BusinessDay-12-Mar-2020.pdf - businessday market monitor Biggest Gainer Unilever N10.6 FMDQ Close Everdon Bureau De Change Bitcoin NSE Foreign Exchange

BusinessDay-12-Mar-2020.pdf - businessday market monitor...

This preview shows page 1 out of 54 pages.

Unformatted text preview: businessday market monitor Biggest Gainer Unilever N10.6 FMDQ Close Everdon Bureau De Change Bitcoin NSE Foreign Exchange Biggest Loser Nestle 9.91 pc N1017 23,572.75 Foreign Reserve - $36.1bn Cross Rates GBP-$:1.29 YUANY - 52.65 Commodities -10.00 pc Cocoa US$2,639.00 Gold $1,650.35 news you can trust I ** thursDAY 12 march 2020 I vol. 19, no 518 ₦2,942,050.42 -0.27 N300 Sell $-N 363.00 369.50 £-N 473.00 483.00 €-N 406.00 415.00 Crude Oil $ 36.08 I Buy g www. Market Spot ($/N) I&E FX Window CBN Official Rate 368.33 306.95 Currency Futures ($/N) 3M 0.00 2.87 NGUS feb 24 2021 367.00 A fter several days of silence amid a coronavirus outbreak and full-blown oil price war, Nigeria’s fiscal and monetary authorities will announce measures in coming days to deal with the economic fallout that has sent oil prices tumbling. “We will not hesitate to de- Dangote urges diversification as banks quote dollars at N390 No buyers for 50 cargoes of Nigeria crude, 12 LNG cargoes What are the likely policy responses from FG to oil collapse? See page 39 ploy additional measures to shield the Nigerian economy from headwinds,” Central Bank Governor Godwin Emefiele said at the consultative roundtable themed ‘Going for Growth 2.0’ held in Abuja on Wednesday. Brent crude prices have slumped more than 40 percent this year to around $37 a bar- 6M 5Y 0.00 3.95 0.00 10 Y 0.00 30 Y 0.32 11.34 10.81 13.31 NGUS feb 22 2023 375.00 @ g Nigeria to unveil fiscal, monetary plan to counter oil slide, coronavirus ONYINYE NWACHUKWU, Abuja fgn bonds Treasury bills rel, as Saudi Arabia and Russia jostle for market share and the coronavirus slows global growth Continues on page 38 NGUS feb 26 2025 380.00 g No respite for investors as stocks slump for third straight session in week SEGUN ADAMS S tocks continued their descent on Wednesday, recording their secondbiggest decline in 2020 to widen year’s loss by the most yet. The most capitalised stock, Dangote Cement, shed 10 percent to N153 a unit after remaining relatively quiet in the previous market routs, pushing the market 3.35 percent lower and YTD to -12.18 percent. Stock investors have now lost over N1trn since Monday. The cement maker makes up about 21 percent of the entire stock market. Despite the downturn in the market, banking stocks saw relatively strong bids for the first time this week as stocks “fall to very attractive levels enough to compensate for risks”, said Gbolahan Ologunro, an analyst at Lagos-based CSL Stockbrokers Ltd. Ologunro said live trade data suggest movement in Dangote Cement share price might have been due to the activity of a single unnamed investor. Nestle, United Capital and Oando were among the laggards Continues on page 38 Inside L-R: Aliko Dangote, chairman, Dangote Group; Rotimi Amaechi, minister of transport; Babatunde Fashola, minister of works and housing; Zainab Ahmed, minister of finance, and Godwin Emefiele, governor, Central Bank of Nigeria (CBN), at the consultative roundtable with the CBN governor themed ‘Going for Growth 2.0’, at the CBN headquarters in Abuja, yesterday. Pic by Tunde Adeniyi Senate seeks ban of electricity generators despite poor power supply P. 2 2 Thursday 12 March 2020 BUSINESS DAY news High cost oil producers like Nigeria to suffer worst impacts of price war ISAAC ANYAOGU A s oil pro ducers scramble to outdo one another in offering bargain prices for crude oil, countries that will hurt the most are those with a higher cost of production like Nigeria, a situation it has failed to address over the years. Over 40 percent of Nigeria’s crude oil production now happens at offshore fields which are very expensive requiring huge capital outlay. The rest happens in onshore terrains marred by militancy, oil theft, and brigandage. In addition, oil companies are now required to pay punitive taxes and royalty rates upon the revision of a Deep Offshore Act when compared with Nigeria’s OPEC peers. “Besides the high tax and fiscal regime, which is not the friendliest, there is also a high level of insecurity in the oilproducing areas which ensures that operators have to incur other miscellaneous costs that may be inapplicable in other regions,” said Desmond Ogba, an energy lawyer at Lagos-based Templars law firm. Yet, the fiscal and regulatory environment is marked by instability carrying huge political and business risks which, when factored in, push Nigeria’s cost of production effectively around $30 a barrel, one of the highest in OPEC. “Oil producers price the political risks and instability in Nigeria into their investments and this raises production costs in Nigeria,” said Ayodele Oni, energy lawyer, and partner at Lagos-based Bloomfield law firm. The challenge for Nigeria is that it is entering into a price war with producers like Saudi Arabia whose