Nigeria investors

Foreign VCs dominate in Nigeria As local investors…

Foreign VCs dominate in Nigeria As local investors bankroll Egyptian startups,

Nigeria tech ecosystem’s march to the throne of a most attractive destination for investors in Africa is likely to be a reality again in 2021 but its local venture capital (VC) scene would take the second seat once again.

READ ALSO: Visa joins cryptocurrency market, now allows crypto transaction, but not bitcoin

In Egypt, though, this is hardly to be the case as local investments compete equitably in the tech investment activities in terms of volume.

Over the years, tech investment has grown significantly in Egypt. In 2019, for example, the number of funded ventures rose to 159 percent on 2018 figures, data from Disrupt Africa shows.

The number dropped to 82 startups in 2020 on the back of the pandemic, the country was nonetheless second only to Nigeria and also means that the number of funded Egyptian startups has grown by 1,540 percent since 2015 when only five startups secured investment.

Egypt, actually, ranked number one in Africa in the number of equity deals with 86, representing over 83 percent growth year-on-year and almost a quarter of the continent’s VC transactions in 2020, according to Partech’s report.

In terms of total equity funding, Egypt also sees the highest growth rate out of the top 4 markets with over 28 percent year-on-year growth, attracting $269 million to represent 19 percent of the total funding and maintaining its third place but significantly closing the gap with Nigeria and Kenya.

Egypt owes much of its rise on the continent’s tech ecosystem to a local ecosystem driven by high-quality entrepreneurs and increased activities from local investors plugged into the many regional Middle East and North Africa (MENA) funds.

However, these would not have grown to the level it is without intentional government investment in technology.

The Egyptian government is one of the biggest investors in the tech ecosystem in Egypt. The government does this through its public venture capital programmes. public venture capital organizations are organizations that are funded and controlled by government institutions.

These types of organizations are either completely funded by the government or partially funded by the government.

According to experts, public venture capital organizations usually have a slightly different aim than other VC firms; their main goal is usually focused on promoting the growth of Small and Medium Enterprises (SMEs).

In other cases, their aim is to invest in certain industries or certain areas. When both the government and the private sector contribute to the funds of Public Venture Capital organizations, they are called hybrid funds.

The Central Bank of Egypt in 2019 established a fintech regulatory sandbox as well as the $57 million Fintech Fund.

According to the bank, the funding to be mobilised directly and indirectly by the new platform is expected to start with $50-100 million upon launch reaching $350-500 million over a period of five years.

Apart from the Fintech Fund, the Egyptian government also runs a number of incubation programmes both independently and in collaboration with other organisations.

The government also made a lot of investment in providing technology infrastructure in the country that enables tech businesses and the ecosystem to thrive.


Visa joins cryptocurrency market, now allows crypto transaction, but not bitcoin

Visa joins cryptocurrency market, now allows crypto transaction, but not bitcoin

Visa has become the latest payment company to accept cryptocurrency, as the firm made its first cryptocurrency transaction this month.

READ ALSO: 45% of N75bn MSMEs survival fund provided for women owned businesses

The incorporation of crypto into its payment options followed Mastercard plans to accept bitcoin.

Visa partnered with digital asset bank, Anchorage, to conduct its first transaction using to send USDC to Visa’s Ethereum address at Anchorage. Head of crypto at Visa, Cuy Sheffield, said the move was encouraged by consumer demand.

Sheffield said the company experienced an increase in customer demand, prompting the firm to conduct a test at an unspecified date. He stated that the company’s clients want product built in line with the digital asset.

Visa is not going in the same direction as most companies embracing cryptocurrency, as it preferred USD Coin (USDC), which is a stablecoin digital asset with a value pegged directly to the dollar.

READ ALSO: United States to make second bitcoin sales, as CBN refuses to innovate

Speaking on its entry into the crypto market, Sheffield said, “We see increasing demand from consumers across the world to be able to access, hold and use digital currencies and we’re seeing demand from our clients to be able to build products that provide that access for consumers”, he told Reuters on Monday.

Global payment companies are beginning to embrace cryptocurrency as it becomes popular among investors and online shoppers.

Although, in Nigeria, payment companies are still keeping distance due to the Central Bank of Nigeria’s ban on crypto transactions.

Aside from payment firms, manufacturers and service providers are also stepping into the market.

Last week, Tesla founder, Elon Musk had announced that his automaker will now accept cryptocurrency as payment for its vehicles.

