Nigeria Content Online

Uganda’s 2010 sugar
production rose slightly on a year earlier but fell short of forecasts,
hit by technical problems at the leading producer and poor rains, an
industry association said on Tuesday.

Richard Orr,
chairman of the Uganda Sugar Cane Technologists Association (USCTA),
said East Africa’s third-largest economy produced 292,051 tonnes of raw
sugar last year, 8.2 per cent below the projected 318,000 tonnes
forecast.

“The 4.3 per cent fall in production here was to do with adverse
weather conditions for part of the year and also a technical problem we
had with a new mill drive that was not installed correctly,” Mr. Orr,
who is also KSW’s general manager, said.

The National Bureau
of Statistics says inflation rate stood at 11.8 per cent in December.
It said in a statement on Tuesday in Abuja that the figure was lower
than the 12.8 per cent recorded in November.

According to the
statement, the Composite Consumer Price Index went up by 1.29 per cent
to 114.2 points, compared with 112.8 observed in November.

The statement
attributed the increase in the index mainly to the increase in the
prices of some food items such as meat, fish, oil and fat, vegetables
and fruits.

The Consumers Protection Council (CPC) received 2,860 complaints from consumers between January and October 2010.

Statistics made
available on Tuesday showed that the figure represents an increase of
24.35 per cent in the number of complaints received in the previous
year. The council received 2,300 complaints from consumers in 2009.

Ify Umenyi, the
director general of the council, explained that the complaints were the
products of public awareness campaigns organised by the agency.

“Ninety per cent of
the complaints were resolved amicably, while the outstanding 10 per
cent are being sorted out through negotiations, mediation and
conciliation,” Mrs. Umenyi said.

Angola’s
much-delayed stock market will not open this year as many of the
country’s companies do not meet the requirements needed to participate
on a bourse, the government said.

The announcement
from state news agency, Angop, monitored by Reuters in Portugal, is the
latest set-back for investors looking to tap into one of Africa’s
fastest-growing but most impenetrable economies.

A Luanda bourse has been in the pipeline for more than eight years.

“It is clear that
the commercial, business and legal situation does not allow us to say
that in 2011 we can have a stock market already,” Angop quoted minister
of state, Carlos Feijo, as saying.

The naira has shed
114 kobo, or 0.76 per cent at the official market as the Central Bank
of Nigeria (CBN) struggles to meet increasing foreign exchange demand.
The naira opened the New Year at N149.17 to the dollar and closed
Monday at N150.31 at the official market. At the interbank, the dollar
traded for around N155 and N57 at the parallel market.

Out of a total of
$1.67 billion that was demanded in the four auctions held this year,
the CBN sold $1.15 billion, representing 69 per cent of demand. This is
coming as the regulator’s resolve that it would continue to defend the
naira by striving to meet all legitimate demand at the bi-weekly
Wholesale Dutch Auction System (WDAS) foreign exchange market.

The CBN governor,
Lamido Sanusi, confirmed recently that it will maintain its foreign
exchange objective in achieving stability. “We remain committed to
stability in the forex market. We are pleased that we had stability
last year,” Mr Sanusi said in a response to enquiry on how the CBN
intends to pursue its foreign exchange objective in 2011.

Cost of stability

However, this
stability was at the cost of depleting foreign reserves, which went
down from $42.39 billion at the beginning of 2010 to $32.35 billion at
the close of the year, though, the reserves has been trending upwards
in the last few weeks, closing last Friday at $33.53.

A currency dealer
on Broad Street, Lagos, Suleiman Ghali, hinged the depreciation of the
naira on Central Bank’s failure to substantially meet demand. “Dollar
is scarce and even allocating only $50,000 to bureau de change does not
help matters,” Mr Ghali said.

CBN recently added
the Chinese Yuan, to the list of foreign currencies that can be used
for trade settlement in the domestic foreign exchange market. This was
in a bid to reduce the pressure on the dollar since a substantial part
of Nigeria’s international trade settlement is for imports from China.

The directive has,
however, not become operational. “It is not yet implemented. Let us
wait and see how it will affect demand for dollars. You know the system
of government, sometimes, it is not what they say but what they do” Mr
Ghali said.

Increased supply

Analysts at
Afrinvest West Africa, a financial services and advisory firm, said
CBN’s pursuit of maintaining stability may result in more intervention
in the weeks ahead. “Given CBN‘s commitment to managing the exchange
rate at the $1.00 / N150.00 – N151.00 band, we expect increased supply
of the dollar to meet demand at the official market,” according to the
firm’s weekly report.

“Nigeria’s growing
and substantial trade relation with China (especially imports) is
expected to spur demand for the Yuan in the medium to long term. We
expect forex exposure to fluctuations in the US Dollar to be
significantly reduced as banks begin to issue Yuan accounts to their
customers,” the report stated.

Standard &
Poor’s Ratings Services has assigned its ‘B+’ long-term senior
unsecured debt rating to the proposed $500 million 10-year bond to be
issued by Nigeria in the next few weeks.

At the same time,
S&P assigned a recovery rating of ‘4’ to the proposed bond,
indicating its expectation of average (30 per cent to 50 per cent)
recovery in the event of a payment default.

In an issued
statement yesterday, the global ratings agency said: “We rate bonds
with a ‘4’ recovery rating at the same level as the issuer credit
rating. The rating on Nigeria’s upcoming bond is, therefore, equalised
with the ‘B+’ long-term foreign currency sovereign credit rating.”

The agency stated that it applied a hypothetical event of default as a starting point.

“If the government
were to default, we believe it would likely follow a prolonged period
of adverse terms of trade that deepened the country’s regional
tensions.”

The agency noted
that Nigeria’s debt profile would look very different under such a
scenario, and a period of uncertain governability could ensue.

