The country’s retail sector will continue to face significant challenges over the next 12 months as a result of its dependence on higher foreign exchange rates offered in the parallel market, analysts have said.
In a recent report by a real estate services firm, Broll Nigeria, on the Nigeria’s retail market update in the second quarter, the analysts stated that while the change in the Central Bank of Nigeria’s policy was expected to increase liquidity and access to forex, the retail sector would depend on the parallel market to fund imports due to the ban on over 40 items to use the window.
The CBN had, over a year ago, banned the issuance of foreign exchange for the importation of some commodities, which could be produced within the country, in a bid to boost the economy.
The report stated that the prevalent economic conditions had continued to adversely affect the retail sector in the second quarter.
“The inadmissibility of items currently banned from the interbank forex market under the CBN’s new policy will see many retailers continue to depend on the higher forex rates offered on the parallel market to fund Imports. The reality of a shallow tenant pool in the retail market continued to bear down on the sector with respect to leasing activity and take-up rates.” the report added.
It further found that as the market practice in the sector continued to allow leases with dollar-denominated rents payable in naira at the interbank exchange rate, there would be an upward rental pressure in the future, given the depreciation of the naira against the dollar.
“We, however, expect that push back from tenants given these realities will intensify and we anticipate that landlords may be willing to consider extending substantial concessions to tenants who are likely to see effective rents increase by 35 per cent to 45 per cent.
An indigenous mall developer and Chief Executive Officer, Top Services Limited, Chief TokunboOmisore, said the recent downturn in the economy, caused by the collapse in oil prices and devaluation of the naira had adversely impacted many local operating retailers.
According to him, the retailers that have felt the brunt of the impact are those who sell a plurality of imported items and have their rental expense either directly paid or indexed to the dollar.
“However, the Nigerian middle-class consumer is 0 prize that both local and international retailer will continue to fight for. With an estimated 35 million people in the Nigerian ‘consumer’ class, it is not a market where entrants will be willing to leave and outside players not considered because of the recent economic downturn,” he said.
Omisore stated that a major structural change that would occur in the sector was that retailer would no longer pay high prices for marginal space and market share.
AB InBev Opens Applications For Beer Garage Africa Innovation Challenge
The world’s largest beer company, AB InBev, has partnered with Hindsight Ventures to launch the Beer Garage Africa Innovation Challenge, which will offer startups access to venture development and grant funding.
AB InBev, which has over 500 brands and over six million B2B customers in over 100 countries, launched Beer Garage a few years ago with the objective of driving innovation by building a strong community of ecosystem stakeholders.
As part of this initiative, AB InBev is now launching the Beer Garage Africa Innovation Challenge, a pan-African challenge to identify hi-tech, high potential startups and founders building innovative solutions across Africa.
To do so, it has partnered with Startup Réseau, an India-headquartered global startup accelerator, which will operate the programme through its Africa-focused vertical Hindsight Ventures.
Ten startups will be selected to take part in a Global Venture Bootcamp, a three-week venture mentorship and leadership development programme that will be delivered by successful founders, industry leaders, domain experts and investors. The Beer Garage Africa Innovation Challenge will culminate with a demo day, which will be attended by AB InBev’s global leadership as well as Hindsight Ventures’ global investor pool. On the demo day, one African startup will stand to win US$5,000 in grant capital. All selected startups get access to US$150,000 in technology credits from partners.
“We are really excited by this partnership, which allows us to drive a pan-African program. With a billion people in the continent, over 300 million new internet users expected to come online over the next three years, a fast-growing mobile internet penetration – and now, with global venture capital money making its way to African entrepreneurs, this is a great opportunity for startups to engage with AB InBev as a partner of choice,” said Ajay Ramasubramaniam, founder and chief executive officer (CEO) of Startup Réseau.
Pritam Dutta, global director for fintech ventures and innovation at AB InBev, said the Beer Garage Africa Challenge was an opportunity to leverage the emerging tech startup ecosystem and funnel novel ideas into AB InBev.
“We set out to build out a stronger connect into the Africa ecosystem, find disruptive startups which could be a great pipeline for our future disruptive innovations and further accelerate our innovation agenda, delivering strong business impact,” he said.
Applications for the challenge are now open here.
Beer Garage is one of the global innovation hubs at AB InBev with the objective of driving innovation by building a strong community of ecosystem stakeholders.
Sub Saharan Africa Mergers and Acquisition Transactions Totalled US$ 78.3 Billion During First Nine Months of 2021
Refinitiv today released the Sub-Saharan African investment banking analysis for the first nine months of 2021. According to the report, an estimated US$387.5 million worth of investment banking fees were generated in Sub-Saharan Africa during the first nine months of 2021, a 15% increase from the same period in 2020.