Musk said bitcoin is the preferred crypto, as he and the company bet big on bitcoin becoming a traditional payment option in the future.

He said Tesla will remain exposed to crypto through bitcoin, as payment made will not be converted into fiat.


msme clinic

MSME Clinic To be Flagged Off by VP Osinbajo And Pantami

Nigerian Vice President Yemi Osinbajo and the Nigerian Minister of Communications and Digital Economy (MCDE) Dr Isa Ali Ibrahim Pantami are set to flag off the National Macro, Small and Medium Enterprises MSME Clinic in Gombe.

READ ALSO: Promoting MSMEs – Osinbajo Patronize Shoemaker

The MCDE announced this yesterday via their official social media platforms.

The clinic will kick off in Gombe, today the 30th of March 2021. The Ministry said the clinic is “aimed at supporting the ease of doing business in Nigeria.

“The Honourable Minister of Communications and Digital Economy, @DrIsaPantami will accompany the Vice President, His Excellency, Prof Yemi Osinbajo, as the Federal Government delegation flags off the National MSME Clinic in Gombe State on Tuesday, 30th March 2021.”

“The clinic is aimed at supporting the ease of doing business in Nigeria by providing shared facilities with access to broadband connectivity, automation of processes, a one-stop-shop, among others.

“This is in line with the National Digital Economy Policy and Strategy for a Digital Nigeria launched and unveiled by His Excellency, President Muhammadu Buhari.”


Nigerian exports

Businesses to lose over N55bn as ports halt exports

Nigeria is desperate for foreign exchange, yet businesses that should be contributing towards earning dollars, in particular, will be losing at least N55 billion ($142m) within the two weeks the country’s seaports in Lagos will not be allowing exports trucks.

READ ALSO: Stock: Equity Market Rallies N109bn Rally

While the country’s non-oil exports for 2020 stood at N1.43 trillion, it averaged N27.5 billion on a weekly basis; in a year trade was significantly down, according to data from the National Bureau of Statistics (NBS). For two weeks, it comes to N55 billion.

However, trade is expected to recover this year as economies recover from the COVID-19 pandemic and N55 billion is at best a conservative estimate that is likely far from what the economy, and in particular, businesses would lose.

In 2019, when trade was better, non-oil exports had a value of N2.51 trillion and if trade this year, as the global economy is gradually rebounding, is as good as 2019, then the losses over the two-week period could even be starting at N96.8 billion ($251m).

“It was abrupt,” said Ibukunoluwa Akinrinde, technical anchor of the NESG Trade, Investment and Competitiveness Policy Commission. “If prior to now, the NPA for reasons best known to it, did not sound the alarm it wanted to halt exports.”

One month to that time, the NPA should have created awareness, with a date it was going to embark on this action, he explained, saying, “Arbitrariness of decisions is part of what affects investors’ confidence.”

Arbitrariness like this see businesses getting their fingers burnt. Those prepared for exports such as through the Sea Link Project could do short cargo movement within two weeks to arrive the destination. Those required for use within a month after which they may no longer be in conditions suitable for what they are needed will now get hurt, leading to colossal losses.

Suspension of export trucks by the ports authority, apart from the value of export goods now stranded, would also see exporters incurring demurrage and detention fees.

Those who had dispatched trucks laden with goods would have to pay the cost of those trucks staying put till delivery can be done at the cargo exports terminals.

To have the shipments returned till the NPA gets its acts right would also mean paying for the goods to be returned to wherever they may have come from in Nigeria.

Anyway it is seen, businesses are bound to lose, and big too.

“In export, once you sign an agreement with the buyer abroad and it takes you two weeks or months to access the port and there is rejection, it becomes double tragedy,” John Isemede, a consultant on Export Value Chain to United Nations Industrial Development Organisation (UNIDO), told BusinessDay. “This is because those goods still have to be brought back to Nigeria. It is like collecting a corpse from the mortuary.”

This indicates yet another casualty of this decision as previously highlighted by BusinessDay. The sanctity of contracts will be broken by many exporters, not of their own doing, but because the port administrators decided to truncate their sources of livelihoods on the back of poor planning.

From different parts of Nigeria, trucks carrying products in export containers are on their way to the Lagos ports. Those who have paid for goods to be transported on those trucks will now have to bear additional costs and shipping lines are expected to charge the export demurrage and detention fees, respectively.



