Nigeria Content Online

The Rivers State
government said businessmen from Germany, Thailand, and South Africa
have indicated interest to invest in various sectors of the state’s
economy.

The commissioner
for commerce and industry, Ogbonna Nwuke, disclosed this in an
interview with the News Agency of Nigeria (NAN) in Port Harcourt.

He said that apart
from oil and gas, the investors showed interest in commerce, tourism,
and agriculture sectors, adding that investment opportunities also
abound in the Greater Port Harcourt City, currently under construction.

“The Greater Port
Harcourt City project is a masterful investment opportunity. In it, we
need to provide sewage, housing, roads, water, and electricity. These
are windows of opportunities for would-be investors, who want to invest
in an area where there can be return for their money,” he said.

A female
entrepreneur in Akwa Ibom, Esther Eka, has said that economic
empowerment of women is indispensable to the country’s poverty
reduction efforts.

Mrs. Eka, who is a
member of the steering committee, International Cooperative Alliance
for Africa and Gender Equality, and president of the Nigeria
Cooperative Women Alliance, made the assertion in an interview with the
News Agency of Nigeria (NAN) in Uyo.

She said that women
were mothers and care givers, hence their empowerment would ensure that
children were well brought up and given proper training, adding that
her organisation had assisted women in Akwa Ibom to form more than 400
producers and consumers cooperative groups.

The Peers Mentoring
Programme (PMP), Nigeria, and Peers Mentoring Programme International,
in collaboration with the NEPAD Business Group, have inaugurated a
development fund, the PMP Promotion and Business Development Fund, to
help informal sector businesses in Nigeria.

Robert Aniebo,
chief executive officer, NEPAD Business Group Nigeria, told the News
Agency of Nigeria (NAN) in Abuja on Sunday that the collaboration would
help to improve the economy.

“This fund will
help to employ and coach at least 1 million mentors to sensitise,
mobilise, and formalise at least 1,000,000 informal sector businesses
in Nigeria,” Mr. Aniebo said.

Financial
experts are of the opinion that the recent tightening of the nation’s
monetary policy rates could worsen the already poor state of private
sector lending, given the persistent liquidity tightening that the
nation has been experiencing since banks started addressing their ‘red’
books last year.

They
said tightening liquidity through the monetary policy rates, in
anticipation of expected inflation due to election spending, is not
going to help private sector lending, which is already contracting due
to increase in government lending. This portends more difficult times
for manufacturers, the private sector, and the average person in the
near and long term.

“The
only component that has grown is credit to government, which has
affected credit to the private sector, because that has contracted over
the months. The way out is to hope that the confidence that seems to
have returned to the markets should stay. If it does, prices would rise
and then markets would rise,” Ayo Teriba, managing director, Economic
Associates, a finance firm, stated last week.

According
to him, the key demand side driver of the economy is interest rates,
especially interest rates on the treasury bills, and Nigeria remains
among the nations with lower interest rates, operating well above
average.

“However,
compared to where we were, liquidity has been tightening in Nigeria and
this could be felt even in the stock market. Even though the stock
market has been faring better, when compared to some other stock
markets, it has been worsening locally,” Mr. Teriba said.

“Figures
obtainable indicate that there is credit crunch, that credit is
tightening, and at the end, you say you want to tighten liquidity,
based on an expected inflation that would be as a result of anticipated
election spending. This is not really appropriate now,” he added.

Akinbamidele
Akintola, a finance analyst at the Renaissance Capital, an investment
bank, expressed hope that the Asset Management Company (AMCON) would
bring a turnaround in banks and help liquidity.

“By
and large, we expect a gradual turnaround in the bank, as the CBN
continues to make concerted efforts to stimulate the recovery of the
financial system by acquiring non-performing loans from the banks and
assisting them in improving their capital and liquidity. So, the AMCON
would definitely help speed up the process of rerating the banks going
forward,” Mr. Akintola said.

Caution in public sector lending

Credit
to the public sector has gradually been increasing, at the expense of
the private sector, experts say. Last year, the Central Bank warned
that commercial banks should follow laid down guidelines for lending to
all the three tiers of government and their agencies.

