Investment Optimism

Optimism rises for investment in Nigeria

by with No Comment Businessfinance

Seyi Fadipe, a chief executive officer in one of Nigeria’s leading investment financial advisory firms, was dismayed after receiving a call from one of his foreign clients.

The client gave her a sorry call, informing her to put on hold an ongoing investment deal, as he and his entourage will not be able to fly into Nigeria for proper inspection due to the imposition of restriction measures in his country, which restricted the movement flow of persons, goods and capital.

READ ALSO: Business owners recount tales one year after COVID

The deal was a multi-million-dollar investment in a local agricultural producing firm in the Middle Belt region of Nigeria, which Fadipe had been on since 2019, hoping to bolster her firm’s balance sheet and reward shareholders when it finally fell through in 2020.

“The suspended deal disrupted our business operations last year,” she told BusinessDay.

Whether it was the fear of contracting the virus, or the pandemic-induced global lockdown, business leaders, and fund managers had a fair share of the unprecedented year 2020, not just in Nigeria alone, but across the globe.

Total foreign inflows (direct investments + portfolio investments + other investment) into Nigeria plunged to $9.7 billion in 2020, the lowest in three years, according to data from the National Bureau of Statistics. And the huge collapse is not unconnected with the elevated risk in the global investment environment occasioned by the pandemic.

READ ALSO: World Bank: Nigeria’s road to economic recovery

“The COVID-19 pandemic had several far-reaching effects on Nigeria’s investment landscape,” according to Toyin Sanni, an investment expert and CEO of Emerging Africa Capital.

Some of these, Sanni noted, include a reduction in disposable income, resulting in reduced demand for investment instruments, and a loss of jobs due to massive layoffs.

“Others include rising food inflation due to supply chain disruptions, among other factors, increased taxes on VAT from 5 percent to 7.5 percent during the year, and the decline in yields following the implementation of expansionary monetary policies by central banks across the world including Nigeria,” Sanni said.

Ijeoma Agboti, managing director/CEO, FBNQuest Fund, told BusinessDay that at the initial stages of COVID-19, investors were generally inclined to avoid aggressive new investment activity and took a wait-and-hold approach. “This, coupled with a dip in interest rates, was followed by a flight to yield and renewed interest in diversification and alternative approaches,” she said.

But it was not just about the coronavirus induced-lockdown alone, a host of factors including Nigeria’s poor FX management made an already bad situation worse.

Africa’s biggest economy resorted to rationing dollar sales after the pandemic and an oil war between Saudi Arabia and Russia, two of the world’s biggest oil exporters, sent prices tanking to as low as $12 per barrel.

Being that oil accounts for a significant share of Nigeria’s dollar revenue, the fall in oil prices squeezed dollar inflows, sending Nigeria’s external reserve to as low as $33 billion, and limited the central bank’s intervention capacity in the currency market.

The naira ran into troubled waters last year, suffering a two-time 19 percent devaluation, with rates weakening to N379/$ at the official window and N383/$ at the I&E window, which further eroded investors’ wealth.

It was undoubtedly a difficult time for foreign investors, importers and manufacturers. A large number of portfolio investors were unable to access the greenback as they sought to repatriate their profit out; while manufacturers found it increasingly difficult to obtain dollars for critical inputs.

The aforementioned scenario alongside negative real interest rates following spiralling commodity prices sent a red flag to the investing public and scared fresh capital from coming, particularly hot money.

NBS data show that not one single foreigner invested in Nigeria’s bond between April and December 2020.

Although Africa’s biggest economy recorded a handful of foreign participation in equities and other money market instruments to the tune of $755.12 million and $4.2 billion in 2020, respectively, the combined amount was the lowest since 2016, and they were funds from maturing bonds, rolled into these assets.

READ MORE: BUSINESS DAY

Business Owners

Business owners recount tales one year after COVID

by with No Comment Business

Chisom Marvelous Elekwa is a young graduate of Public Health from one of the private universities in Nigeria. After two years without a job and not ready to watch her 50-year old mother struggle with her siblings school fees, Chisom in November 2019 went into the rice business, buying from producers and selling to consumers. She invested her life savings into the business which became instant success as she had huge patronage. But that joy was short-lived as the coronavirus disease which index case in Nigeria was detected in February 2020, took away her means of livelihood.

READ ALSO: How a gas company raised $650m facility…

Fortunately, she applied and got N1millon loan from the Federal Government to cushion the effects of the pandemic. Today, Chisom is back to her rice business owing to the lifeline.

But while Chisom is grateful and happy, Jummai Abdullahi, another small scale entrepreneur is sad and distraught. She told BusinessDay that the N5 million MSME loan she took from the Central Bank of Nigeria (CBN) last year which she invested in cassava and poultry farming has become a source of sorrow. Her 10 hectare farmland located in the outskirts of Kuje in Abuja, was last year destroyed by cattle herders whom she alleged invaded her farm at a time the crops were about to be harvested. “My brother I am in tears. All the money I took from the CBN and the ones I borrowed from my bank went down the drain due to no fault of mine. I went to my farm on November 10, 2020 to discover that the cattle ate up all the crops. How and where do I start from paying back the loans?’’ she said with tears.