“In this scenario,
we assume that Nigeria’s multilateral creditors would maintain their
preferred creditor status and bilateral creditors would resist a debt
reduction,” since, according to the agency, Nigeria has already
benefited from a 60 per cent reduction of $30 billion of Paris Club
debt in 2000 and 2005.

While downplaying
the possibility of such a scenario, as indicated by the ‘B+’ rating,
S&P noted that its sovereign credit ratings on Nigeria are
constrained by its view of the country’s political risk, as manifested
in its underdeveloped political institutions and apparently weak
governance.

“The ratings are
also constrained by a low level of development and high dependence on
the oil sector. Furthermore, we see residual risks in Nigeria’s
financial sector, although the Central Bank has addressed solvency and
liquidity problems in the banking sector,” it said.

The ratings on Nigeria are supported by the sovereign’s strong
external and fiscal balance sheet, owing to debt write-offs in 2005 and
2006 and fiscal reserves built up during years of high oil prices.

The Nigerian Stock
Exchange recorded a total gain of N5 billion on equities at the close
of trading activities in December, after recording N74 billion losses
in the preceding month.

The market value of
the 217 listed equities, which opened the month at N7.908 trillion,
closed on the last trading day in December at N7.913 trillion,
reflecting a N5 billion marginal gains or a 0.06 per cent increase.

The Exchange’s
Strategy and Business Development Department said the marginal increase
in market capitalisation during the month could be attributed to the
“commencement of operations by the Asset Management Company of Nigeria
which boosted investors’ confidence, as reflected in positive equity
price movements.”

The Exchange said
the 217 listed equities accounted for 79.85 per cent of total market
capitalisation of the 264 listed securities which closed December at
N9.92 trillion; down by 0.94 per cent from N10.015 trillion in November.

Market turnover

The market recorded
a turnover of 6.63 billion shares valued at N56.7 billion in 111,114
deals during December, in contrast to a total of 7.43 billion shares
valued at N60.34 billion exchanged during November in 121,531 deals.
Trading days in December were 21, compared with 20 in November.

Aggregate stock
market turnover between January and December 2010 were 93.335 billion
shares valued at N797.551 billion, exchanged in 1,918,479 deals. In the
comparable period during 2009, the market recorded turnover of 95.3
billion shares valued at N638.11 billion in 1,619,385 deals.

Measuring by
turnover volume, the Banking subsector was the most active in December
with traded volume of 3.83 billion shares valued at N35 billion, while
the Insurance subsector was second with traded volume of 1.01 billion
shares valued at N658.55 million. The Information Communication
Technology subsector was third with transaction volume of 398.1 million
valued at N276.62 million.

A total of 173
equities out of the 217 listed were traded during the month compared
with 176 in November. Zenith Bank was the most active stock with
transaction volume of 981.1 million shares, followed by Guaranty Trust
Bank with 367.1 million shares, while First Bank placed third with 350
million shares.

Analysts at Renaissance Capital, an investment bank, said equity market outlook is compelling in 2011.

“Nigeria is just
beginning to fully recover from the financial crisis that started in
2008. Equities remain an attractive asset class to be in during the
recovery phase of the business cycle, and as such our outlook for
equity market performance in 2011 is robust,” they said.
Over-The-Counter (OTC) bond market, a turnover of 465.9 million units
worth N430.03 billion, was recorded in December 2010, in contrast to a
total of 730.82 million shares valued at N750.91 billion, exchanged
during the preceding month.

The most active
bond, in terms of volume, was the 5.50 per cent Federal Government of
Nigeria (FGN) Bond Feb 2013 with traded volume 81.2 million units
valued at N73.21 billion.

It was followed by
10 per cent FGN July 2030 with a traded volume of 73.85 million units
valued at N56.1 billion. Only 24 of the available 33 FGN Bonds were
traded during the month, compared with the 26 in the preceding month.

The Central Bank
Governor, Lamido Sanusi, has said that the bank will not hesitate to
use corrective measures on its regulated institutions who default its
guidelines.

“If we say we will
do something, we will do it, you all saw what we did with the banks,
the microfinance banks and we will do it to all regulated institutions”
Mr Sanusi said adding that institutions that are not compliant with
laid down guidelines would not be certified, or have their
certifications withdrawn.

Mr Sanusi said this
at the official commissioning of Superflux International Limited’s
factory in Lagos yesterday. He said the Central Bank was making moves
to help the real sector of the economy despite criticisms that it is
not its duty to be directly involved in addressing challenges of the
real sector.

He said the
Superflux project was funded from the Central Bank and Bank of Industry
packages, though the banks helped set the project rolling in the first
place. “This is one company, I am confident that in due course we would
see more others make use of our (CBN and BOI) initiatives. It is our
collective responsibility to provide support for our industry”.

Evelyn Oputu, the
Managing Director, Bank of Industry said the bank’s mission is about
value addition. Mrs Oputu urged banks to also look out for individuals
and companies with integrity, potentials and value that they can loan
money to.

Tokunbo Talabi, the
president and CEO of Superflux International Limited, stated that
though it has taken a while for the company to get to its present
position, he is optimistic that things will get better.

“There are still
challenges. We have inadequate infrastructure, which we all know, and
having to face the fact that some people believe nothing good can come
out of a local structure. Funding is also another issue” Mr Talabi said.

He said it took him 35 minutes to convince his former boss at Guarantee Trust Bank on why he needed funds from the bank.

“Bank Of Industry’s
initiative is a needed catalyst for economic growth” he said, adding
that “Superflux was birthed to constantly stir up stereotypes,
dormancy, and status quo with the sole aim of finding new and improved
ways of handling situations. We have an overwhelming obligation to be
accountable to our customers and to meet their expectations.”