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Nigeria Has Current Account Surpluses to Support Imports

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ICAEW

The Institute of Chartered Accountants in England and Wales (ICAEW) has stated that Nigeria and a few African countries have current account surpluses, indicating that their economies have lesser risk of suffering when imports become more expensive in the face of a stronger dollar.

ICAEW made this known in its latest Economic Insight: Africa Q4 2015, which examined the impact of key economic events of 2015 on the future outlook of African development.

ICAEW in the report determined the risk levels of various economies within the continent in relation to the rise in United States Federal Reserve rate.

“In order to do so, a ‘vulnerability index’ was constructed which focuses on three measures, namely; a country’s current account balance, its growth in private sector credit, as well as its ratio of foreign debt to reserves. These indicators are scaled, harmonised and added together to provide an overall vulnerability score for each economy. The higher the score, the more vulnerable an economy to the rise in the US Federal Reserve rate, ”it stated.

According to the report, Ghana emerges as the weakest economy with a score of 273 out of 300, explaining that is due to a very high current account deficit as well as a history of rapid credit growth.

“Seychelles came in at a close second place followed by Guinea, Tanzania and Democratic Republic of Congo (DRC). Kenya ranked 6th in terms of vulnerability scoring just under 250 points out of 300.

“This can be attributed to the nation’s current account deficit which stands at 10.4 per cent,” ICAEW added.

Countries according to the report were assessed on three variables: the current account/GDP ratio, the growth of private sector credit and the foreign debt/reserves ratio.

Nigeria’s weak point among the variables is credit growth, which expanded by 24.8 per cent year/year in June 2015 according the CBN data.
The series covers the lending by deposit money banks, and includes loans to state and local governments, which represent a little over five per cent of the total.

Growth in private sector credit, it added, also presents a risk, as it indicates a dependence on debt to drive growth.

“Within the major African economies, Ghana tops the list, with a private sector credit growth rate of 18.4 per cent followed closely by Kenya with a rate of 17.8 per cent since 2013. Botswana and Mauritius have seen a growth of under 10 per cent while other economies such as Zimbabwe have seen credit decline by 24 per cent over the same period. While the index provides insights into the vulnerability of emerging markets in relation to a US Federal Reserve rate hike, it is not exhaustive.”

Regional Director, ICAEW Middle East, Africa and South Asia, Michael Armstrong, said: “Of course, there are many factors to consider, like financial openness and the level of integration into the world economy, which all affect the level of vulnerability to global economic shocks. Clearly, if policy conclusions are going to be drawn, they should be done following a country-by-country analysis. However, this index does show a snapshot of how resilient the various African economies are on some important metrics. All countries would be well placed to anticipate the possible effects of US monetary policy when planning for economic growth.”

ThisDay

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Finance

FG Borrows N2.36 Trillion from Capital Market in 2020

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President Buhari

FG Borrows N2.36 Trillion from Capital Market in 2020

Mr. Oscar Onyema, the Chief Executive Officer, Nigerian Stock Exchange, said the Federal Government borrowed N2.36 trillion from the nation’s capital market in 2020.

The CEO disclosed this at the 2020 market recap/2021 outlook held on Tuesday.

He said the Federal Government issuances account for 92 percent of the total bond issued in the market in the year.

Onyema further explained that corporate organisations leveraged on low yield environment to expand and embark on debt refinancing, raising a total of N192 billion,

Capital-raising activities in the fixed income market increased significantly in 2020. The NSE’s bond market capitalisation rose by 35.52 per cent from N12.92tn in 2019 to N17.50tn,” he said.

Onyema noted that “The year 2020 was indeed a historic one for global capital markets. Facing buffeting headwinds, world markets saw sharp swings and steep losses, but largely remained resilient and orderly amid rising uncertainty.

“For The Exchange, renewed investor optimism coupled with improved economic conditions and low fixed income yields, propelled a year end bull run. Of 93 global equity indices tracked by Bloomberg, the NSE All Share Index emerged the best-performing index in the world, surpassing the S&P 500 (+16.26 per cent), Dow Jones Industrial Index (+7.25 per cent) and other global and African market indexes, to post a one-year return of +50.03 per cent.

