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Banking & Finance

Fuel subsidy to gulp N450 bn in 2020 -‘ -finance minister



FG, States, LGCs share N601bn for Nov, says Perm Sec

Mrs Zainab Ahmed, the Minister for Finance, Budget and National Planning says under-recovery of Premium Motor Spirit (PMS), popularly referred to as fuel subsidy will gulp N450 billion in 2020.

She said this on Monday in Abuja, at the public presentation of the 2020 budget proposals.

Ahmed said it was called ‘under-recovery’ because it was the cost of operation of the Nigeria National Petroleum Corporation (NNPC).

“We have a provision for under-recovery of PMS in the sum of N450 billion. If you look at the Budget office website, it is in the fiscal framework, which is an annexure to the budget.”

President Muhammadu Buhari had on Tuesday, presented a budget proposal of N10.33 trillion to a joint session of the National Assembly.

He put the Federal Government’s estimated revenue in 2020 at N8.155 trillion, comprising oil revenue of N2.64 trillion, non-oil tax revenues of N1.81 trillion and other revenue of N3.7 trillion.

Other estimates are N556.7 billion for statutory transfers, N2.45 trillion for debt servicing and provision of N296 billion as sinking fund.

The 2020 budget is based on an oil production estimate of 2.18 million barrels per day, oil price benchmark of 57 dollars per barrel and an exchange rate of N305 to a dollar.

Ahmed said that recurrent (non-debt) spending was expected to rise by 11.28 per cent, from N4.39 trillion in 2019 to N4.88 trillion in 2020.

This, she said, would reflect in salaries and pensions, including provisions for implementation of the new minimum wage.

Ahmed said that the overall budget deficit of N2.17 trillion represents 1.52 per cent of the Gross Domestic Product (GDP) and N1.64 trillion of it would be funded by both domestic and external borrowing.

According to her, the external sources will provide N850 billion, while domestic sources will provide N744.99 billion.

Also read: No plan to remove fuel subsidy now — FG

Citing the top 12 Ministries, Departments and Agencies (MDAs) capital allocations, she said the Ministry of Works and Housing was allocated N259.2 billion, Ministry of Power N127.67 billion, Ministry of Transportation N123.07 billion, Ministry of Education (including Universal Basic Education Commission) N162.74 billion.

Others are Ministry of Defence N99.87 billion, Ministry of Health N90.98 billion, Ministry of Agriculture and Rural Development N79.79 billion and Ministry of Water Resources N78.34 billion.

Some others are: Ministry of Humanitarian Affairs, Disaster Management and Social Development N45.45 billion, Ministry of Aviation N53.85 billion, Ministry of Industry, Trade and Investment N41.34 billion and Ministry of Science and Technology N37.55 billion.

She, however, said that there were key expenditures captured in the Medium Term Expenditure Framework (MTEF), but were not in the 2020 budget.

“They are N61 billion for the Presidential Power Initiative, N1.22 trillion for federally funded projects in the oil and gas sector to be undertaken by NNPC on behalf of the federation.

“Others are: N272 billion as transfers to Tertiary Education Trust Fund (TETFUND) for infrastructure projects in tertiary institutions and N82.35 billion as transfer to Nigeria Sovereign Wealth Investment (NSIA) for Public Private Partnership/Presidential Infrastructure Development Fund (PIDF),” she said.

For revenue, Ahmed said there were Strategic Revenue Growth Initiatives (SRGI) aimed at boosting revenue generation to meet targeted revenue to GDP ratio of 15 per cent.

She said further that the SRGI would be implemented with increased vigour to improve revenue collection and expenditure management.

She said that Nigeria must mobilise significant resources to invest in human capital development and critical infrastructure.

“Some reforms will be tough but they must be done to look at the facts and be frank to ourselves.

“However, we will engage the public sector in whatever we do, including any changes in taxes, with regards to rates or administration methods.” 

Banking & Finance

NGX Market Capitalisation Sheds N134bn



NGX Market Capitalisation Sheds N134bn

 …As Nigeria Exchange Group confirms Jude Chiemeka as NGX CEO

 Bearish trading dominated the Nigerian stock market on Thursday, leading to a loss of N134 billion or 0.24 per cent on the market capitalisation.

Specifically, the Nigerian Exchange Ltd.(NGX) market capitalisation which opened at N56.738 trillion, closed at N56.604 trillion.

The All-Share Index also declined by 0.24 per cent or 236.2 points to close at 100,063.32, compared to 100,299.48 recorded on Wednesday.

Consequently, the Year-To-Date (YTD) return fell to 33.82 per cent.

Selloffs in MTN Nigeria, Unity Bank, Wema Bank, Wapco, United Capital, Honeywell Flour, and Mutual Benefits Assurance, among other declined equities propelled the market’s weak performance.