cost of production hovers around $4 per barrel and Russia with over $560 billion in foreign currency reserves. Nigeria’s foreign currency reserves are a paltry $37 billion, setting the stage for David vs Goliath-style confrontation absent the sling and stones. However, the true cost of crude oil production in Nigeria often depends on which government official is reading a prepared speech. “Let me go back memory lane. The technical cost of crude oil production in the 1980s/90s was around $4 per barrel. In early 2000, it was between $5 and $6 per barrel. Today, it is over $35 per barrel,” said Timipre Sylva, minister of state for petroleum resources, at a seminar on effective cost management in the oil and gas sector in Abuja last December. At a consultative roundtable with the CBN governor Senate seeks ban of electricity generators despite poor power supply ... prescribes 10 years imprisonment for importers Solomon Ayado, Abuja T he Senate is seeking to ban electricity generating sets in the country and is proposing 10 years imprisonment for importers of generating sets. This is contained in a bill sponsored by Bima Enagi (Niger South), which passed first reading in the Senate on Wednesday. “All persons are hereby directed to stop the use of electricity generating sets which run on diesel/ petrol/kerosene of all capacities with immediate effect in the country,” the bill stated. The proposed ban is applicable to all types of generators, except for ones providing essential services such as in hospitals and other health facilities. Analysts say the bill is a joke in a country where the Federal Government has yet to figure out a sustainable solution to the regular power outage that has bedevilled the country for decades now. Businesses and households rely on power generating sets to supply own power, which adds to their costs. While power supply hovers around mere 3,000MW, Saleh Mamman, minister of power, recently threatened to dump the electricity distribution companies (DisCos) over epileptic power supply, blaming current situation on their inability to distribute stranded power. “ Ni g e r i a c u r re n t l y generates 13,000MW of electricity, it transmits 7,000MW to DisCos while the distribution companies can only distribute 3,000MW to end users,” Sale said. But in a response to the claim, Association of Nigeria Electricity Distributors (ANED) argued that the statement by Saleh was untrue, saying the quantum of power that DisCos supply to their customers was based on the allocation they got from the TCN. It said TCN wheels a mere 4,303MW supplied to consumers. It is amid this back and forth that the Senate is proposing to ban the use of generators. “A ny b o d y w h o i m ports generating sets, or knowingly sells generating sets shall be guilty of an offence and be liable on conviction to be sentenced to imprisonment for a term not less than 10 years,” the bill said. According to the bill, generators used for “essential services include medical purposes (hospitals and nursing homes and healthcare facilities), airports and railway stations/services”. Other essential services allowed to use generators are elevators, escalators, research institutions and some facilities that require 24-hour power supply. Continues on page 38 MTN plans for new Group CEO as Shuter steps down in 2021 Jumoke Akiyode-Lawanson M TN Group says it is currently working on a succession plan for the company, as the group president and CEO, Rob Shuter would be stepping down from his role at the end of his contract in March 2021. According to MTN, the succession process will be concluded during the year, enabling a seamless handover. Charles Molapisi, the chief technology and IT officer, MTN Group, has been appointed to the group executive committee and the fixed contract of the group chief operations officer, Jens SchulteBockum, has been extended until March 31, 2022. The company, which recently released impressive results for the year ended December 31, 2019, said the encouraging outcome was delivered against challenging macroeconomic conditions, particularly in South Africa, with muted economic activity and the rand weakening against the US dollar. “In 2019, the 25th anniversary of MTN Group, we delivered commercial momentum across our operations as well as great progress in our strategy and strong financial results, despite challenging trading conditions. “We added 18 million customers to reach a total of 251 million and increased our data users by 17 million to 95 million and our fintech customers by 7 million to 35 million. This growth is central to our belief that everyone deserves the benefits of a modern connected life. We also saw improvements in customer experience, network quality and market share across the Group,” Shutter said. In constant currency terms, group service revenue increased by 9.8 percent to R141.8 billion and earnings before interest, tax, depreciation and amortisation (EBITDA) expanded by 13.6 percent to R53.4 billion. The holding company leverage ratio improved to 2.2x, which is well within