Speaking on product results for the year, the CEO said, “The Nigerian equities market got off to a strong start in 2020, returning 10.4 per cent by the eighth trading session. By October, the equities market entered a much-awaited bull run.

“Buoyed by the formal declaration of the US president-elect, unattractive fixed income yields and better-than-expected corporate earnings, the NSE ASI recovered from Q1’20, to close the year at 40,270.72 (+50.03 per cent) and erase losses of -14.90 per cent recorded in 2019.

“During its remarkable year end run, the ASI gained 6.23 per cent in a single trading session which triggered a 30-minute halt of trading on all stocks for the first time since the NSE Circuit Breaker was introduced in 2016 to safeguard market integrity in periods of extraordinary volatility.

“At the close of the year, the NSE’s equity market capitalisation was up by 62.42 per cent, from N12.97tn in 2019 to N21.06tn in 2020 while market turnover saw an uptick of 7.25 per cent, from N0.96tn in 2019 to N1.03Tn in 2020.

“Although Initial Public Offering activity was mute, the value of supplementary issues increased dramatically from 2019, rising by 851.37 per cent to N1.42tn, from N148.77bn.

“Also noteworthy is that for the second consecutive year, equity market transactions were dominated by domestic investors who accounted for 65.28 per cent of market turnover by value (retail: 44.98 per cent; institutional: 55.02 per cent) while foreign portfolio investors accounted for 34.72 per cent.”

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Airtel to Announce Financial Results for Nine Months Ended December 31, 2020 on 29 January 2021

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Airtel Financial Results

Airtel to Announce Financial Results for Nine Months Ended December 31, 2020 on 29 January 2021

Airtel Africa, one of the leading telecommunications companies in Africa, on Wednesday announced it will report its financial statements for the nine months ended December 31, 2020 on January 29, 2021.

The telecom giant disclosed in a statement signed by Simon O’Hara, Group Company Secretary.

The statement reads “Airtel Africa, a leading provider of telecommunications and mobile money services, with a presence in 14 countries across Africa, will announce its results for the nine months to 31 December 2020 on 29 January 2021.

“Management will host a conference call on the day of results for analysts and investors at 2:00pm GMT.

“Participants are requested to pre-register for the call by navigating to:
www.diamondpass.net/4467631

“Once registered, participants will receive a calendar invitation with the dial in details for the call.”

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Global Credit Rating Affirms Sovereign Trust Insurance A Rating

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insurance

Global Credit Rating Affirms Sovereign Trust Insurance A Rating

Global Credit Rating, an international rating agency based in South Africa, has affirmed Sovereign Trust Insurance Plc A rating in its latest report released for the month of December 2020.

In a statement released through the Nigerian Stock Exchange (NSE), Global Credit Rating noted “that the Company has shown a great deal of consistency in her claims paying obligations to her numerous customers spread all over the country.

The Report further stated that “the listing of the Rights Issue in 2019 helped in increasing the Shareholders’ funds of the Company by 33.8%, to N7.8b by the end of the Financial year in 2019 as against the figure of N5.8b in 2018.

“Subsequently, by the third quarter of 2020, the Shareholders’ funds had increased to N8.2b which also translated to a 31% increase in the corresponding period of 2019 with a figure of N6.3b. In the Rating Agency’s opinion, Sovereign Trust Insurance Plc is strong in liquidity with more than adequate claims coverage that compares well to industry averages.

“The capital adequacy of the Underwriting Firm is considered strong according to the rating report and this is underpinned by the sizeable capital base catering for the quantum of insurance and market risks assumed. In this regard, the ratio of Shareholders’ funds to NEP, (Net Earned Premium) improved to 189.2% in the Q3 of 2020 as against 130.9% in the corresponding quarter of 2019.

In terms of peer-to-peer performance comparison, “Sovereign Trust Insurance Plc did very well when compared with other selected insurers in terms of Capital, Total Assets, Gross Premium Income (GPI) and Net Premium Income (NPI).”

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