The
warning, which was contained in a circular by the CBN director of
banking supervision, advised commercial banks to be more cautious in
their lending to the public sector.

The
circular, which stated that “A maximum limit of 10 percent of the total
credit portfolio should be placed on public sector credits both
on-and-off balance sheet,” further reminded banks of the history of
non-performing public sector credits and, therefore, strongly advised
them to exercise caution and avoid the mistakes of the past.

“The
CBN will be constrained to reintroduce measures to curb public sector
loans if banks do not put in place appropriate measures to avoid the
excessive exposure to the sector,” it said.

Earlier
in the year, the Central Bank noted that financing conditions,
especially for businesses and firms, are likely to remain as they are
in the near term as financing institutions continue to maintain a
cautious approach to credit extension.

The
notice, which was drawn at the then special Monetary Policy Committee
(MPC) meeting, noted that the persisting tight credit conditions and
the continuing under-performance of key monetary aggregates, had
informed its earlier decision to embark on a quantitative easing policy
to be implemented through investment in debentures to be issued by the
Bank of Industry (BOI).

Bank
officials have stated that they are still trying to be careful in their
lending, given their recent experiences with margin loans, adding,
however, that while lending is challenging due to liquidity problems,
they are still doing some lending.

Experts
said the ability of the Nigerian banks to grow their loan portfolios
will be limited by their ability to grow their deposit base, which may
be undermined by deteriorating economic fundamentals.

Ivory Coast’s main
cocoa crop is likely to drop 11 percent to 800,000 tonnes in the new
2010/11 season due to black pod disease, the official marketing body of
the world’s top grower said on Friday.

“We expect there
will be a deficit in the main crop of at least 100,000 tonnes compared
with last year,” said Gilbert Ano, president of the country’s cocoa
sector management committee and head of the Coffee and Cocoa Bourse
(BCC), at the official opening of the new cocoa season.

“Last season, we
saw 900,000 tonnes. This year, we expect 800,000 tonnes as a result of
the rains, which provoked an outbreak of black pod disease,” he added.

Morocco, which
plans to invest $9 billion to build five solar power stations, had
opted for solar thermal technology for the first unit, to be set up in
the southern Ourzazate area, its solar energy agency chief said.

The North African
country’s government had previously not revealed which solar technology
it would choose, with officials saying they were open to all types.

“The first stage of
the $9 billion solar project will be achieved to satisfy the needs of
the country’s electricity operator ONE, which required the storage of
power,” Moroccan Agency for Solar Energy (MASEN) chief executive
officer, Mustapha Bakoury, said on Friday.

Egypt’s National
Railways Authority is considering issuing 10 billion Egyptian pounds in
bonds to finance projects over the next 10 years, a newspaper reported
on Sunday, citing unnamed authority sources.

The bonds, which
would fund projects worth 60 billion pounds, would be secured by the
assets of seven companies belonging to the state authority, Al-Mal
newspaper said.

The authority’s Chairman Mohamed Hegazy said by telephone he had no information to confirm or deny the newspaper report.

Egypt changed its laws in December to allow utilities and other
quasi-government organisations to issue bonds directly, a move designed
to expand the country’s debt market.

Update for September

NSE ASI opened the
month of September on a rather poor note; the bear had 16 of the 20
trading days in the month. The market experienced four black weeks of
the five trading weeks within the month. Month to date the market is
down by 1,217.65 points or 5.02% from 24,268.24 to 23,050.29.

Meanwhile, month to
date is up by 2,223.46 points or 10.68%. Recall that it opened the year
at 20,827.13. Market capitalization ends the week at N5.648 trillion.

The market traded a
total of 5.951 trillion shares within the month and the performance was
top by the banking subsector that moved 3.359 trillion shares. Only 22
equities closed above their month-opening prices and they accounted to
1.086 trillion shares or 18.26% of market volume for September.

85 stocks that lost
moved 4.051 trillion units of share; same as 68% of market volume. 94
stocks wrapped up the month activities on a flat note and they traded
813.03 million shares or 13.66% of market volume.