The above two cases illustrate the joy and sadness associated with small scale entrepreneurs who were pushed to the world by the ravaging effects of COVID-19 which was first recorded in Nigeria on February 27, 2020.

In one year, the COVID-19 pandemic has had a far-reaching impact on the country’s already fragile oil and import-dependent economy. The pandemic affected the livelihood of 85.2 million people living in poverty, who mostly sustain themselves on daily labour, and 41.5 million small and medium enterprises (SMEs), which account for 76 percent of the labour force and contribute half of the gross domestic product (GDP) but are mostly informal.

The World Bank Group predicts that the long-term fallout of the pandemic led to food shortages, massive unemployment, and large-scale business failure while the recession that followed may increase the number of people living in poverty to 95.7 million by 2022, and reduce Nigeria’s economic and development outcomes. The government has taken decisive actions to mitigate the humanitarian and economic impact of the pandemic and the oil price shock but the outcome is still uncertain.

Government efforts have been enhanced by a US$3.4 billion loan from the International Monetary Fund (IMF) and have been augmented by massive support from the private sector and development organisations.

In the wake of the pandemic, the Federal Government provided access to funds for households and businesses affected by the pandemic, including cash payments for the most vulnerable as well as an Economic Sustainability Plan (ESP) – a one-year programme estimated at ₦2.3 trillion, focusing on achieving mass employment and mass domestic production and on expanding pro-poor spending to protect the vulnerable.

There was also a fiscal stimulus for micro, small and medium enterprises (MSMES) which include N50 billion loan SMEs, extension of revenue remittance deadlines for key non-oil tax payments (VAT, corporate taxes) and 50 percent rebate on corporate taxes for employers who do not make staff cuts between March 1 and December 31, 2020. Others were: three-month repayment moratorium for all TraderMoni, MarketMoni, and FarmerMoni loans and to all Federal Government funded loans issued by the Bank of Industry, Bank of Agriculture, and the Nigeria Export-Import Bank Central Bank measures.

COVID 19: Impact on businesses

The COVID-19 pandemic presented new challenges to businesses, disproportionately affecting smaller and less-efficient firms across all industries. Businesses had to move quickly to remote operations while ensuring business continuity under the lockdown. They had to change their operating models to safeguard workers and customers, manage disruptions in supply chains and cash flow, and respond to changing demand. Increased working capital requirements coupled with liquidity constraints, reduced access to forex for imports, logistics disruptions at ports and in interstate transport, and rising insecurity in the north have strained business operations. Right now, experts say many businesses are being forced to downsize operations, retrench workers, and reduce compensation to avoid failure.

READ MORE: BUSINESS DAY

World Bank

World Bank: Nigeria’s road to economic recovery

by with No Comment Businessfinance

According to the World Bank, economic growth is expected to expand by 1.1% this year while Bloomberg forecasts GDP to contract by 1.5% in Q1 2021.

Africa’s largest economy has displayed resilience over the past few months.

From defending against the Covid-19 menace to battling untamed inflation and shouldering domestic risks.

READ ALSO: Stock market opens on a positive note

Initially, the economic outlook was bleak during 2020 after the economy sunk back into its second recession in less than five years.

Lockdown restrictions caused significant disruptions in the value chain, halted most aspects of the economy while crippling the manufacturing sector.

A growing sense of alarm and unease over surging coronavirus cases added to the uncertainty, ultimately fanning fears around Nigeria experiencing a prolonged economic recession.

However, the economic expansion of 0.11% in Q4 2020 came as a breath of fresh air and offered some light at the end of the tunnel.

Although the economy contracted 1.92% for the full year, the rebound during the final quarter raised hopes that Africa’s largest economy was exiting from the Covid-19 induced recession.

According to the World Bank, economic growth is expected to expand by 1.1% this year while Bloomberg forecasts GDP to contract by 1.5% in Q1 2021.

Nigeria certainly has the potential to exceed these growth estimates due to rising oil prices and improving global economic conditions.

It must be kept in mind that earnings from oil exports account for over half of government revenues and about 90% of foreign-exchange earnings.

As oil prices appreciate, this provides the government with ammunition to attack domestic risks threatening the country’s fragile economic outlook.

In regards to other key metrics, inflation is seen averaging around 14% while the Central Bank of Nigeria (CBN) is forecast to hike interest rates at least once this year as economic conditions improve.

READ MORE: BUSINESS DAY

Gas Investments

Nigeria’s local gas opens investment opportunities

by with No Comment BusinessfinanceNews

The Federal Government of Nigeria is stepping up funding for important gas projects to promote the use of local commodities, opening up investment opportunities for pipeline construction, new industrial gas corridors and electricity projects. I am.

With increasing production from natural gas producers in a nearly bearish global market, the global reality of driving energy shifts to cleaner fuels could unleash Nigeria’s potential for gas for domestic use. It has become indispensable. In Nigeria, only 9 percent of the natural gas produced is used.

