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AfDB okays fresh $200m for Nigeria’s power sector

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AfDB’s initiative calls for proposals targeting women’s businesses

…As Bad loan rises further, hits N2.3trn in banking sector***

The Federal Government has secured a loan of $200 million to fund its electrification project.

The African Development Bank (AfDB) Group yesterday said it provided $150 million for the project. The balance of $50 million was issued from the Africa Growing Together Fund (AGTF) – a $2 billion facility sponsored by the People’s Bank of China.

A statement by the bank said: “The Board of Directors of AfDB Group has approved a $150 million sovereign loan to the Federal Government of Nigeria to finance the Nigeria Electrification Project (NEP).

“The AGTF, a $2 billion facility sponsored by the People’s Bank of China and administered by the AfDB, has also approved a $50 million loan to the Federal Government of Nigeria to co-finance the project.”

According to the statement, the joint financing is targetted at supporting the Federal Government’s efforts “to address critical energy access deficit in the country, and catalyse achievement of universal energy access by 2030 targets.”

Last year, the World Bank granted $350 million loan to the Federal Government for rural electrification projects.

The Managing Director, Rural Electrification Agency (REA), Damilola Ogunbiyi, said: “By supporting the electrification of unconnected and underserved communities, NEP will contribute materially to their economic development.

“Access to reliable, affordable and clean electricity will result in savings for households and businesses, which can be deployed to other uses.”

The government  has 2020 target to generate up to 3,000 megawatts (Mw) of electricity with about 10,000 mini-grid projects to electrify communities in the country that are yet to get connected to the national grid.

In 2016, the Minister of Power, Works & Housing, Babatunde Fashola, said the government was ready to invest up to $150 million in rural electrification projects.

Fashola said the government plans to use 44 tertiary institutions and small hydro dams in the rural areas as anchors for the electrification programme.

He explained that the money would be deployed towards providing Independent Power Plants (IPPs), to supply electricity to tertiary institutions and rural communities.

The minister also identified 37 out of the 44 tertiary institutions to be used for the project as varsities and the other seven as teaching hospitals.

In the meantime, against the backdrop of a challenging operating environment the banking sector performance update shows escalating bad loans as businesses that borrowed money struggle to survive.

Consequently, the latest data from the National Bureau of Statistics, NBS, released yesterday has revealed that value of Non Performing Loans (NPLs) in the third quarter of 2018, Q3’18, increased by N400 billion or 21 percent to N2.3 trillion from N1.9 trillion in Q2’18 though it also indicated a slight four percent decline when compared to N2.4 trillion recorded in the corresponding period of 2017.

This corroborates the most recent report of global rating agency, Moody’s which warned that losses to bad loans remain high in Nigeria’s banking industry.

In its 2019 Outlook on African Banks, Moody’s stated that while Nigerian banks now enjoy improved foreign currency liquidity due to higher oil prices, they however face the challenge of rising loan quality.

The company said: “Higher oil prices and partial liberalisationof the foreign-exchange market have eased pressures on “unhedged” borrowers and normalized foreign-currency liquidity.

Asset risks nonetheless remain high as banks continue to tackle legacy issues; similarly, earnings remain under pressure as loss-loss provisions remain elevated. Capital buffers are strong for the bigger banks, but weaker for smaller bank.”

While affirming a ‘Stable’ outlook for African Banks, Moody’s highlighted risks to banks on the continent to include rising US interest rates and political uncertainty in some countries including Nigeria.

It stated: Our outlook for African banks is stable but risks are tilted to the downside though banking prospects remain strong over the longer term Risks to the operating environment relate to: Rising US interest rates leading to capital outflows across emerging markets, in conjunction with rising government debt and currency depreciation, could significantly harm banks’ loan quality and access to foreign currency; Political uncertainty and risk of social unrest are an ever-present challenge for Africa; South Africa, Tanzania, Nigeria are some of the countries that face such challenges, which could weaken investor and consumer confidence; External shocks such as falling commodity prices, drought, or an escalation of global trade wars, could hurt African corporates and their ability to repay debt.” Moody’s warning is coming on heels of similar concern expressed by its global rating companion, Fitch Ratings on the Nigerian banks.

In its latest credit rating for three Nigerian Tier-1 banks, namely Access Bank, GTBank and UBA, Fitch warned that Nigerian banks face pressure on margins and capital.

“The fragile economic recovery restrains banks’ growth prospects and asset quality. Operating conditions are still difficult for banks. “Despite stronger oil prices in second half of 2018 (H2’18) supporting economic growth, credit demand is weak and banks face pressure on margins and capital.

“Fitch believes that sovereign support to Nigerian banks cannot be relied on given Nigeria’s weak ability to provide support, particularly in foreign currency. In addition, there are no clear messages of support from the authorities regarding their willingness to support the banking system. “Therefore, the Support Rating Floor of all Nigerian banks is ‘No Floor’ and all Support Ratings are ‘5’.

This reflects our view that senior creditors cannot rely on receiving full and timely extraordinary support from the Nigerian sovereign if any of the banks become non-viable”, Fitch stated.

The Nation with additional report from Vanguard

Economy

NGX Market Capitalisation Gains N836bn

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Stock Market Gains N18bn; FTN Cocoa Processors, Prestige Assurance lead Losers’ Chart 

…Tantalizers, NASCON lead the losers’ chart 

The Nigerian Exchange Ltd.(NGX) market capitalisation, which opened at N57.697 trillion on Tuesday, gained N836 billion or 1.45 percent closing at N58.533 trillion.

Also, the All-Share Index rose by 1.45 percent or 1,480 points to close at 103,524.44, as against 102,044.84 recorded on Monday.

As a result, the Year-To-Date (YTD) return rose to 38.45 percent.

Interest in Telco heavyweight and Tier-one banks such as MTN Nigeria, UBA, Access Corporation, Guaranty Trust Holding Company(GTCO), and sustained interest in Transcorp Power(TransPower) kept the market in the green.

Market breadth closed positive with 35 gainers and 14 losers.

On the gainer’s chart, UBA led in percentage terms of 10 to close at N25.30, followed by MTN by 9.98 percent to close at N243.50 per share.

Julius Berger also gained 9.71 percent to close at N61, While Access Corporation rose by 9.51 percent to close at N22.45 per share.

Veritas Kapital Assurance went up by 9.38 percent to close at 70k per share.

Conversely, Tantalizers led the loser’s chart by 7.89 percent to close at 35k, and National Salt Company of Nigeria(NASCON) trailed by 6.77 percent to close at N53.70.

Morison Industries Plc shed 6.62 percent to close at N1.41, C&I Leasing lost 6.45 percent to close at N3.48, while Cutix Plc dropped 6.30 percent to close at N2.53 per share.

However, analysis of the market activities showed trade turnover settled lower, relative to the previous session.

The value of transactions was also down by 16.76 percent.

A total of 565.79 million shares valued at N14.23 billion were exchanged in 11,519 deals,  compared to 436.90 million shares valued at N17.09 billion exchanged in 11,344 deals traded on Monday.

On the activity chart, Transcorp led in volume with 170.72 million shares traded at a value of N3.13 billion, Access Corporation followed by 48.57 million shares valued at N1.06 billion.

GTCO sold 39.04 million shares worth N165.80 million, Jaiz Bank traded 36.78 million shares valued at N72.51 million and UBA transacted 31.96 million shares valued at N796.24 million

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Economy

SIFAX Group Appoints Basil Agboarumi As Executive Director

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SIFAX Group, one of the leading business conglomerates in Nigeria with investment in Maritime, Aviation, Oil & Gas, Haulage & Logistics, Financial Services, and Hospitality, has appointed Basil Agboarumi as its new Executive Director of corporate and Intergovernmental Affairs.

Agboarumi recently completed his term as the Managing Director/CEO of the Skyway Aviation Handling Company Plc. (SAHCO Plc.), one of the subsidiaries of SIFAX Group.

Agboarumi holds a National Diploma (OND) in Mass Communication from the Federal Polytechnic, Auchi and a Higher National Diploma (HND) in Mass Communication from the Federal Polytechnic, Oko, a Master in Communications (MSc) from the Lagos State University and a Certificate in Creative Design & Digital Communications from the School of Media & Communications of the Pan-Atlantic University, Lagos. He also holds a Management Certificate in Civil Aviation from Concordia University, Montreal, Canada.

Basil Agboarumi, Executive Director, Corporate and Intergovernmental Affairs

After the privatization and subsequent takeover of SAHCOL by SIFAX Group in 2009, Agboarumi was appointed the Head of Corporate Communications to spearhead the re-branding of the new company. He was subsequently appointed the company’s Managing Director in 2018. Under his leadership, SAHCO Plc was listed on the Nigeria Stock Exchange while many airlines, both local and foreign, signed business deals with the company due to its excellent and cutting-edge services which include passenger handling, ramp handling, and cargo handling.

