Again, IMF raises concerns about Nigeria, says IDPs rising in number

After declaring that the debt to GDP ratio of the country was becoming too risky, the International Monetary Fund, IMF, on Friday said it was concerned with the rising number of Internally Displaced Persons, IDPs, in the country.

The IMF said this on Friday in Washington DC in its latest Regional Economic Outlook for sub-Saharan Africa report presented by Director of the IMF’s African Department, Mr Abebe Selassie.

The IMF further said that the current number is five times higher than what it was 20 years ago.

The report also showed that IDPs in the Democratic Republic of the Congo stands at 4.4 million people, South Sudan 1.9 million and Nigeria 1.7 million.

Speaking further, Selassie said that economic growth in the Sub-Saharan region was expected to increase from three per cent in 2018 to 3.5 per cent in 2019.

“Some 21 countries, mainly the region’s more diversified economies, are expected to grow at more than five per cent and see income per capita rise faster than the rest of the world on average over the medium term.

“However, the remaining countries, comprising mostly resource intensive countries, including the largest, Nigeria and South Africa, are expected to see slower improvements in standards of living.

“Overall, sub-Saharan African countries need to strike a delicate policy balance between containing public debt levels, investing in human and physical capital and raising revenue.

“This calls for urgent action on the fiscal front to improve tax revenue collection, public financial management and spending efficiency.

“On the trade front, countries should reduce non-tariff barriers and deepen intra-trade integration including in the context of the African Continental Free Trade Area,” Selassie said.

According to the report, growth in Nigeria was 1.9 per cent in 2018 and is expected to reach 2.1 per cent in 2019, driven by recovering oil production and a pickup in the non-oil economy in the aftermath of the election.

N5.5bn withdrawn from stock market by foreign investors in February, NSE

The Nigerian Stock Exchange has revealed that a total of N5.5 billion was recorded as foreign outflows from the stock market for the month of February.

This was contained in its latest foreign portfolio investment report published on its website on Friday.

It stated that the figure increased by 97.8 per cent from N27.81bn in January 2019 while foreign inflows increased by 91.24 per cent from N22.97bn to N43.93bn between January and February.

FG mulls diversifying stock market instruments

The Federal Government is considering diversifying instruments of of the nation’s stock market through the Economic Recovery and Growth Plan.

This was disclosed by the Minister of Finance, Mrs Zainab Ahmed, while speaking at the maiden Awards Night of the Securities and Exchange Commission.

The minister, who restated Federal Government commitment to building a vibrant capital market that would contribute to the growth and development of the country, said the ERGP policy objectives for the financial sector aimed to further diversify instruments of the stock market, review the capitalisation of the financial institutions and encourage lending to the real sector of the economy similar to the Capital Market Master Plan.

Ahmed also noted that the capital market played a central role in the development of the economy through the mobilisation of long-term savings for investment, as well as efficient pricing of financial instruments.

She said: “The government is making a lot of efforts to diversify the economy, raise revenue and block leakages; efforts are also being made to ensure the mobilisation of resources that will aid investment in small and medium enterprises and provide infrastructure.

“The main thrust of the Capital Market Master Plan aligns with the vision of the ERGP for the financial services sector. When the ERGP was being prepared, copious references were made to the 10-year master plan.

Speaking further, the minister bsaid that the ERGP vision for the financial services sector was to strengthen relevant market institutions and mitigate risk by building a healthy and competitive financial system, which would be better positioned to support the private sector and contribute towards the sustainable development of the economy.

She also insisted that the strengthening of the capital market is necessary for the government to be able to create jobs, wealth and increase the standard of living of the people.

She said: “The capital market is central to all of these efforts. As the ERGP recognises the power of the capital market to drive its own forms, the Capital Market Master Plan Implementation Council has proven to be an embodiment of recognition.”

CBN predicts 12 percent inflation, to keep current MPR

The Central Bank of Nigeria, CBN, has estimated that the country’s inflationary rate will rise to 12 percent and thereafter moderate.