Stock: Equity Market Rallies N109bn Rally

The Nigerian Stock Exchange (NSE) Thursday sustained the bullish trend as trading rallied to a N109 billion gain

READ ALSO: Liquidity rises, external reserves grow but naira falls

The All-Share Index and Market Capitalization rose by 0.53 percent to close at 39,293.14 basis point and N20. 558 trillion, up from 39,085.78 basis point and N20. 449 trillion respectively.

The ASI and market capitalisation appreciated by 207.36 index point and N109 billion respectively.

The market turnover decreased by 36.6 percent, as investors bought and sold 229.417 million shares worth N3.780 billion in 4,016 deals as against the 361.903 million shares valued at N5.701 billion in 4,018 deals that exchanged hands on Wednesday.

The market breadth was positive with 23 stocks appreciating, while 12 declined.

The top gainers was led in percentage parameters by Coronation Insurance Plc, rising by 10 percent to close transaction at N0. 55 Kobo per share.

UPDC Real Estate Investment Plc appreciated by 9.80 percent to close at N5. 6 Kobo per share, while Pharma – Deko Plc climbed by 9.63 percent to close at N1. 48 Kobo per share.

Neimeth Pharmaceutical and GlaxoSmithKline surged by 9.55 and 9.45 per cent to close at N1. 95 Kobo and N6.95 per share respectively.

Conversely, Sovereign Trust Insurance led the losers’ chart, losing 8.33 percent to close at N0. 22 Kobo per share.

PF Micro Finance Bank shed 7.22 percent to close at N1.8 Kobo per share, while Prestige Assurance Plc declined by 6.82 percent to close at N0. 41 Kobo per share.

Japaul Gold and Dangote Sugar Refinery Plc fell by 4.44 and 2.67 percent to close at N0. 43 Kobo and N16. 4 Kobo per share respectively.

For the second consecutive trading sessions, Union Bank of Nigeria was the most active stock at 79. 566 million shares valued at N421.699 million.

While Communication giant, MTN Nigeria finished trading as the most valuable equity at N1.613 billion.



Dangote Cement Enters Trillion Earners’ Club With 15.9% Revenue Growth.

Dangote Cement Group has grown its revenue by 15.9 percent in 2020, crossing over to the trillion league with its earnings that surged to N1.034 trillion in 2020 from N891.671 billion in 2019.

READ ALSO: Registration for FG’s MSME survival fund to open Monday

The cement company in its 2020 financials show that its Gross profit rose to N596.226 billion up from N511.682 billion, representing a 16.5 percent growth.

Administrative expense climbed to N60. 339 billion from N54.124 billion, while Production cost of sales stands at N437,970 billion up from N379.989 billion. Also Selling and distribution expenses is at N153.719 billion.

The Profit from operating activities fell from N386. 734 billion to N276.068 billion for the year after an Income tax Expense of N97.24 billion was deducted.

Dangote Cement’s profit after tax (PAT) of N276.068 billion soared from N200.521 billion it posted in 2019, which indicated a 37.7 percent appreciation, profit before tax rose by 49 percent, leaping from N250.479 billion the previous year to N373. 310 billion in the year in review.

According to the 2020 statements, the company’s Total Assets are put at N2.022 trillion, jumping from N1.742 trillion, a 16.1 percent growth. However, its Equity fell by 0.77 percent to stand at N890. 970 billion down from N897.937 billion.

Its Liabilities outstripped Assets by rising by 33.9 percent to stand at N1.131 trillion from N844.500 billion in the corresponding year.

According to the Financials, Property, plant and equipment stand at N1.390 trillion, while its share capital remains at N8.520 billion same as 2019.

Also, the company’s earnings per share, basic and diluted moved to N16.14 Kobo up from N11. 79 Kobo it posted in the previous year. It generated N720 billion of the revenue from its operations in Nigeria, while about N320 billion from the offshore operation.

The report also revealed that sales volume from its products rose by 8.9 per cent, while its net cash flow of N511.89 billion from its operating activities soared from N426.12 billion in 2019.

Dangote Cement also proposed a dividend payout of N16 per share, this is while disclosing a tax charge of N97 billion for the financial year ended 31st December 2020. A tax charge represents an increase of N50 billion recorded in 2019.
Dangote Cement’s Nigerian operations during the period sold 15.9Mt for the full year 2020, compared to 14.1Mt in 2019. This includes both cement and clinker sales. Looking at the domestic sales alone, Nigerian operations sold 15.6Mt. Revenues for the Nigerian operations came in at N720.0 billion, owing to demand in the domestic market.