READ ALSO: e-Commerce: Call to rescue SMEs’ Data Genocide

“We need a revolution in our energy system,” said Timipre Silva, Minister of Petroleum Resources, in a speech at the Nigerian Gas Association’s (NGA) multi-logue, which was virtually organized on February 25 and 26. I believe. “

“And in that context, an important decision and new impact we can make now is to continue to expand the role and opportunities of natural gas for economic recovery,” Silva said.

According to Silva, the government’s perception that gas will continue to play an important role in economic development has led to the creation of a program to “grow the gas economy through the development of industrial and transport gas markets in a gas-to-electric juxtaposition.” It was. Initiative. “

As a result, the government has mandated the Nigerian National Petroleum Authority (NNPC) to increase its domestic gas usage from approximately 3 billion cubic feet (BCF) to 4.5 BCF, and has identified several projects to drive this result. ..

Mele Kyari, Group Managing Director of NNPC, said in a presentation at the event that the major projects to unlock 4.5 BCF gas for local use were the OB-3 pipeline (AKK pipeline) and Assa North. (Brass petrochemicals), stated through a representative. Especially ELP.

The $ 3.2 billion 40-inch x 614 km Ajaokuta-Kaduna-Kano (AKK) gas pipeline project, which is part of the Trans-Nigeria Gas Pipeline (TNGP), will move 2.2 billion cubic feet of gas per day from Kogi when completed. And you can cross Abuja. , Nigeria, Kaduna, Kano.

They are few, but the industry along this corridor has enough gas to drive growth. However, because the pipeline traverses a large, ungoverned region of Nigeria’s unstable northern region, there is an increased risk of pipeline instability.

The Obiafu-Obrikom-Oben gas pipeline, also known as the OB3 pipeline or East-West pipeline, is a natural gas pipeline that extends from the Obiafu-Obrikom gas plant in Delta to the Oben node in Edo.

The 48-inch, 127 km gas pipeline presents challenges, the latest being the original construction contractor, and Nestoil is technically unable to run the pipeline across the Niger River. The Chinese company China Petroleum Pipeline Engineering Corporation handles this and expects a completion date for the first quarter.

It is planned to supply gas projects in Asa North-Ohaji South, ANOH, one of the largest greenfield gas condensate development projects billed to produce 600 million standard cubic feet of gas per day. ..

If the project is successful, we will provide an alternative link to southwestern Nigeria whenever the critical Esclavos Lagos pipeline system fails.

Brass Fertilizer and Petrochemical Company Limited (BFPCL) is another high priority project. There are two trains producing 5,000 tonnes / day (MTPD) of methanol and 500 million standard cubic feet / day (MMscf / d) gas treatment to extract condensate from natural gas before supplying the remaining lean gas. Includes plant. Methanol plant.

It also includes gas manifolds and pipelines to connect gas processing plants to gas fields and export facilities.

“We are aiming to set up two gas hubs, one in Oven and the other in Brass,” said the NNPC boss.

The NNPC boss further said the gas hub “will make an announcement about gas prices, creating a situation where the industry will begin to mention gas prices in Nigeria.”

Other projects, such as Shell-led AssaNorth and the AssaNorthGas processing company that approved $ 650 million in funding, are also important projects.

“All projections show that 60-70% of the gas that forms the basis of 4.5 BCF comes from electricity. Therefore, broken power lines so that you can make money from your investment in gas. It needs to be repaired and improved downstream collection, “said NNPC.

To this end, the state-owned oil company is considering establishing an additional 5,000 mw of electricity in its network and is currently working with stakeholders to resolve the issue so that the investment can be realized. Said.

However, operators say gas pricing remains controversial. “Our investment has affordable gas prices. We need a price that works,” said Roger Brown, CEO of indigenous oil company Seplat.

Osagie Okunbor, managing director of SPDC and country chair of Nigeria’s Shell Companies (SCiN), said Nigeria’s regulatory approach to gas should not focus too much on renting like oil. He warned that a spurring financial and regulatory environment should be created. Investing in gas projects has a beneficial effect on the economy.

SOURCE: BUSINESS DAY

Data Genocide

e-Commerce: Call to rescue SMEs’ Data Genocide

by with No Comment Businessfinance

READ ALSO: Enugu Tech. Program Registration.

Post COVID-19 pandemic issues have disclosed that ‘unless we consciously promote and empower e-Commerce in Nigeria, the consequences may result in the annihilation of SMEs’! Indeed, without a well-structured and resilience SME segment, there may be no viable trade and commerce platform for constructive intervention to attain our sustainable development goals.

Gains from e-Commerce can write the cheque to significantly assist in reviving our dying SMEs and reduce youth employment in Nigeria.