The Governor of the CBN, Godwin Emefiele stated this on Thursday in Lagos at the Businessday post election economic agenda conference, adding that the apex bank would also keep the current monetary policy stance of the bank.

“The CBN has set the post-election agenda for the nation’s monetary policy, projecting that the current monetary policy stance of the bank is expected to continue while inflation is estimated to rise to 12 per cent and moderate thereafter,” he said.

The inflation rate is currently put at 11.31 percent for February, according to statistics from the CBN and the National Bureau of Statistics, NBS

Hinging the monetary policy stance of the bank on rising inflation expectations, the CBN governor however noted that the bank would adjust the policy rate in line with unfolding conditions and outlooks, adding that the bank would continue in its drive to ensure that the policy interest rate was set to balance the objectives of price stability with output stabilisation.

Emefiele, who disclosed that the apex bank based the inflationary projection on productivity gains in the agricultural and manufacturing sectors, said the Gross Domestic Product, GDP, was expected to pick up in the first half of the current year owing largely to the continued efforts at driving indigenous production in high-impact real sector activities.

Speaking on the bank’s foreign exchange rate policy, Emefiele said the CBN, in spite of expected pressures from the volatility in the crude oil markets, would maintain its stable exchange rate over the next year.

“Gross stability is projected in the foreign exchange market, given increased oil production and contained import bill,” he said.

ELECTRICITY: NBET owes GenCos N364.1bn

The Nigeria Bulk Electricity Trading Plc. NBET, is owing power generation companies in the country N364.11 billion for the electricity they generated sold and fed into the national grid between January and October 2018.

NBET is a government owned power sector player that buys electricity in bulk from Gencos through Power Purchase Agreements and sells through vesting contracts to the distribution companies, which then supply it to the consumers.

According to the latest data from the bulk electricity trader, NBET received total invoices of N499.79bn from the Gencos for electricity delivered in the 10-month period but only paid N135.68bn to them.

The data also showed that the average energy sent out by the Gencos was 3,584.55 megawatts hour/hour in January; 3,820.37MWh/h in February; 3,904.65MWh/h in March; 3,867.53MWh/h in April; 3,597.26MWh/h in May; 3,128.87MWh/h in June; 3,182.18MWh/h in July; 3,519.55MWh/h in August; 3,382.76MWh/h in September, and 3,593.47MWh/h in October.

NBET’s records also showed that it paid the Gencos N6.08bn for January invoices of N48.23bn; N20.75bn out N48.27bn in February; N13.39bn out N52.50bn in March; N14.12bn out of N50.98bn in April; N15.09bn out of N49.62bn in May; and N13.83bn out of N47.64bn in June.

NBET also paid N15.08bn out of N51.79bn in July; N10.287bn out of N50.69bn in August; N14.977bn out of N47.79bn in September, and N12.075bn out of N52.279bn in October.

Nigeria agrees to 40,000 crude oil production cut

Nigeria has agreed to cut 40,000 out of her 1.7 million barrels per day crude oil production after two days of touchy negotiations in Vienna capital of Austria, by member countries of the Organisation of Petroleum Exporting Countries, OPEC, and their non-OPEC allies led by the Russian Federation.

This is part of a collective agreement to cut their outputs by 1.2 million barrels of oil per day (mbd).

OPEC countries however decided to take up the burden of limiting their production by 800,000 barrels a day (bd).

According to the Minister of State for Petroleum, Dr. Ibe Kachikwu, Nigeria could contribute up to 40,000bd, representing about 2.5 per cent of her 1.7mb current production level.

Kachikwu, who had expressed fears before the meeting that it would be difficult for Nigeria to agree to a production cut, however said the output cut was as a matter of fact in the best interest of Nigeria, adding that with larger oil volumes in the market weakening prices, Nigeria would have found it difficult to implement its budget for 2019.

Details of the agreement, according to the President of the OPEC Conference and Minister of Energy and Industry of the United Arabs Emirate, Mr. Suhail Mohamed Al Mazrouei, and Russian Energy Minister, Alexander Novak, at a press conference after their joint meeting, showed that OPEC countries would take out 800,000bd from the market, non-OPEC members would have to take out the balance of 400,000 with Russia contributing as much as 230,000bd of this.