Agboarumi has over 25 years of professional in public relations, reputation management, brand development, media relations, business development, and government relations.

Speaking on the new appointment, Dr. Taiwo Afolabi, Chairman, SIFAX Group, said Agboarumi brings vast experience and records of achievements to his new role, adding that these qualities will help him succeed in the new role.

He said: “He demonstrated the capacity and ability to navigate different terrains as a leader during his time as the Managing Director of SAHCO. The COVID-19 pandemic hit shortly after he took over the reins at SAHCO, but he was able to steer the ship of the company to profitability despite the uncertainties that characterised the global aviation business at the time. I am convinced the Group will benefit tremendously from his wealth of experience as he assumes this new role.”

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Economy

NGX All-Share Index Crosses 100,000 Mark

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Stock Market Gains N18bn; FTN Cocoa Processors, Prestige Assurance lead Losers’ Chart 

…Guinness Nigeria and FTN Cocoa Processors lead the losers’ table

The All-Share Index, one of the performance indices of the Nigerian Exchange Ltd.(NGX), on Thursday, crossed a 100,000 mark for the second time in the year.

Having crossed the mark on Jan. 24, and later dropped, the All-Share Index specifically added 0.75 percent or 744 points to settle at 100,335.3, compared to 99,591.64 posted on Wednesday.

Consequently, investors gained N420 billion or 0.75 percent, as the market capitalisation which opened at N56.310 trillion, closed at N56.730 trillion.

Also, the Year-To-Date (YTD)return rose to 33.19 percent.

Improved buy interest in the shares of Dangote Sugar, MTN Nigeria, Transcorp Power, Oando Plc, and Cornerstone, alongside other top gainers drove the equity market to a positive terrain.

Analysis of the market activities showed trade turnover settled lower relative to the previous session, with the value of transactions down by 9.11 percent.

However, market breadth closed negative with 33 losers and 25 gainers.

On the gainers table, Dangote Sugar and MTN led in percentage terms of 10 percent each to close at N50.60 and N201.30 per share, respectively.

Transcorp Power followed closely by 9.99 percent to close at N351.30, while Juli Plc added 9.96 percent to close at N4.97 per share.

National Salt Company of Nigeria (NSCN) rose by 9.92 percent to close at N47.65 per share.

On the other hand, Guinness Nigeria and FTN Cocoa Processors led the losers’ table by 10 percent each to close at N45.90 and N1.53 per share, respectively.

Transcorp also lost 9.95 percent to close at N17.10, Ikeja Hotel shed 9.93 percent to close at N6.08, while Redstarex declined by 9.87 percent to close at N3.38 per share.

Stock Market Gains N18bn; FTN Cocoa Processors, Prestige Assurance lead Losers’ Chart 

A total of 554.72 million shares valued at N17.73 billion were exchanged in 9,708 deals, compared to 416.48 million shares valued at N19.51 billion exchanged in 9,338 deals.

On the activity table, Transnational Corporation (Transcorp) led both in volume and value with 301.36 million shares traded in value of  N5.65 billion.

Sterling Nigeria sold 33.32 million shares worth N150.78 million, while FBN Holdings traded 23.21 million shares valued at N773.91 million.

Also, United Bank of Africa (UBA) transacted 18.38 million shares worth N400.29 million and Zenith Bank sold 17.08 million shares valued at N583.93 million.

Reacting, a stockbroker with Premium Capital, Mr Victor Ibrahim, said that the improved performance of the equity market was due to renewed investors’ expectations from the current government’s policies.

Ibrahim stated in Lagos that investors were keying into the future benefits of the economy by boosting their investment in the equity market.

He said, “The stock market is a leading indicator of the Nigerian economy and as such, with government policies such as the free-flow economy, investors confidence in our market has been boosted.

“The artificial scarcity of dollars in order to underprice or devalue the Naira is also another indicator.

“This is because the price of stocks in the Nigerian equity market is cheaper for foreign investors and those local investors who have dollars in reserve.

“While the Nigerian economy may presently appear tough, investors are keying into the future opportunities in the current government’s policies with the belief in the capacity of President Bola Tinubu.”

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