Nigeria’s capital market grows by 38.8% in 2013 – SEC

Nigerian Stock Exchange

WorldStage Newsonline—The Nigeria’s capital market grew by 38.8 per cent in the current year, making it one of the fastest growing bourses globally, according to the Securities of Exchange Commission (SEC).

The Director General of the Commission, Ms. Arunma Oteh, who disclosed this at the Capital Market Wealth and Health Day organised in Kuje, a satellite town in the Federal Capital Territory, attributed the spike of the market to primarily regulatory guidelines and other measures by the Commission to ensure transparency in the operations of the Nigerian Stock Exchange (NSE) and , amongst other factors.

Describing the SEC as one of the top 10 capital market regulatory institutions globally, the investment expert said the Commission would continue to adopt proactive strategies, including grassroots awareness campaigns on why Nigerians needed to continue to create wealth through investments in stocks, mutual funds, unit trust schemes, amongst others, as part of sustained efforts to deepen the capital market and restore confidence in it as a wealth creation market for investors.

CBN links positive inflationary rate to agric transformation agenda

Sanusi Lamido Sanusi

For the first time since 2008, the inflationary rate in Nigeria has come down to 7.8 percent from 8 percent, according to reports from the National Bureau of Statistics (NBS).

Sanusi Lamido Sanusi, governor, Central Bank of Nigeria (CBN), attributed this to a modern agricultural financial strategy adopted by the Federal Ministry of Agriculture in collaboration with the CBN and supported by Nigerian banks.

The CBN governor was represented by the deputy governor on Fiscal System Stability, in an interactive session with Akinwunmi Adesina, minister of agriculture, and some selected chief executives of banks at the weekend in Abuja. They noted that bank lending to the agricultural sector had been put at a single-digit interest rate that would co-opt seed companies and fertiliser companies to support the agricultural transformation.

Adesina, while confirming the CBN governor’s assertion, noted that the Federal Government’s Growth Enhancement Scheme (GES) kick-started the revolution of agriculture as a business, saying

SANUSI BRACES UP FOR ELECTION SPENDING SHOCK

Sanusi Lamido Sanusi

Central Bank of Nigeria (CBN) Governor, Mallam Sanusi Lamido Sanusi, has said he is bracing up for public spending “shocks” as the country prepares for the 2015 elections.

 

His disclosure reduces the chance of a reduction in the benchmark interest rate.

“Toward, the elections, there will be a supplementary budget,” Sanusi said in an interview on Bloomberg TV’s African Business programme at the weekend.

 

He added: “I don’t think I have seen an election cycle in any country in which the government has not spent money.”

The CBN governor, who is billed to finish his tenure in June 2014, is being wooed by northern leaders to join politics despite the fact that he has ruled out joining politics after his exit from the bank .

 

The CBN held its key interest rate at a record high of 12 percent at its last Monetary Policy Committee (MPC) meeting last week and said policy makers might raise borrowing cost to curb possible surge in government's spending in a pre-election year.

Growing banks’ exposure to power, oil sectors to increase concentration risk

Increased lending by banks to the power and oil sectors of the economy may portend concentration risk for financial operators, according to industry watchers. To this end, there is a stir of anxiety among the banking public as failure in the sectors may adversely affect the fortunes of lender banks.

Analysts say the current growing exposure to the power and oil sectors is at variance with extant regulations guiding loans and credit, which calls for urgent attention from the Central Bank of Nigeria (CBN).

BusinessDay gathered that the development is in contravention of CBN laws that forbid concentration of risks beyond certain limits, particularly through the single obligor limit of 20 percent of shareholders’ funds and the macro-prudential risk which addresses sectorial concentration.

Single obligor limit is the maximum amount a bank is allowed to lend a single borrower or an individual in relation to the total shareholders’ fund of that bank. Macro-prudential regulation, on the other hand, concerns approach to financial regulation aimed to mitigate the risk of the financial system as a whole so as to reduce the risk and the macro-economic costs of financial instability.

FNB plans to foray into Ghana retail banking sector by 2014

First National Bank (FNB) is planning to foray into Ghana and Nigeria and set up its retail banking business by the end of next year, as part of its overseas expansion strategy.

FNB CEO Jacques Celliers was quoted by BD Live as saying that the lender is hopeful about the business prospect in both countries.

It is believed that FNB will seek a banking license in Ghana, set up its retail banking operation and then strike a small to mid-sized acquisition to further boost the presence.

Earlier this year, FirstRand attempted to seal a deal in Ghana that could not materialize, and now has options to apply for a banking license or explore another acquisition opportunity.

"We will approach it both ways, but you can't always wait for deals," Celliers told the news portal.

The decision to expand the banking business comes after, the bank felt that South Africa's economic climate had changed and retail banking market was becoming more competitive in the region.

In Zambia, the bank has decided to set up the FNB brand organically after it failed to purchase Finance Bank of Zambia in 2011.

In Nigeria, FirstRand has a merchant banking operation in the form of Rand Merchant Bank (RMB), which has been provided with a merchant banking license in Nigeria.

FNB, which manages operations in Namibia, Botswana, Mozambique, Tanzania, Swaziland and Lesotho, was reportedly mulling over the acquisition of banks held by Asset Management Corporation of Nigeria, which holds Mainstreet, Keystone and Enterprise Bank.

Celliers also told the news site that FNB had ambitions to foray into Kenya, but nothing concrete was planned now.

Source: Banking Business Review

Ease of property registration: SA dwarfs Nigeria in private equity investment interests

As against 80 inter-regional private equity firms looking to invest in South Africa’s real estate market, 30 in Egypt and 40 in Kenya, only 16 of such companies are interested in Nigeria’s real estate market due, in part, to difficulty in registering property and doing business generally.

The Central Bank of Nigeria (CBN), which disclosed this in the 2012 report on Nigerian economy by the Nigerian Economic Summit Group (NESG), adds that there are also 10 domestic and private equity firms looking to invest in the country.

Private equity investments in Africa have seen phenomenal increase from $151 in 2002 to $3 billion in 2011 and, according to Emerging Markets Private Equity Association, South Africa accounted for the largest portion of these investments, leaving Nigeria with just 10 percent of the continent’s total.

On account of demographics and strong buying power, Nigeria is seen as a green field and an investment haven, yet investors are slow in moving into the market due to unfavourable business environment.

In its 2011 report on ‘Doing Business’, the World Bank ranked Nigeria 180 out of 183 countries in terms of ease of registering property. Currently, there are 13 steps in the registration process which can take up to 82 days. Four of the steps carry their own associated costs which on average total 20.8 percent of a property’s value, according to the NESG report.

N220bn MSMED fund ready for disbursement as CBN finalises modalities

The N220 billion Micro, Small and Medium Enterprises (MSME) Development Fund is on the verge of being disbursed to micro-finance banks as the Central Bank of Nigeria (CBN) finalises the modalities for accessing the fund, BusinessDay has learnt.

The fund was launched in August this year, three years after it was first pronounced in September 2010 by the CBN and President Goodluck Jonathan.

Operators are already warming up to access the fund as they have compiled their application forms and submitted to the CBN for approval.

The central bank had said it would engage only micro-finance banks with good track records for the disbursement of the N220 billion ($1.34 billion) under the direct lending to MSMEs scheme.

It would also consider the financial health of the grassroots banks before they can serve as conduits for new stimulus package by the regulator to energise the economy through lending to small businesses.

When contacted on phone about the current health status of micro-finance banks in the country, Olufemi Fabamwo, director, Other Financial Institutions and Supervision Department (OFID), CBN, said: “I only confirmed that the modalities for accessing the fund are being finalised. The MFBs are healthy.”

GSK Nigeria Optimistic Parent Will Agree to Take Stake

GlaxoSmithKline Plc (GSK), the U.K.’s biggest drugmaker, will probably agree to take a majority stake in its Nigeria business after suspending the plan four months ago, according to the head of the Lagos-based division.

“Our focus is that if it has to be done and when it is done, it’s done right,” Chidi Okoro, chief executive officer of GlaxoSmithKline Consumer Nigeria Plc (GLAXOSMI), said in a Nov. 24 interview in Lagos, the commercial capital. “The plan is only suspended. It certainly will come up at some stage.”

GlaxoSmithKline in July postponed a $100 million move to raise its stake in the Nigerian business to 80 percent from 46.4 percent in order to further consult with shareholders and the country’s regulator. The parties couldn’t agree on a price for the shares after the market value increased during negotiations, Okoro said on July 23. Glaxo said in November 2012 it would pay 48 naira a share for the stake, compared with its value of 64.80 naira in Lagos yesterday, having gained 44 percent in 2013.

Ghana: SMEs Challenged to Embrace ICTs

Accra — SMALL and Medium Enterprises (SMEs) operating in Ghana and other parts of Africa have been urged to make use of modern technology to access global markets.

Ghana's chief director in the ministry of trade and industry, Nii Ansah-Adjei told CAJ News in Tema on the sidelines of a month-training workshop for women entrepreneurs that only through technology could enable Africa's SMEs to survive competition with their international counterparts.

He explained that one effective way for the local industry, especially small-scale businesses, to expand their goods and services and increase their cash flows was to target the foreign market.

He said since the private sector of every country thrived on the activities of small-scale businesses, Ansah-Adjei said there was need for African industries to devise technological ways to attract bigger markets.

“As an entrepreneur, your major goal is to go beyond your country and think of how best you can access the global markets, since it is the only platform to reap the full benefits of your businesses,” he said.

10 Successful African Entrepreneurs To Follow On Twitter

Only a tiny handful of Africa’s most successful entrepreneurs and business leaders have embraced Twitter, using the micro blogging platform to share business advice, personal experiences, news updates, opinions and lunch pictures; but mostly words of wisdom.

These 10 Tweeters are all highly accomplished African entrepreneurs. Follow them, retweet them, and learn from their wisdom.

Strive Masiyiwa

Twitter handle: @StriveMasiyiwa