Afromedia led the
percentage gainers with 37.25%, as it closed at N0.70 from N0.51. Vono
Products gained 34.92% and First Alluminum, Nigerian Wire and Cable,
and Berger Paints followed. AIICO top the percentage losers with 37.74%
drop. Spring Bank shed 34.52% and Unity Bank, Custodian Alliance, and
Academy Press followed with 33.96, 33.73, and 30.83 respectively.

Market report for the week ended 30th September, 2010

The market recorded
a turnover of 1.1 billion shares, valued at N10.50 billion in 21,572
transactions within the week. Meanwhile, the stock market operated for
four trading days within the week, as Friday was declared public
holiday to commemorate the Independence Day.

The banking
subsector was the most active as it moved 673.50 million shares in
12,225 transactions. Performance was boosted by volume on the shares of
Stanbic IBTC, Guaranty Trust Bank, Zenith Bank, and First Bank of
Nigeria Plc. The insurance subsector was enhanced by volumes on the
shares of Guaranty Assurance Plc and Intercontinental Wapic, and it
followed on performance chart with 100.30 million shares in 923 deals.

Skye Bank top the
price percentage gainers with 21.61% gain, from N6.20 to N7.54. Afro
Media gained 18.64%, Diamond Bank was third with 17.78%, while
Starcomms Plc, Costain, and Access Bank followed in that order.
Meanwhile, Custodian & Allied tops percentage losers’ chart with
drop of 26.97%, RT.Briscoe lost 24.79%, and Ashaka Cement, UTC,
Guaranty Trust Ass. and AIICO followed in that order.

Ikeja Hotels

The Q4 scorecard
for the year ended December-2009 of Ikeja Hotels was released to the
market on the first trading day of the week. The company reported a
turnover of N7,169 billion, which was 11.08% over the N6,454 billion
reported in 2008. PBT was up by 30.97%, while PAT and Net Asset were up
by 34.32% and 21.16% respectively.

Earnings/ratios/proposed dividend

Estimates from the
released figures show that the EPS improved by 33.33% from 0.42 of the
previous year to 0.56. The said earnings yielded 42.27%. ROE stood at
0.176% while the profit margin was 16.35%. The management has proposed
a dividend of 10k, which will be paid on the 6th of December, 2010,
after the company would have closed its book between 15th-19th
November, 2010. The AGM has been scheduled to hold on 25th November,
2010, while the venue is yet to be announced.

CHAMS Plc, audited year end – December, 2009

The company reveals
its Q4 2009 results to the market yesterday. The figures revealed
dropped on its top and bottom lines, as the TO dropped by 58.81% and
both PBT and PAT closed low at 394.98% and 1,588.43% respectively. The
company could not reward its investors and all its performance indexes
are negative.

Observations

The company needs
to improve; there is need to strategically position and come in with
profitable investments decisions. The result will not attract traders
in both short and medium term.

Adswitch Plc, year ended 30th April, 2010

The audited report
for the above mentioned year was released to the market today. The
released figures revealed an almost double growth in both top and
bottom line. The turnover was up by 75.37% when put side by side with
the comparable period of 2009. PAT gallop by 84.81% to N10.181 million,
from N5.509 million. And it marginally grows its net asset by 12.21%.

The management has
proposed 2k dividend, which when approved, shall be due for payment on
the 29th November, 2010, to investors in the company’s book by 18th
-22nd October, 2010. Other details on the AGM date and venue are as
stated in the table below.

Ratio analysis

EPS doubled from 4k
of the previous year end to 8k this year and it yielded 4.29%, when
compared to the current market price. It currently controls a good
PE/Ratio within the market average. Comparing the TO and PAT, its
profit margin was fair at 6.85%.

Observations

The result is good
and very impressive, despite the current economic situation. We expect
the company to sustain its current market price.

Custodian & Allied Insurance Plc

Payment of Interim
Dividend – The company notified The Exchange that its board of
directors has approved an interim dividend of N0.06 per share. The
closure of register is October 14, 2010, while the payment date is 20th
October, 2010.