Meanwhile, market breadth closed negative with 25 losers and 24 gainers on the floor of the Exchange.

On the gainers’ chart, Daar Communications led by 8.33 per cent to close at N44k, UPDC Real Estate Investment Trust trailed closely by 8.26 per cent to close at five Naira per share.

Guinea Insurance lost 7.69 per cent to close at 36k, UPL declined by 6.67 per cent to close at N2.10 and MTN Nigeria dropped 6.54 per cent to close at N200 per share.

Conversely, Oando Plc led the gainers’ chart by 9.93 per cent to close at N15.50, Conoil followed by 9.52 per cent to close at N115 per share.

Veritas Kapital Assurance also gained 9.38 to close at N1.05, Neimeth International Pharmaceuticals advanced by 8.61 per cent to close at N1.64 and Jaiz Bank rose by 7.55 per cent to close at N2.28 per share.

Analysis of the market activities however showed trade turnover settled higher relative to the previous session, with the value of transactions up by 164.30 per cent.

A total of 863.58 million shares valued at N12.56 billion were exchanged in 7,931 deals,in contrast to 342.20 million shares valued at N4.75 billion exchanged in 7,592 deals traded in the previous session.

Meanwhile, Fidelity Bank led the activity chart in volume and value with 539.40 million shares  worth N5.66 billion, followed by Guaranty Trust Holding Company(GTCO) with N59.43 million shares valued at N2.79 billion.

Veritas Kapital Assurance sold 40.42 million shares worth N41.49 million, United Bank For Africa(UBA) transacted N35.98 million shares valued at N839.60 billion.

Zenith Bank traded 24.02 million shares worth N882.33 million..

In another development, the Nigerian Exchange Group Plc (NGX Group) on Thursday confirmed the appointment of Mr Jude Chiemeka as the Chief Executive Officer of Nigerian Exchange Ltd. (NGX), its operating exchange subsidiary, effective July 1.

NGX, in a statement made available to newsmen in Lagos, said the appointment was sequel to an approval of the Securities and Exchange Commission (SEC).

Chiemeka has been serving as the acting CEO of NGX since Jan. 1.

He succeeded Mr Temi Popoola, who transited to the role of Group Managing Director of the NGX Group.

Also, Group Chairman, NGX Group, Alhaji Umaru Kwairanga, said that the strategic appointment aligns perfectly with the Exchange’s succession plan.

Kwairanga stated that the appointment reinforces the synergy that NGX continuously foster across its group operations.

He said: “Chiemeka’s extensive experience and proven leadership qualities are invaluable assets that will propel NGX towards long-term success.

“Under his leadership, I am confident that NGX will play an even more pivotal role in contributing to the sustainable growth of Nigeria’s and Africa’s economies.”

Mr Ahonsi Unuigbe, Chairman of NGX, as quoted by the statement, also expressed the satisfaction of the Board of NGX to confirm Chiemeka’s appointment as CEO of the Exchange.

“It is our hope and expectation that he will drive growth and innovation, enhance our operational perspectives, democratise investment in the capital market, and unlock opportunities for investors,” Unuigbe said.

Mr Temi Popoola, GMD/CEO, NGX Group, speaking through the statement also expressed delight to see Chiemeka step into the role of CEO of NGX.

Popoola added that Chiemeka’s extensive experience and deep understanding of the markets will be crucial in driving NGX’s growth while aligning with a broader group strategy.

“I look forward to working closely with him to unlock value and to create new opportunities for stakeholders across the entire NGX Group ecosystem,” he said.

In his remark in the statement, Chiemeka said he was honored with the appointment at this critical period of the Exchange’s history while appreciating the Boards of NGX Group and NGX.

“As we aim to build on our achievements and maximise value for all stakeholders, I look forward to forging strong collaborations with NGX’s exceptional team and the broader capital market community.

“We are committed to creating a more dynamic and inclusive exchange that fuels Nigeria’s economic growth and competes on the global stage,” the NGX CEO said.

Chiemeka brings close to three decades of experience in African securities trading and asset management to his new role.

His career includes serving as Executive Director of Capital Markets at NGX and Managing Director, United Capital Securities Ltd.

He also worked at leading investment banking firms in Nigeria such as Chapel Hill Denham Securities and Rencap Securities (Nigeria).

A Fellow of the Chartered Institute of Stockbrokers, Chiemeka is an alumnus of the University of Lagos, Lagos Business School, and the University of Oxford, UK. 

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Banking & Finance

Equity Market Rebounds, Gains N26bn On Renewed Investors Interest



NGX Market Capitalisation Sheds N134bn

The equity market rebounded by 0.05 per cent on Tuesday, driven by renewed investor interest in banking, insurance and some blue-chip stocks.

