture sector producing 40 per cent of the Gross Domestic Product (GDP), the sector’s performance has a material impact on economic growth.

     

     

    explained the non-oil sector’s growth slowdown during the period.

    “The lean harvest season, typically in second quarter, partly explains the agriculture growth softening. This was exacerbated by an increase in insecurity, which has undermined agricultural activities, as well as flooding in some parts of the country that displaced people and damaged farmland. We expect agriculture sector growth to strengthen in fourth quarter, on the upcoming main harvest,” it said.

    It said that the building and construction sector, has been growing at double-digit rates for more than three years, and is one non-oil sector that did not experience a growth slowdown in first half of 2012, compared to a year earlier.

    “We believe this strong growth reflects robust fixed investment. Building and construction’s solid growth is mirrored in the sector that supplies a significant building material, cement. The cement sector’s growth strengthened to 11.7 per cent first quarter, from 10.4 per cent in first quarter and 10.6 per cent a year earlier,” it said. Manufacturing, it said, picked up in second quarter, owing to improved power supply. The manufacturing sector’s growth strengthened to 7.3 per cent in second quarter, from 4.2 per cent in first quarter.