This is possible if we can intelligently provide the framework to secure and analyse related data sets that gets missing in action by policymakers each day. The phenomenal data genocide observed in our trade-ecosystem, if rescued, can create millions of jobs; as well as value chains of wealth for the country. It will also renew lost hope for the disillusioned youths, their families and indeed contribute positively to the GDP. This calls for a proactive National e-Commerce policy and devoted strategies to energize indigenous business empires. – Advertisement –

READ ALSO: Nigeria gasps for new LNG investments.

Unarguably, the biggest problem we face in Nigeria/Africa is leveraging evidence-based data for accelerated development and economic advancement. For want of an equitable expression, with respect to e-Commerce analytics; it appears we are annihilating data required for the growth and security of life. In other words, our concern should now be focused on exploring if we are not facing an e-Commerce data genocide in Africa?

It is significant to note that data genocide contributes to catastrophic e-Commerce poverty in Nigeria/Africa. This is against the background of the energy status in the production and development processes of the wealth creation value-chain. For example, reliable data informs that the total energy consumption required for the advancement of education, shelter, trade and security in Africa is equal to the total power generation and consumption volume in the Republic of Spain!

Therefore, this is the right time to empower mega e-Commerce companies in Nigeria.

To achieve this, the smart economic approach is to urgently start trade recovery investment to rescue millions of small-scale SMEs currently on life support and dying out there.

In the United States, for example, over 480,000 small-scale enterprises have gone under! SMEs represent the economic backbone of mega enterprises and sustainable mechanism for effective governance and national security-of-things. – Advertisement –

Reliable estimates indicate that if an e-Commerce outfit such as Konga in the Zinox Group and others are empowered to create a physical market distribution presence in the 36 States; the stimulant intervention will energise the creation of 20,000 new small-scale enterprises with capabilities to create over five million jobs and related activities in the trade, commerce and logistics industries.

In a span of 24 calendar months; e-Commerce enabled solar energy to millions of homes will produce three million employment avenues for Nigeria.

Post-pandemic reality has now cleared the air that the world can now anticipate a 276.9% increase in worldwide eCommerce sales over the most-recently tracked period (cumulative data).

However, many business owners and investors are vigorously scratching their heads and strategizing on how to participate and scale into that magic number adding up to $4.7 trillion; where e-Commerce has a sizeable chunk in the market playbook. How can Nigeria’s e-Commerce domain benefit from the emerging market?

Today, the term going global has become almost meaningless. The irony is that all nations, business and everything in-between is dreaming of going global. Whereas, this is an illusion because the world is intertwined and already gone global.

The new challenge is that some geographical spheres are dreaming of rebuilding traditional trade fences – domestically! Nevertheless, the Harvard Business Review recently informed that: “Business leaders are scrambling to adjust to a world few imagined possible just a year ago.

The myth of a borderless world has come crashing down. Traditional pillars of open markets — the United States and the UK — are wobbling, and China is positioning itself as globalization’s staunchest defender.”

Currently, the majority of the world’s entrepreneurs/CEOs recognize that Big-Data holds the key to discovering and recovering the abundant wealth in Africa. But without evidence-based predictive analysis, the e-Commerce benefits will perhaps remain a pipe dream. Now, how can we propel African e-Commerce to the next level and at the same time limiting the risks?

Historically, Africa had been a mega trading continent. And to date, Africa remains a trading destination continent – reminding us about Mansa Musa of the old Mali Empire and the gold riches. The recorded fame of Musa I. (c. 1280 – c. 1337), or Mansa Musa, apart from his kingship background, was entirely due to his ingenuity in trade and commerce.

Little wonder he has been described as the wealthiest individual in all human history. But today the continent has been inundated with several challenges – limiting her trade development potential and innovation.

Visibly noticed as central to Africa’s development challenges are technology and related trade and commerce infrastructure. The good news today is, the same technology phenomena infested by digital transformation is igniting Africa with the e-Commerce revolution.

It is evident that this revolution is happening at the speed of thought while Africa’s data rate of response to digital commerce is better described as unacceptable snail speed that leads to nothingness. Ironically, the continent still harbours a major chunk of global wealth.

The resilience to conquer those challenges lies on the capability and mastery of e-Commerce delivery and services. What constitutes the beneficial substances of re-imagining the Nigerian trade and commerce model?

Numbers speak. According to WTO, ‘‘Africa is undergoing a remarkable energy transformation. But African governments and their international partners must accelerate that transformation if we are to achieve our collective ambitions. Access to clean modern energy, especially in Africa, where 620 million people have no electricity, is critical to the success of global efforts to tackle poverty.’’

One critical factor stands out, and that is, digital infrastructure to promote e-Commerce and energize multi-sectoral market segments.

The telecoms infrastructure support to e-commerce logistics and service delivery remains a strategic imperative. The INFRACO initiative targeted at the telecoms section holds a great promise if the investment assurances are strategically put into action as a post-COVID-19 pandemic recovery plan.

This is critical, especially if channelled in partnership with experienced and trustworthy development groups. Again, a good example of such dynamic groups in Nigeria is the Zinox Group where Konga qualifies and fulfils the expectations of showcasing reasonable equity to eliminate financing gaps. This can be achieved by concentrating such investment into digital innovation solutions.