Iran, Venezuela and Libya were however granted exemptions from the cuts because they either suffered sanctions or production disruptions, and would not be able to participate in the cut.

Speaking further after the press briefing, Mazrouei said that the parties took note of oil market developments since it last met in Vienna in June 2018, and reviewed the outlook for the remainder of 2018 and 2019.

According to him, the meeting observed that current oil supply and demand fundamentals confirm a well accommodated market following the concerted efforts of participating countries in the Declaration of Cooperation (DoC) toward restoring balance.

He further explained that they discussed the increasing market volatility and the broad consensus on the prospects for 2019 that suggests higher supply growth than global requirements, taking into account prevailing uncertainties.

Flooding raise price of cocoa by 21%

The price of cocoa beans in Nigeria has jumped by 21% in the last three weeks due to fears that the output of the commodity may be cut by as much as 7% because flood ravaged farmlands.

Cocoa is Nigeria’s second largest export after oil, with the country ranking joint fifth cocoa exporting in the world with Cameroon.

Price per metric ton rose to N700,000 ($2,282.36) from N580,000, as buyers scrambled for the beans, as the Cocoa Association of Nigeria, CAN, put the decline of output on poor weather conditions.

Speaking on the decline, the National President of CAN, Sayina Rima, said: “The high incident of this year’s rainfall has cut down our 2017-2018 production by seven percent.”

The International Cocoa Organisation, ICCO, estimated Nigeria’s production to reach 240,000 metric tons in the 2017-2018 output.

CAN however fears that a decline in cocoa output could lead to a drop in the country’s position among the leading cocoa producing countries.

According to Rima, high humidity led to the outbreak of Black Pod, a fungus disease this year, adding that the flood has made it difficult for farmers to sun-dry their cocoa beans properly.

“The combination of these factors has led to a decline in our production when compared to that of last season,” Rima explained.

Speaking also, Mr. Zacheaus Egbewusi, the chief executive officer of an agro-commodity inspection company based in Lagos, said farmers do not have adequate sunlight to dry their beans and this has resulted in the scarcity.

According to him, farmers are unable to maintain the quality of their cocoa beans, as machine-drying , which is not easily available in most rural areas, reduces the flavour of the beans.

Telecom giants MTN, Airtel eye mobile banking licence

Telecommunication giants, MTN and Airtel have concluded plans to obtain mobile banking licence from the Central Bank of Nigeria (CBN) as they prepare to enter the financial services sector with a bang.

The companies are also believed to have formed subsidiaries that will handle the operation of their mobile banking licence.

With the mobile banking licence, the telcos would be able to offer customers more financial services on their phones, including paying for goods and services, and withdrawing money from recognised payment service agents on the roadside.

However, going by CBN’s guidelines, they are not allowed to collect deposits or give out loans, though it is expected that they may partnership with banks to be able to offer more services in the financial sector.

The Chief Executive Officer of Airtel Nigeria, Segun Ogunsanya, confirmed his company’s move for mobile banking license to BusinessDay, saying that Airtel “already has a name for its subsidiary company that will operate as a payment service bank to carry out basic mobile money services such as funds transfer and payments.”

Also, Rob Shutter, MTN Group CEO, also told Reuters, Tuesday, that the group ‘‘will apply for a mobile banking licence in Nigeria and plans to launch the service next year.”

He said further: “We will be applying for a payment service banking licence in Nigeria in the next month or so, and if all goes according to plan, we will also be launching Mobile Money in Nigeria probably around Q2 of 2019,”

It would be recalled that the CBN, on November 2, 2018, published the draft policy guideline, for payment service banking by non-banks in order to help drive the country’s national financial inclusion strategy goal of 80 percent inclusion by 2020.

National Insurance Commission decries low capital base of Nigerian insurance companies

The low capital base of insurance companies in the country has adversely affected their capacity in the business, the Commissioner for Insurance and Chief Executive Officer, National Insurance Commission (NAICOM), Alhaji Mohammed Kari has said.

According to him, because of the low capacity of insurance companies in the country, my multinationals and high networth individuals in the country now engage in double insurance to stay safe.

This involves insuring assets locally to meet local content and also insure offshore due to the inadequate capacity of local insurers.

According to Kari, multinationals and high net worth individuals choose to pay for double cover because they don’t thrust local operators’ capacity.

Kari said in an interview with Vanguard: “A lot of the big clients in Nigeria still do double insurance. First they insure to meet the requirement of the local content. However, they still insure abroad independent of their local insurers. So, they prefer to pay insurance twice because they don’t trust local operators’ capacity.”

Blaming the current capital level of insurance companies for the problem, Kari said the current capitalisation regime was introduced 13 years ago, which he said is against obtains in other financial sectors.

He said: “The current capital of insurance companies was increased thirteen years ago. Which financial sector leaves capital stagnant for thirteen years? In the last ten years, microfinance banks license have been reviewed five times. That is how a financial sector operates and to a large extent a responsible operator should do these things without regulatory prompting.

“We are the weakest link in the Nigerian economy and now we are going to be less capitalized than mortgage guarantee banks with N6 billion and less capitalized than microfinance banks with N5 billion. How can an insurance company that insures the aviation sector have capital less than that of microfinance banks? We should wake up.

“Some insurance operators argue that capital is not important. If capital has no function, how come banks bought over insurance companies that used to be owned by insurance companies?

“Insurance anywhere in the world is the mobilizer of funds and provider of security. You cannot provide security if you don’t have capital. How can you approach a microfinance bank of N5 billion and tell them you want to give them protection. What is your capital?

“The claim you pay and the liability you hold is a function of your financial ability. Check any jurisdiction in the world, insurance companies are more capitalized than banks. Breaking the electricity supply jinx

“Insurance companies own virtually all the financial sector in the world. They fund infrastructure because they have long term funds to fund long term business. If the insurance industry don’t need capital, why are they the weakest link in the financial sector?

“We have had three regulators in Africa who had come to understudy the Tier Based Minimum Solvency Capital, TBMSC, structure because they loved it and they are thinking of introducing it in their market.”

Kari however noted that the TBMSC policy is just a document with a name because the regulator has always been implementing it directly in the past.

Nigerian Breweries to pay N4.8bn interim dividend

The board of directors of Nigerian Breweries Plc. has recommended an interim dividend of N4.8 billion to its shareholders.

The total dividend translates to 60 kobo per ordinary share of 50 kobo for the period ended September 30, 2018.

In a statement by the company on Monday, the interim dividend, which is subject to the deduction of withholding tax, is payable on Monday, December 10, 2018 to all shareholders registered in the company’s books at the close of business on Thursday, November 22, 2018.

An analysis of the firm’s unaudited and provisional results for the nine-month period ended September 30, 2018, shows that Nigerian Breweries recorded 11 percent drop in sales, indicating a decline in patronage.

Its profit before tax loss was N5.09 billion between July and September this year, while it paid N5.90 billion in the third quarter of 2018 on excise duty expenses up from N4.50 billion in the corresponding period in 2017.

Nigerian Breweries kept a positive profit of N14.76 billion for the nine-month period ended September 2018, this is about 38.4 percent drop from N23.98 billion recorded in the corresponding period in 2017.

Results from operating activities stood at N27.7 billion during the first nine months of the year, representing 34.4 percent decline from N42.3 billion recorded in the same period last year

Despite the positive record for the first nine months, it recorded a loss of N3.66 billion in the third quarter of this year.

The weaker results undermined investors’ sentiment, leading to the depreciation of the stock of Nigerian Breweries on the floor of the Nigerian Stock Exchange (NSE) yesterday, just as it lost 57 basis points to close at N87.50 per share.

Reacting to the results, the Company Secretary/Legal Adviser, Uaboi Agbebaku, explained that the new excise duty on alcoholic beverages and tobacco products introduced in June and the consequent effect of it, adversely impacted the third quarter results.

According to Agbebaku, the company undertook a rightsizing exercise which resulted in a substantial one- off cost during the quarter