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Forex Inflow Drops by $447m on Oil Facility Attacks

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Forex Weekly Outlook October 31-November 4
  • Forex Inflow Drops by $447m on Oil Facility Attacks

The persistent attacks on the country’s oil installations by militants in the Niger Delta have resulted in a decrease of about $447m in foreign exchange inflows from $1.4bn in September to $957.3m in October.

Figures obtained from the Central Bank of Nigeria show that the $447m decline represents a drop of 31.85 per cent.

Investigation also revealed that the total outflows also decreased during the period, dropping significantly by $1.44bn or 58.68 per cent from $2.46bn to $1.02bn during the same period

The price of crude oil currently hovers between $53 and $54 per barrel and the country may be losing much in terms of volume as a result of the persistent attacks on oil installations.

This, according to findings, has resulted in a decline in oil production to about 1.6 million barrels per day as against the budgeted production volume of 2.2 million bpd.

Based on the current daily crude oil output of 1.6 million bpd at the price of $51 per barrel, the country is currently earning a total of $81.6m as against $112.2m, which it could have earned had 2.2 million bpd been produced.

Speaking on the drop in oil production, finance analysts told our correspondent during separate interviews that the Federal Government should allow states to develop their untapped resources, stating that the current economic downturn had provided a platform to carry out the exercise.

They contended that while the country had been badly hit by the decline in oil production and revenue as a result of the activities of militants in the Niger Delta, there were a lot of untapped resources at various states, which could be developed for the purpose of economic prosperity.

Those who spoke to our correspondent on the issue included the Head of Banking and Finance Department, Nasarawa State University, Keffi, Uche Uwaleke; and a former Managing Director of Unity Bank Plc, Mr. Rislanudeen Muhammed.

Uwaleke, an associate professor of finance, stated that once the federating units were given the powers to control their resources, it would help promote healthy economic competition.

He said with competition, the federating units would come up with innovative ways of stimulating their respective economies.

He said, “The seemingly endless crises in the Niger Delta region will substantially abate if the country is restructured in a way that allows greater control of resources by the federating units.

“The present economic recession is a direct consequence of the drastic fall in government revenue, which has been blamed in part on militancy in the Niger Delta.

“The good news is that every state in this country is endowed with human and material resources. Economic restructuring will enable states to develop their competitive advantages, which can bring about multiple revenue streams and fast track the much needed diversification of the Nigerian economy.”

Muhammed said there was a need for the government to push all the states into making them to develop their economies in a sustainable manner.

He said, “Nigeria has huge economic potential outside oil sector, largely untapped due to the Dutch disease that has for years made us lazy and always relying on oil as a source of income, notwithstanding the fact that oil constitutes only 10 per cent of our Gross Domestic Product.

“There is potential for growth in non-oil export in most states and virtually every state has one form of economic competitive advantage or the other.

“The states do not have to grow at the same pace but hard work will make all the difference. For example, virtually the whole of Zamfara State is sitting on gold and diamond, largely untapped with little going to illegal miners.

“The current economic reality is a good opportunity for all the states to wake up and diversify their incomes but current tax laws need to be amended to ensure more percentage of the resources is controlled by them.”

But the Minister of Budget and National Planning, Udo Udoma, said although the government was focused on diversification of the economy, it needed oil revenue to effectively diversify the economy.

He said Nigeria’s immediate priority was to get oil production output back to the desired level to secure the revenue needed to diversify the economy.

Udoma explained that though the global slump in oil prices introduced some shocks that affected the country’s economy, the immediate reason for the slump into recession was massive reduction in output caused by militancy in the oil-bearing Niger Delta region.

The minister said the government was currently exploring a number of engagements that would ensure return of normal production activities in the region.

He added that the government was intensely focused on a long-term economic agenda that would ensure sustainable economic growth and revenue development.

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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Finance

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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