The Nigerian Exchange Ltd. (NGX) market capitalisation gained N26 billion or 0.05 per cent to close at N56.606 trillion, up from N56.580 trillion at the opening.

The All-Share Index also advanced by 0.05 per cent or 47 points to close at 100,067.77, compared to 100,020.83 recorded on Monday.

As a result, the Year-To-Date (YTD) return rose to 33.83 per cent.

Investor interest in Zenith Bank, United Bank for Africa (UBA), and Guaranty Trust Holding Company (GTCO), among other advanced equities, pushed the market into positive territory.

However, market breadth closed negative with 28 laggards and 20 leaders on the floor of the Exchange.

On the losers’ log, ETranzact led by dropping 50k to close at N4.50.

Fidson Healthcare Plc trailed by losing N1.45 to close at N13.50, while Cornerstone Insurance lost 20k to close at N1.90 per share.

LASACO Assurance declined by 24k to close at N2.31, UPDC Real Estate Investment Trust shed 45k to close at N5.00, and May & Baker dropped 40k to close at N5.50 per share.

On the other hand, Linkage Assurance led the gainers’ log by adding 10k to close at N1.10.

Africa Prudential followed, gaining 80k to close at N9.00 per share.

Unity Bank gained 15k to close at N1.69, Wapic Insurance rose by 6k to close at 73k, and Sovereign Trust Insurance went up by 4k to close at 49k per share.

Analysis of the market activities showed that trade turnover settled higher relative to the previous session, with the value of transactions increasing by 10.86 per cent.

A total of 365.64 million shares valued at N4.12 billion were exchanged in 8,665 deals, compared to 274.68 million shares valued at N3.71 billion exchanged in 10,112 deals previously.

Universal Insurance led the activity log-in volume with 61.53 million shares worth N24.36 million.

AIICO followed with 31.72 million shares valued at N32.51 million.

UBA transacted 25.85 million shares worth N581.91 million, while UCAP led the log-in value with 25.27 million shares worth N711.31 million.

NEM Insurance traded 23.26 million shares worth N197.68 million. 

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Banking & Finance

Revocation Of Heritage Bank’s Licence Will Stabilise Financial System – Experts



Revocation Of Heritage Bank’s Licence Will Stabilise Financial System – Experts

 ….Uwaleke, Ekechukwu opine it’s a step in the right direction 

 Some finance experts have commended the Central Bank of Nigeria (CBN) for revocating the operating licence of Heritage Bank Plc, describing it as a proactive gesture, made to save depositors’ funds.

The CBN announced on Monday, the revocation of the licence of the bank with immediate effect.

The experts, who spoke on Monday in Abuja, said the action was in the overall interest of the financial system.

According to Uche Uwaleke, a Professor of Finance and Capital Market, and the president of Capital Market Academics of Nigeria, the revocation is a step in the right direction.

Uwaleke said that the proactive step taken by the CBN was in the overall interest of financial system stability.

He, however, said that efforts should be made to protect the depositors and employees of the liquidated bank.

“With the Nigeria Deposit Insurance Corporation (NDIC) taking over the liquidation process, efforts should be made to protect the depositors as well as the interests of employees using liquidation dividends,” he said.

An economist, Dr Chijioke Ekechukwu, said that Heritage Bank had been struggling over the years to remain afloat, adding that the situation must have become irredeemable for the apex bank to revoke its licence.

According to Ekechukwu, a past president of the  Abuja  Chamber of  Commerce and  Industry, some years ago, some of us in the finance sector knew that the bank was struggling to remain afloat.

“For the CBN to revoke its licence, it means that it was irredeemable and probably not marketable to investors,” he said.

He said that there would be an initial setback to all the bank’s customers because it would take a while to verify them for the purpose of compensation and refund of their monies by the NDIC.

“It is, however, better to sanitise the financial system than to allow a sick and weak bank to continue to open its doors to customers,” he said.

Mr Gregory Mmaduakolam, also an economist, said that the action by the CBN was rash and capable of eroding the much-needed confidence in the banking system.

Mmaduakolam said that the action would also result in avoidable job loss of staff of the bank, thereby, further exacerbating the country’s unemployment challenge.

“I would have preferred a situation where the CBN supports ailing banks and prevents them from failing than simply withdrawing their licences.

“Such an action does not encourage confidence in the banking system, ” he said.

The CBN had on Monday, announced the revocation of the licence of the bank with immediate effect.

It said that the action was in accordance with the apex bank’s mandate to promote a sound financial system in Nigeria and in the exercise of its powers under Section 12 of the Banks and Other Financial Act (BOFIA).

It said that the board and management of the bank had not been able to improve the bank’s financial performance, a situation which constituted a threat to financial stability.

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