the group’s guidance range of 2.0 to 2.5x, and MTN reduced its capex intensity to 17.5 percent from 19.3 percent, indicating greater efficiency in deploying assets. Driven by the strong earnings performance, operating cashflow increased by 18 percent and the return on investment increased from 11.5 percent in 2018 to 14.3 percent in 2019 on an IAS17 basis. L-R: Isyaku Tilde, acting executive commissioner, operations, Securities and Exchange Commission (SEC); Mary Uduk, acting director-general; Daisy Ekine, chairperson, Market Wide Technical Committee on Commodity Trading Ecosystem, and Edward Okolo, acting executive commissioner, corporate services, SEC, during a press briefing of the forthcoming SEC International Conference on Nigeria Commodities Market 2020 in Abuja, yesterday. Pic by Tunde Adeniyi CBN extends uniform account number to OFIs by April 20 … fixes March 15, 2021 as deadline for compliance HOPE MOSES-ASHIKE T he Central Bank of Nigeria (CBN) on Wednesday revised the Nigeria Uniform Bank Account Number (NUBAN) to include the Other Financial Institutions (OFIs) for efficient operations of electronic funds transfer and cheque clearing operations by Deposit Money Banks (DMBs) and OFIs. Other Financial Institutions are institutions, apart from commercial banks, that carry out financial services and activities. They include microfinance banks, primary mortgage banks, finance companies, development finance institutions. The revised standard takes effect from April 20, 2020 with a deadline of March 15, 2021 for full compliance, according to a circular signed by Musa Jimo, director, payment system management department, CBN. The circular stated that appropriate sanctions would be imposed for contraventions and non-compliance to the revised standard. The CBN first issued the NUBAN standard in August 2010 to achieve uniform customer bank account numbering structure among all the deposit money banks in the country. In view of the success of the NUBAN standard across DMBs and the increasing role of the OFIs in the electronic payment system, the apex bank said it was imperative that the scope of the standard be expanded to include the OFIs. “It is in this regard that the revised standard on Nigeria uniform bank account number scheme for banks in Nigeria was revised to include the OFIs,” the circular stated. The NUBAN issued to a customer shall be 10 digits which is unique within each deposit-taking institution, the CBN said. @Businessdayng The standards set out the approved structure of a customer account number in all deposit-taking institutions in Nigeria. According to the circular, the NUBAN format shall consist of 16 digits with the following structure: ABCDEFGHIJKLMNO-P where – For DMBs: ABCDEF is the 3-digit Financial Institution code assigned by the CBN, with 3 leading zeros, e.g., ‘011’ and ‘232’ become ‘000011’ and ‘000232’, respectively. For OFIs: ABCDEF is the 5-digit Financial Institution code assigned by the CBN with a leading ‘9’ e.g. ‘50547’ becomes ‘950547. Thursday 12 March 2020 BUSINESS DAY @Businessdayng 3 4 Thursday 12 March 2020 BUSINESS DAY @Businessdayng Thursday 12 March 2020 BUSINESS DAY @Businessdayng 5 6 Thursday 12 March 2020 BUSINESS DAY news ACCA forum: Experts urge professionals on tax planning, compliance to new Finance Act AMAKA ANAGOR-EWUZIE E xperts in the tax industry have advised practitioners to learn the importance of planning for tax payment and complying with the provisions of the new Finance Act of 2019. Speaking at an interactive forum organised by the Association of Chartered Certified Accountants (ACCA) in partnership with the Chartered Institute of Taxation in Nigeria (CITN) in Lagos recently, Taiwo Oyedele, PWC West Africa Tax leader/partner, who was the keynote speaker, stated that increase in Value Added Tax (VAT) from 5 percent to 7.5 percent had resulted in rise in the cost of production, and market prices of goods would go up because companies must pay tax. To Oyedele, all taxes are borne by people through the price of goods, adding that professionals have a lot of work to do under the new Finance Act. “It is good to do tax planning but the most important thing is to get everybody into the tax net first. When people are invading tax, it cost even higher than trying to do the right thing,” he said. He pointed out the need for professional to learn to put some planning behind their companies’ tax payment, and listed options such as claiming capital allowance on assets such as car, phones and others as good way to plan. In terms of tax compliance, he noted that many professionals were worse than the ordinary people because there were tax consultants who do not pay taxes, but “these kinds of people help companies to comply when the practitioner is not compliant.” He advised professionals using company name such as ‘Taiwo & Co.’ to use this opportunity to register a limited liability company, where all their revenues can be transferred to enable him pay lower tax rate of Personal Income Tax (PIT) as low as 2 percent on the initial company. Oyedele, who