In the long term, as demonstrated by InfraCo Africa, Infraco model investment championed by proactive Government financing reduces identifiable risks and costs of implementation. Not only that, it goes a long way to ensure project reliability and standards that fulfils the expectations of sustainable development Goals (SDGs).

Looking at 2050, what will become of our post-COVID-19 economic outlook, without a dynamic and health e-Commerce ecosystem? A very lucid question indeed! Will the digital evolution validate the known adage that; “when the poor have nothing more to eat, they will consume the rich”?

This is the time to act. We must not allow the looming digital tsunami to consume our trade and commerce missions. There will be great consequences if that is allowed to happen. We must avoid travelling back in time from the digital divide to the invisible traps of emerging digital poverty!

Let there be action. The nation is at war with the COVID-19 pandemic. The vaccines are knocking at the door. Now, the central concern is how to empower the youth to engage and own the emerging digital knowledge ecosystem. This can be done by instituting a special national cluster for Nigeria’s Digital Transformation Innovation Readiness for Nigeria.

The first line of action is creating and reconstructing a digital transformation movement mindset and political will to defeat consumerism, corruption and enthrone bold philosophies of prioritizing merit for advancement in science and technology-enabled manufacturing. Nigeria must lead this complex mission in the combat of global digital knowledge acquisition to drive trade and commerce and succeed.

E-Commerce has the magic to facilitate the sustainable development of Africa’s youth employment and digital wealth creation. This agenda includes re-imagining national economic development and corporate governance pathways; while fast-tracking government mandatory responsibilities through proactive intervention strategies.

It also includes the conscious responsibility to analyse our environment, communication and digital divide challenges in Africa and prepare for the world of AI, which includes raising a future digital army for national and continental security.

Refocusing our development from figurative oil-based data to digital commerce transformation information system is the panacea for migrating the nation from an economy that generates an internal revenue of $9 billion as against $39billion import to register $trillion trade export numbers as a meticulous enterprise out of Africa.

Moving forward, there should be no further excuses for Africa with its large population and market to continue failing digital exams repetitively; sitting in the same class of knowledge advancement! The new and profound dream must commence now.

Our entrepreneurial-mind treasure is capable and must advance our success agenda from the euphoria of self-celebration to being celebrated by the world.

SOURCE: BRAND SPUR

LNG vessel

Nigeria gasps for new LNG investments.

by with No Comment Businessfinance

Stakeholders have urged the Federal Government and others to invest more in the Liquefied Natural Gas, LNG, as it becomes obvious that other nations have left the nation behind with its 22 million tonnes, MT, yearly capacity.

Investigation by Energy Vanguard showed that this is based on the awareness that the expansion of the nation’s output to 30MT yearly through the ongoing Train 7 would not make much difference in the global ranking of Nigeria.

READ ALSO: Loans: Why its difficult for SMEs to get from  banks.

Available data showed that Australia, Qatar and Malaysia are currently the world’s top three exporters with 77.5MT, 77.MT and 24MT respectively.

These are followed by Nigeria, Indonesia and Algeria, with 22MT, 16.6MT and 11.5MT respectively. The nations are further followed by Russia, Trinidad & Tobago, Oman and Papua New Guinea with 10.8MT, 10MT, 8.1MT, and 7.1MT respectively.

However, in its presentation at the just-concluded 12th biennial International Conference themed, “Powering Forward: Enabling Nigeria’s Industrialisation via Gas” obtained by Energy Vanguard, the Managing Director, Nigeria LNG Limited, Mr. Tony Attah, MD/CEO, stated: “Nigeria LNG, the biggest LNG plant in Africa produces 22 million tonnes despite our 200 TCF, and that’s partly why we are saying it’s really a time to take advantage of this resource and start to monetize it.”

Energy Transition He said: “As the world is transiting, the risk is incumbent on us that we potentially could get to a point where even the gas, just like oil, will not be as relevant in the future because if technology, which I believe is the biggest disruption takes centre stage to make hydrogen more available and easier to access, then we have a big issue.

“As we say, there is still coal in Enugu, for those who are from the 50s, you can imagine the biggest economy at the time was underpinned by coal. “The locomotives, everything was about coal, power was about coal.

But today no one talks about Enugu with respect to energy. “So energy is in full transition. And we believe it’s time to monetise Nigeria’s gas today. We just touched on a quick case study of Qatar.

“Someone mentioned Qatar already from a proficient country to a gas giant, and it took just 10 years, which is why we as Nigeria LNG firmly believe in the conversation and the narrative about the declaration of the decade of gas. We believe it is possible.” Case of Qatar Speaking further, he said: “If you look at Qatar from 1995. When they really went into gas development, we were just two years behind Qatar.

“So Qatar’s first gas LNG was in 1997. Nigeria’s first LNG was in 1999, just two years behind. But then within 10 years because of the deliberateness of the government and focus on gas, they have gone to 77 million tonnes and we are at best 22 million tonnes. ““We’ve made major in-roads with the support of the Minister of State for Petroleum, the Group Managing Director of NNPC, the Executive Secretary of NCDMB, and our shareholders NNPC, Shell, Total, and Eni, taking the ultimate decision for Train-7.