While debt capital markets underwriting fees increased 148% to US$117.8 million, the highest year-to-date period since our records began in 2000, fees from equity capital markets underwriting, M&A advisory and syndicated lending all declined from the first nine months of 2020. Equity fees declined 17% to US$50.7 million, while syndicated lending fees declined 4% to US$148.2 million. Advisory fees earned in the region from completed M&A transactions reached US$70.8 million, down 3% from last year to the lowest first nine-month total since 2013. Fifty-eight percent of all Sub-Saharan African fees were generated in South Africa during the first nine months of 2021, and 23% were earned from deals in the financial sector. Standard Chartered earned the most investment banking fees in the region during the first nine months of 2021, a total of US$33.1 million or an 8.5% share of the total fee pool.
MERGERS & ACQUISITIONS
Boosted by the US$44.1 billion Naspers/Prosus share swap in May, the value of announced M&A transactions with any Sub-Saharan African involvement reached US$78.3 billion during the first nine months of 2021, more than four-times the value recorded during the same period last year and the highest first nine-month total since our records began in 1980. The number of deals increased 4% from last year to a three-year high of 584.
M&A involving a Sub-Saharan African target reached US$61.8 billion, again lifted by the share swap to an all-time record first nine-month total, while the number of deals increased 8% over last year. Inbound deals, involving an acquiror outside of Sub-Saharan Africa, increased 86% to US$9.6 billion, while Sub-Saharan African outbound M&A more than doubled to US$11.5 billion. With advisory work on deals worth a combined U$52.1 billion, Morgan Stanley held the top spot in the financial advisor ranking for deals with any Sub-Saharan African involvement during the first nine months of 2021.
EQUITY CAPITAL MARKETS
Sub-Saharan African equity and equity-related issuance reached US$971.2 million during the third quarter of 2021, the highest quarterly total in more than two years. Despite the strong third quarter, total proceeds raised during the first nine months of 2021 was down 42% from last year at US$1.2 billion, the lowest first nine-month total since 2005. Pepkor Holdings, Lighthouse Capital and retail pharmacy chain Dis-Chem Pharmacies were among those in the region raising new equity funds from follow-on offerings during the third quarter. There have been no initial public offerings in the region so far during 2021. Investec and Goldman Sachs share first place in the Sub-Saharan African ECM underwriting league table during the first nine months of 2021.
DEBT CAPITAL MARKETS
Sub-Saharan African debt issuance totalled US$37.2 billion during the first nine months of 2021, up 149% from the value recorded during the same period in 2020 and the highest first nine-month total since our records began in 1980. The number of issues increased 33% over the same period. US$15.2 billion worth of the bond proceeds were raised during the third quarter alone, with both Prosus and the Federal Government of Nigeria raising US$4.0 billion. Government & Agency issuance accounted for 55% of proceeds raised during the first nine months of 2021, while the financial sector accounted for 24%. Citi took the top spot in the Sub-Saharan African bond book runner ranking during the first nine months of 2021, with US$6.0 billion of related proceeds, or a 16% market share.
Access Bank Completes Acquisition of African Banking Corporation of Botswana Limited
Africa’s leading bank, Access Bank Plc has now completed the acquisition of a 78.15 percent shareholding in African Banking Corporation of Botswana Limited (BancABC Botswana).
Access Bank announced in a statement signed by Sunday Ekwochi, Company Secretary, Access Bank Plc.
According to the lender, the new acquisition will form part of the Bank’s nexus for trade and payments in Southern Africa and the broader COMESA trade region.
BancABC Bostwana is the fifth-largest bank in Botswana and is a well-capitalized franchise poised for growth in its local market. The lender’s achievements in the retail banking space will provide an opportunity for the Bank to deploy its best-in-class digital platforms and product suites to the benefit of BancABC Botswana’s customers and enable it to complete strongly across its core business segments.
Commenting on the transaction, Dr. Herbert Wigwe, GMD/CEO of the Bank, “We are pleased with the successful conclusion of this transaction which will provide significant synergies by combining BancABC Botswana’s strong retail banking operation with Access Bank’s wholesale banking capabilities. It will also strengthen the quality of earnings through revenue diversification and growth in the corporate and SME banking segments for BanABC Botswana. The combination is another step towards our broader vision of becoming the world’s Most Respected African Bank.”
Social Media2 weeks ago
Facebook Downtime Plunges Zuckerberg’s Wealth by $7B in Few Hours
Economy4 weeks ago
FG Plans To Deliver 15 Projects Across The Country With $4B Foreign Loans
Government4 weeks ago
Envoy Considers Establishment Of Chinese Banks In Nigeria To Boost Economy
eNaira3 weeks ago
Official eNaira Website Goes Live
Economy3 weeks ago
British Petrol Stations Run Dry as Truck Driver Shortage Disrupts Supply Chain
Crude Oil2 weeks ago
Crude Oil Trading Near 3-year High Following OPEC+ Agreed to Gradual Increase
Energy2 weeks ago
Ikeja Electric Notifies Lagos Customers On 8-Week Power Outage
Economy3 weeks ago
Nigeria Spent N445bn on Debt Servicing in Q2, Debts Hit N35tn – DMO