This volume growth was enhanced by a successful innovative national consumer promotion “Bag of Goodies – Season 2” and lower rains in the third quarter compared to the previous year.

Dangote Cement posted a record high Pan-African EBITDA of N71.3 billion. Within the period under review, the cement group commissioned its gas power plant in Tanzania. Group earnings per share were N16.14.



CBN holds benchmark interest rate at 11.5%

The Central Bank of Nigeria (CBN) on Tuesday retained its benchmark interest rate, known as the Monetary Policy Rate (MPR), at 11.5 percent after the two-day Monetary Policy Committee (MPC) meeting in Abuja, citing inflation concerns.

READ ALSO: How to invest when inflation bites

This comes not as a surprise as analysts in the financial services sector had expected a hold following persistent uptick in inflation rate and weak growth.

Nigeria’s inflation rose to 17.33 percent in February 2021 from 16.47 percent in January 2021, according to data from the National Bureau of Statistics (NBS).

In the fourth quarter of 2020, Nigeria’s economy sluggishly recovered from a recession it slipped into in the second quarter (Q2) of 2020 – after output contracted for two consecutive quarters.

Real GDP grew by 0.11 percent in the fourth quarter of 2020, from -3.62 percent in Q3 2020, according to NBS data.

The CBN also retained the Cash Reserve Ratio (CRR) at 27.5 percent, Liquidity Ratio at 30 percent as well as the Asymmetric Corridor around the MPR at +100/-700 basis points.

Given the fact that the rise in inflation has been due to cost-push factors rather than demand pull factors, Godwin Emefiele, governor of the CBN, said the Monetary Policy Committee has placed greater weight on utilising tools that would strengthen the nation’s productive base as a nation.

Taiwo Oyedele, head of Tax and Corporate Advisory Services at PwC, had said the rising inflation would be of concern to the MPC as it does not support any expansionary policy changes. He said a contractionary policy adjustment would hurt the fragile economic growth and recovery.


Trade sector

Afreximbank, NEXIM sign $50m deal to boost Nigeria’s trade sector

African Export-Import Bank (Afreximbank) and the Nigeria Export-Import Bank (NEXIM) have signed a Memorandum of Understanding (MoU) to establish a Joint Project Preparation Fund. This will provide early project preparation financing and technical support services to public and private sector organisations operating in Nigeria’s trade sector.

READ ALSO: Bankly gets $2m seed funding to financially include 2m Nigerians

Signed on 20 February 2021, the MoU provides that Afreximbank and NEXIM will collaborate through the Joint Project Preparation Fund to unlock investments into sectors such as export manufacturing, agro-processing, solid minerals development and beneficiation services, as well as healthcare, Information, and Communications Technology, and creative industries.

The Joint Project Preparation Fund will support public and private sector investors by providing technical and financial support services that will result in a steady pipeline of well-structured, bankable projects that Afreximbank, NEXIM, and other financial institutions can readily fund.

The Fund will assist the early development process of projects from concept stage to bankability by covering the preparation of feasibility studies, project development and advisory services and related costs.

Afreximbank and NEXIM aim to mobilise up to US$50 million in the form of project preparation funds for investments in Nigeria.

Benedict Oramah, President of Afreximbank, said, “The execution of this Memorandum of Understanding marks yet another significant milestone in our collaboration with NEXIM. I am particularly pleased that Afreximbank and NEXIM are boldly venturing upstream to help investors develop well-structured projects that meet market standards.”

This intervention is timely and the Fund will play a catalytic role in accelerating the diversification of the Nigerian economy by ensuring a steady flow of bankable projects in priority tradable sectors in a timely manner.

In addition to enhancing bankability, the Fund will, on a case-by-case basis, undertake feasibility studies to assess the viability of accessing markets in the sub-region, thereby promoting intra-African trade under the AfCFTA.

This replicates a similar initiative that Afreximbank pioneered in Malawi in partnership with Malawi Export Development Fund (EDF).

Abubakar Abba Bello, managing director of NEXIM, said his bank was pleased about the partnership opportunity with Afreximbank.

This will resolve the challenges associated with the shortage of credit in Nigeria’s trade sector.



Inflation: Relief as inflation to moderate around May

Nigeria’s economy may likely heave a sigh of relief should the inflation rate moderate in May as optimistically stated by Godwin Emefiele, Governor, Central Bank of Nigeria (CBN), after announcing a hold on its benchmark interest rate and other parameters on Tuesday.