“But Train 7 is only going to add about eight million tonnes to take us to 30 million tonnes and just recently to establish Qatar’s dominance and deliberateness and focus on gas, they have taken an FID for 30million tonnes. “We celebrated Train-7 on the back of eight million tonnes to take us to 30 million.

“They have taken FID for 30 million tonnes. Essentially, our overall existence as a country is their increment. And for me, that is about how deliberate you can be. Look at how much they have made it count in Qatar.

But for Nigeria LNG, we continue to deliver value to the nation.” In an interview with Energy Vanguard, Victoria Ibezim-Ohaeri, Executive Director, Spaces for Change, said: “As a major gas destination, Nigeria deserves to stake more of its resources in the development of its LNG in order to get much value from natural gas.

“As the world considers shifting from dependence on one form of energy to another, we should consider making massive investment in the sector, apparently because of much benefit the nation is currently getting from LNG.”

Report Nevertheless, in a document obtained from its website, the NLNG, stated: “NLNG has over the years paid dividends of about USD18 billion to the Federal Government of Nigeria courtesy of its shareholding in the company, via Nigerian National Petroleum Corporation, NNPC.

As a good corporate citizen, NLNG also contributes to national wealth and the economic wellbeing of states in which it operates, by paying all applicable taxes and tariffs. The company has paid about USD9 billion in taxes to the Federal Government of Nigeria.

“Payment to the Federal Government of Nigeria via its shareholding in Nigerian National Petroleum Corporation, NNPC, for feedgas from inception till date is about USD15 billion.

With its plant construction, the company generated considerable Foreign Direct Investment, FDI, for the country. NLNG has assets (i.e. property, plant and equipment) worth about USD17.5 billion with 51 per cent stake by international oil companies and 49 per cent belonging to the country through the Nigerian National Petroleum Corporation, NNPC.” The report, added:

“The Company, since 2008, has contributed about four per cent of Nigeria’s annual Gross Domestic Product, GDP. With rebasing of the GDP in 2014, NLNG’s contribution to the GDP is estimated at about one per cent. NLNG provided more than 12,000 jobs at the peak of construction of each plant. Overall, the major sub-contractors employed over 18,000 Nigerians in technical jobs in the Base Project (Trains 1 and 2). Through each Nigerian Content plan for its contracts, NLNG has promoted the development and employment of Nigerian manpower.

Over 12,000 direct jobs will be generated during the construction phase of Train 7.” Time, running out However, time seems to be running out as some emerging oil and gas nations have also ventured into commercial NLG production. Take Mozambique as an example.

In its latest report, African Oil and Gas, stated: “Mozambique at Forefront of Global Gas Development. “Driven by new discoveries and progressive gas-focused policies, Africa’s LNG consumption and production is set to become one of the fastest-growing sub-sectors globally through 2040.”

Read more at: Vanguard News Nigeria

SME Loans

Loans: Why its difficult for SMEs to get from  banks.

by with No Comment Businessfinance

“Onyeagwu gave all these insights while speaking in an interview with Arise TV on why Nigerian banks charge high-interest loans”

The Group Managing Director of Zenith Bank, Mr. Ebenezer Onyeagwu  has discussed the impressive positive returns recorded this year by the bank. He also shared some insights on the relationship between commercial banks in Nigeria and Small/Medium Enterprise business owners.

READ ALSO: Investing during a recession.

Onyeagwu gave all these insights while speaking in an interview with Arise TV on why Nigerian banks charge high-interest loans, making it difficult for small business owners to get single-digit loans for their business, the Zenith Bank GMD explained that the operational costs and regulatory costs involved in running a bank usually sets the pace for every other thing.

He listed examples of operational costs involved in running a single bank branch and how all that adds to the bottom line at the end of the day.

He also highlighted regulatory costs which are not particularly known by people outside the banking sector as one of the costs of doing business banks face.

These two factors mainly contribute to the high-interest rates banks charge on loans.

“Our cost profile depicts the operating environment. Within the year we saw an upward review in fuel price, which accounted for the increase in our fuel cost. Again, when you are looking at cost of doing business, you also need to look in total, how businesses are being conducted. If I set up a branch today, I would need to provide my infrastructure, I need to provide power, water and in some cases, we even construct the road to provide access to the branch location. So, as a result of the poor state of infrastructure, you see that businesses would now have to contend with providing these resources to get their operations running. So, if we have more available and cheaper utility services and infrastructure to support businesses, of course, the cost would go down.

Then, looking at cost of doing business in banking, it goes beyond those operational costs. We also have things like regulatory cost. A bank like Zenith, given our size, the burden of regulatory cost on us is heavy. By regulatory cost here, I am referring to the Nigeria Deposit Insurance Corporation premium and the Asset Management Corporation of Nigeria fee. So, because of our size, if you look at the numbers, you will see that these regulatory costs account for a whopping 28 percent of our overhead. So, all of them come together to add to the cost of doing business for us as a banking institution in the country,” Onyeagwu said.