Report on the over-the-counter market for FGN bonds

A turnover of 332.8
million units bonds valued at N317,950.53 million in 2,864 deals was
recorded this week, in contrast to a total of 209.3 million units worth
N195,013 million exchanged in 1,875 deals during the week ended
Thursday, September 23, 2010.

Measured by
turnover/volume, the most active bond was the 10.00% FGN July 2030
series, with a traded volume of 97.12 million units valued at N82.7
billion in 799 deals. This was followed by 5.5% FGN February 2013
series with a traded volume of 54.85 million units, worth N51.98
billion in 443 deals.

Eleven (11) of the
available thirty-seven (37) FGN bonds were traded during the week,
compared with fourteen (14) recorded in the preceding week.

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Should we be
concerned that, lately, the stock of the nation’s foreign reserve is
being run down at rates that appear unsustainable even in the
short-term? The apprehension with which the newspapers reported last
week the fact that by Monday, our foreign reserves stood at US$35.66bn,
the lowest level since April 2006, and down from the May 2008 high of
US$62.24bn, seems to suggest that we ought to.

However, before
panic sets in, how do foreign reserves matter to the economy? The
relatively simple nature of our economy, depressed final demand, almost
non-existent local production of anything of value, abysmal levels of
domestic productivity, all these ensure that the quantum of reserves
directly affects the naira’s exchange rate. And in an economy where
everything is “made in China”, a volatile exchange rate could be a
problem indeed.

On the other hand,
our managed exchange rate regime also forces us to include inflation
considerations in the concerns associated with the rate of depletion of
our foreign reserves. Can the Central Bank of Nigeria (CBN) continue to
intervene in support of the national currency, even as its main
ammunition for this is depleted? Or put differently, how soon before we
are called upon to choose between an exchange rate crisis and devaluing
the naira? Most commentators imagine that this scenario would not play
out before the general election is done. Apparently, no central bank
governor would want to act in a way that hands victory to any opponent
of an incumbent president. If after the election, the naira begins to
buy fewer dollars than it was wont to, inflation figures may then trend
up, as the value of our imports rise relative to the value of the naira.

But then, isn’t it
the case that we worry too much. Lamido Sanusi, the central bank
governor, has re-assured to no end, all as might care to attend to him,
that his leadership of the CBN is not minded to devalue the naira.
Besides, apart from the muscle provided by external reserves, within
the context of a managed exchange rate regime, the central bank has a
slew of administrative controls with which it could impose costs on the
demand side of the official foreign exchange market. The tension that
will arise were it to resort to these tools, between appearing to
abandon market-based solutions, and seeming to act in the interest of
the domestic economy, should comfortably be resolved in favour of the
latter. In the end, the fear of the depreciation of the naira in an
import-dependent economy might be overdone. Moreover, the current
levels of the reserves can still support several months of imports.

Thus assured, the
next question is, aside from the sense of the naira’s value as somehow
reflective of the nation’s virility, how harmful is this loss of the
foreign reserve?

We will have to
borrow metaphors here. Recall that it did not matter that the balance
on the excess crude account was run down faster than any of us could
count the cents. Remember also, that nothing happened thereafter. And
although state governors had objected to the sterilisation of
relatively scarce foreign exchange earnings in the “unconstitutional”
excess crude account (at a time of extreme need in their respective
states) salaries are still owed public sector personnel in most states;
and the infrastructure deficit grows dire daily. Inflation,
interestingly, has remained unusually restrained. So once again, we
confront another uniquely Nigerian quandary. Where is the money?
Inflation isn’t up, because the infusion of cash into the economy from
monetising the excess crude account wasn’t expended on anything that
might drive local demand. And the CBN prefers to see a repatriation of
earnings as responsible for the spike in demand for foreign currencies
at the official market, rather than capital flight.

Admitting to the
logic of the central bank, one ought to ask, “how much was earned in
the economy last year?” By whom (it would help the argument if
non-resident economic entities were the most profitable)? And why
should the default response on the part of such economic entities be to
shop all such earnings out, rather than re-invest in an economy healthy
enough to have generated such rich pickings in the first instance?

Strengthened by these perspectives, the economy is clearly immune to economic logic!