READ ALSO: Fuel Marketers Raise Diesel Price To N265 Per litre

The Monetary Policy Committee (MPC), which concluded its two-day meeting on Tuesday, has been confronted with a policy dilemma, with inflation rising for 18 consecutive months to 17.33 percent in February 2021.

The dilemma that confronted the MPC relates to whether to focus on efforts to stimulate output growth or focus on the raging inflation, which at 17.33 percent is almost attaining the January 2017 inflation rate of 18.72 percent.

“The country just crawled out of recession in Q4 2020, if the MPC tightens, it would constrain liquidity, the interest rate would be high and it would make it difficult to access credit needed that investment need to drive growth and the economy could slip back into recession,” Emefiele said.

Nigeria’s Gross Domestic Product (GDP) grew by 0.11 percent (year-on-year) in real terms in the Q4 2020, representing the first positive quarterly growth in the last three quarters.

Though weak, the positive growth reflects the gradual return of economic activities following the easing of restricted movements and limited local and international commercial activities in the preceding quarters, the National Bureau of Statistics (NBS) said.

“We would not lose sight on inflation. Inflation may move up in April, but we expect inflation to begin to moderate from May. By that time we should have our Q1 GDP numbers and we hope it shows significant growth and then we begin to attack inflation,” Emefiele said.

But analysts in the financial services sector disagree with the CBN governor’s optimism, citing a high level of insecurity, which has obstructed productivity in the agriculture sector.

Uche Uwaleke, professor of capital market and president, Capital Market Academics of Nigeria, said that would be too optimistic since inflationary pressure was more on food.

“I don’t see inflation rate moderating significantly till the end of the third quarter that is by September, about the time harvest season sets in. Besides, insecurity and likely flooding between now and May remain downside risks,” Uwaleke noted.

However, the committee decided by a vote of three members to increase the Monetary Policy Rate (MPR) by 50, 75 and 50 basis points, respectively, and six members voted to hold all parameters constant.

The MPC noted the overarching need of taming the rising inflation and sustaining growth recovery in the economy while focusing on downside risks associated with the injections.


Diesel Price

Fuel Marketers Raise Diesel Price To N265 Per litre

Against the backdrop of the recent rise in global oil prices, some fuel marketers have increased the price of Automotive Gas Oil, also known as diesel, to a new high of N265 per litre.

READ ALSO: FG to support MSMEs with $1bn syndicated loan

Reported on February 24 that diesel price rose to a high of N250 per litre, with businesses taking a beating on the back of rising energy costs.

Our correspondent observed on Sunday that some filling stations in Lagos State were selling the product for between N248 and N265 per litre while some put the price at between N220 and N245 per litre.

Mobil filling station along the Lagos-Ibadan Expressway and Nipco at Fadeyi axis of Ikorodu Road increased the pump price of diesel to N265 per litre; while Forte Oil at Onipanu sold it for N255 per litre.

The National Bureau of Statistics, in its latest AGO price watch report, said the average price paid by consumers for diesel increased by 1.29 percent to N227.76 in February from to N224.86 in January.

“States with the highest average price of diesel were Zamfara (N268.78), Adamawa (N263.33) and Kebbi (N257.50). States with the lowest average price of diesel were Osun (N206.50), Ekiti (N207.86) and Plateau (N208.57),” it said.

Crude oil price accounts for a large chunk of the final cost of petroleum products, and the deregulation of the downstream oil sector by the Federal Government means that the pump prices of the products will reflect changes in the international oil market.

The international oil benchmark, Brent crude, had risen above the $70 per barrel mark on March 8 for the first time in over 14 months from the $51.22 per barrel at which it closed last year. It stood at $64.43 per barrel as of 7:03pm Nigerian time on Monday.

The National Operations Controller, Independent Petroleum Marketers Association of Nigeria, Mr Mike Osatuyi, said the prices of diesel and kerosene had been increased because of the rise in crude oil prices.

Business“Marketers are importing diesel because it has been deregulated and the pump price is based on the current crude oil prices. We get foreign exchange from the black market to import the product,” he told our correspondent on Monday.

Diesel is mostly used by businesses to power their generators amid a lack of reliable power supply from the national grid.

The President, Association of Small Business Owners of Nigeria, Mr Femi Egbesola, had in a recent interview with our correspondent lamented that the recent increase in the price of diesel was taking a heavy toll on businesses, especially Small and Medium Enterprises.

“The cost of diesel and raw materials is giving us a nightmare. The price of diesel has been skyrocketing in a way that creates fear in manufacturers,” he said at the time.