On why it is difficult to get single-digit loans from Nigerian banks, Onyeagwu highlighted 3 key reasons why single-digit loans are very difficult to obtain in Nigeria. He listed the following:

  • Fiscal deficit
  • Government Borrowing
  • Money supply and demand

The Zenith GMD stated that it is nearly impossible to issue an interest rate by fiat. He stated that the interest rate will always be determined by market forces.

He said, “First of all, if you are looking at the interest rate, you have to look at it in terms of the theoretical framework and issues around money supply, demand for money, issues around government borrowing, and the fiscal deficits. So, when you put all that together, you will see that you cannot have a situation where you decree interest rate by fiat. Interest rates would always be set by the dynamics and realities in the market. In this case, if you are looking at the interest rate in Nigeria, you have to index it to the risk-free rate. The one-year risk-free rate in Nigeria is like 10 percent. So, it will be difficult to have a single-digit rate in Nigeria.” 

Solutions 

Onyeagwu highlighted the various ways the Central Bank of Nigeria has intervened in a bid it provides single-digit loans to entrepreneurs in certain sectors. Sectors like cinema, movie, ICT, and fashion designing have been enjoying single-digit loans courtesy of various CBN initiatives.

He said, “We have intervention funds such as the Creative Industry Financing Initiative, where banks in the country provide long-term single-digit funding for entrepreneurs who are in cinema, movie, ICT, and fashion designing. We also have what is called the Agri-Business/Small and Medium Enterprise Investment Scheme. It is also a pool of funds available for businesses in that space. You can as well access these loans. Apart from these, the CBN also has different intervention schemes such as the Anchor Borrowers Scheme, the Commercial Agricultural Credit Scheme, and others, and all these loans are single-digit and they provide long-term financing. The big problem we have is that when you see an SME approaching you for the loan, the SME may not have a track record; he walks up to you and tells you that he needs a single-digit loan and needs N20 million.

“But I can’t give you N20 million without looking where you are coming from. So, we cannot decree the interest rate by fiat. But the regulators have done good work by providing funding schemes and whoever is eligible would get such single-digit long-term loans once they meet the criteria. So, the funding is there, but the SMEs when they approach the banks don’t often meet the eligibility criteria.” 

SOURCE: NAIRAMETRICS

Investing During Recession

Investing During a Recession

by with No Comment BusinessOpinionssme tips

Recession has in the last few years become something of a buzz word in Nigeria to describe the harsh economic conditions in the country and its resultant effect on the income, spending power and businesses of the people.

However, by definition, a recession happens when a country’s GDP falls in two consecutive quarters, while the Gross Domestic Product (GDP) simply means the measure of goods and services produced in a country over a period of time.

READ ALSO: Traders happy as movement of food trucks begins…

Last year, the economy contracted by 3.62 percent in the third quarter of 2020, indicating that two consecutive quarters of negative growth had been recorded in 2020 following the previous decline by 6.1 percent in the second quarter.

Officially, this meant that Nigeria’s economy slipped into recession and for the second time in four years as oil prices plunged in the midst of the COVID-19 pandemic.

Recessions are usually characterized by falling incomes, weakened sales and production as well as a drop in the confidence levels of investors. Consequently, this leads to an aversion for risk and often a tendency to err on the side of safety.

The interesting fact, however, remains that recessions often give way to recoveries soon after. In the light of this, with the right strategy, a recession might not necessarily be a bad time to invest.

These few tips will be useful in helping you create your personal investment strategy.

Avoid Panic One big mistake investors make in times of recession is to make panic-induced decisions and follow an inclination to liquidate investments in favour of cash. This could, however, mean that you box yourself into a “corner” which could eventually produce hefty losses once the economy begins to recover. This is especially for people who have a stock-based investment portfolio.

Also, patiently wait to get dividends for your existing investments and resist the urge to sell in panic. Carefully Inject Funds into Investments When a market is fraught with volatility and investor fear, it can be extremely difficult to time trades perfectly and properly predict when prices are likely to rise or fall.

The way to work around this is to find a personal saving pattern that works for you and then carefully identify investments that appear worthwhile to inject your saved resources into.

This can help you save money and also, significantly increases your purchasing power as prices are usually low at these times.

It may also be a good time to take advantage of low prices and get bargain deals especially in industries that have been hard hit by the recession but have clear potential to bounce back strongly.

Take a Peek In taking on new investments in this period, especially with direct investment like shares, always take a peek into the financial records as well as the business and operational models of the companies you are considering for investment.

Industries and companies that cater to basic human survival needs are a good bet in this regard because they can often expect to experience minimal upheavals even in a recession.

There is Nothing Wrong with Being Safe Investing in safety nets such as bonds and mineral resources such as gold can be a great way to store up value, as their performance is often unaffected by market forces.

This can help you diversify your portfolio properly and ensure you are not entirely reliant on how the stock market pans out. I leave you with the words of the American businessman, MichealNesmith “Behind every dark cloud, there is usually rain”.

SOURCE: VANGUARD

Investment Risk Capital Market

Capital market investment: Managing Risks…

by with No Comment Businessfinance

The capital market is, generally, regarded as a safe haven for investment. There, your money works for you.

The market is a setting for income without stress.

READ ALSO: Firstbank Unveils First SME Account…

Smart and daring speculators can make fortunes there and can also lose a fortune through poor judgement.

Despite its attractiveness, the capital market is volatile.

In fact, volatility in price of securities is the hallmark of every capital market.

Increased risk can emanate from increased volatility.

Everyday, stock prices go up and down in reaction to any number of issues involving business, the socioeconomic and geopolitical events.

The field of behavioral science has contributed an important element to the risk equation, demonstrating asymmetry between how investors view gains and losses.

Investors usually put roughly twice the weight on the pain associated with loss than the good feelings associated with a profit.

Every investor wants to play safe with his investments.

Often, investors want to know just how much the value of an asset may deviate from it’s expected outcome, and also how bad things may look way down on the negative side.

Value-at-Risk (VaR) attempts to provide an answer to this question.

The idea behind VaR is to quantify how large a loss in investment could be with a given level of confidence over a defined period.

Due to the high volatility and frequent downturns in the capital market, uncertainties characterize the predictability of returns on investment.

As a result of uncertainty, it is extremely difficult to predict the future price of a security and by extension, direction of the capital market.

Uncertainty and risk are synonyms but they are not quite the same. Uncertainty must be taken in a sense radically distinct from the familiar notion of risk, from which it has never really been properly separated.

The term “Risk” as loosely used in everyday speech and in economic discussion, really covers two things which functionally at least in their causal relations to the phenomenon of investment, are categorically different.

Uncertainty is the lack of complete certainty. It is a situation where the future outcome cannot be predicted with any confidence from knowledge of past or existing events.

Uncertainty presents more than one possibility whereby the true outcome or result is unknown. Uncertainty is immeasurable ie, not possible to calculate whereas, risk is a state of uncertainty where some of the possibilities involve a loss, catastrophe or other undesirable outcome.

It is a set of possibilities each with quantified probabilities and quantified losses. One may have uncertainty without risk but not risk without uncertainty. We can be uncertain about the winner of a contest but unless we have some personal stake in it, we have no risk.

If we bet money on the outcome of the contest, then we have a risk. Consequently, the measure of uncertainty refers only to the probabilities assigned to outcomes while the measure of risk requires both probabilities for outcomes and losses quantified for outcomes. Uncertainty presents both risk and opportunity, eroding or enhancing value.

READ FULL ARTICLE

First-bank SME

Firstbank Unveils First SME Account…

by with No Comment Business

First Bank of Nigeria Limited, Nigeria’s premier and leading financial inclusion services provider, has announced its SME specific accounts designed to reinforce the Bank’s role in putting SME’s at an advantage whilst contributing to national growth and development.

READ ALSO: CIT Microfinance Bank Disburses Over N16bn Loans

The SME accounts – which are in two variants – First-bank SME Classic and First-bank SME Deluxe – are offered to SMEs, irrespective of industry, and tailored to have SMEs exposed to a wide range of services and opportunities that are essential for their continued growth and role in contributing to national development.

The advantages and features of these accounts include; access to Temporary OverDrafts (TODs)and other facilities subject to meeting Risk Adjustment Capital (RAC) of each product; immediate enrollment on all digital platform; free access to FirstBank SME events; free access to extensive business promotional and networking opportunities on the SMEConnect portal; access to a wide range of discounted and promotional offers.

Amongst the many opportunities available to holders of FirstSME account is the SMEConnect initiative of FirstBankwhich is a platform through which SMEs access the Bank’s unique propositions that will equip them with the essential tools needed for the growth of their business.

The SMEConnect portal is also designed to help SMEs identify various gaps that hinder their business growth. With FirstBank’s over 126 years of impacting the economy, the Bank’s SME innovative Business Diagnostics Tool will also help proffer tailored solutions, whilst creating avenues for business improvement, profitability and sustainability.

Following extensive research by the Bank, 7 strategic pillars have been considered essential for the sustainability and growth of SMEs. The 7 pillars – connect to infrastructure, connect to talent, capacity building, connect to policy and regulation, connect to resources, connect to market as well as connect to finance.

According to Chief Executive Officer of FirstBank, Dr. Adesola Adeduntan, “FirstBank is delighted to unlock several opportunities for SMEs to thrive. Our FirstSME account is one of the numerous opportunities designed to empower SMEs to continually drive impact as the backbone and contributors to employment and economic growth.

Being woven into the fabric of the society for close to 127 years means that we remain at the forefront of providing the desired financial products and services to fit the needs unique to the SMEs as well as facilitating the requisite tools and resources to efficiently and effectively drive business sustainability and expansion strategies essential to taking SMEs to the next level’’

SOURCE: THE NIGERIAN VOICE