noted that there were lot of corruption among practitioners than the entire population, appealed to people to say no to bribery to enable the system get better, adding that practitioners needed to be committed to doing the right thing. Titilayo Fowokan, group head, Strategic Tax and Compliance, Dangote Industries Limited, who noted that the Finance Act came with mixed feelings for the industry, said there were issues of Awaiting trial inmates get opportunity of freedom in Lagos JOSHUA BASSEY I n a move aimed at decongesting the prisons (now known as correctional centres), the Lagos State government has urged lawyers, families and the general public to forward details relating to trial of clients/relations being held over minor offences to the office of the Chief Registrar of Lagos State High Court to commence the process of granting freedom to such inmates, especially those on awaiting trial. Nigerian prisons are generally congested due to slow judicial processes, leading to thousands of inmates being held as awaiting-trial. There is also the issue of several others on death row, as state governors have consistently shy away from signing the death warrants of condemned inmates. Equally contributing to the sad narrative is alleged frequent raiding of suspected crime hideout by the police, where persons arrested in such operations, who cannot bail themselves as well as those accused of minor offences are taken to the prisons without trial in some cases, thereby further worsening the congestion. However, a notice signed by the chief registrar, titled “correctional centres decongestion exercise,” in pursuant to the directive of the Chief Judge (CJ) of Lagos State, and in preparation for the next correctional centres decongestion, request members of the bar and the general public to send to the office of the chief registrar detailed particulars of awaiting trial inmates who have spent two years and above in any of the correctional (prison facilities) in Lagos State. The notice advised that all such requests must reach the office of the chief registrar on or before March 20, 2020, indicating name of the persons involved, high division and number as well as the magistrate court division and number of the trial. CBN to issue N512.8bn TBs in Q2 2020 … as dollar sells above N370 HOPE MOSES-ASHIKE C entral Bank of Ni g e r i a ( C BN ) will issue a total of N512.8 billion worth of Treasury Bills in the second quarter of 2020, as the same amount will be maturing between March and May this year. The CBN stated this in the Nigerian Treasury Bills issuance programme calendar released on Wednesday. The breakdown of the Nigerian TBills programme to be issued in the next three months of the year 2020, which represents the amount that will mature during the period, consists of a total of N94.2 billion for 91 days tenor, N86.2 billion for 182 days tenor and N332.3 billion for 364 days tenors. The CBN issues TBs twice in a month to help the Federal Government fund its budget deficit, support banks in managing liquidity in the system and curb inflation. However, nervous consumers are buying up the US dollars to hedge against imminent devaluation of the naira. Conse quently, after trading on Wednesday, the dollar was sold above N370 from N359/$ sold on Monday at the black market. “I did not even see the dollar. It is scarce,” one of the black market operators at the Lagos International Airport told BusinessDay. Also at Apapa and Festac areas of Lagos, dollar was scarce as customers were seen scrambling and making calls all over in quest for the dollar. @Businessdayng small, medium and large, and the question was basically how to classify and separate them from each other. According to Fowokan, the first mixed feeling was on the rate, which sent many signals to the industry as to what to do about customers that have paid in advance for products, and “so, most companies took the heat of the change in VAT because they could not go and tell customers that have paid earlier to pay additional 2.5 percent VAT. Thursday 12 March 2020 BUSINESS DAY 7 news As 39 Covid-19 contacts set to regain freedom in Ogun … people jittery, say freed contacts may be treated as pariah RAZAQ AYINLA, Abeokuta A s the 14-day observation period for the 39 contacts of the first Italian index case of Coronavirus isolated in the Lafarge Africa’s facilities at Ewekoro in Ogun State lapses today, uncertainties rise over the reunion of the contacts with family members and the communities at large, as some residents are already expressing some degree of anxieties. Some residents of Ewekoro, who spoke with some journalists that visited the Isolation Centre within Lafarge facilities on Wednesday, observed that the place was somehow deserted except for the security men manning the gate of Lafarge Africa’s Ishofin Estate as the residents await what would happen on Thursday or Friday, when the 39 contacts would be freed and reunited with their families. Recall that the...
View Full Document

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture