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Business Undeterred by Sluggish Q1 Performance

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  • Business Undeterred by Sluggish Q1 Performance

Amid a sluggish economic performance in the first quarter of 2017, the Business Confidence Monitor indicated growing confidence among businesses operating in the country.

While the exit timeline from the current economic recession continues to generate debate among different stakeholders, indications of an increasing confidence level in the economy among businesses operating in different sectors of the nation’s economy have begun to emerge, according to The Business Confidence Monitor (BCM) that was released last week by the Nigerian Economic Summit Group (NESG).

The report obtained revealed that indices for the leading business indicators reviewed such as production, operating profit and employment were at positive readings of 9.8, 8.2 and 4.7 respectively. On the other hand, cost of doing business and access to credit indices stood at negative trajectories of -41.3 and -23.7 respectively, even though senior managers and business executives polled in the survey demonstrated optimism of better performance in the next two quarters.

The report obtains qualitative information on the current state of businesses’ sentiments within the Nigerian economy and gauges expectations about the overall economic activities in the short-term and is anchored on business managers’ optimism on key leading economic indicators such as investment, prices, demand conditions, employment etc.

The report findings are categorised under four themes, namely business conditions and performance in Q1-2017, future business sentiments, factors militating against business performance and overall BCM outlook in Nigeria. Indices of performance, expectation and overall outlook were reported both on aggregate and sectoral bases.

According to the Head of Research NESG, Dr. Olusegun Omisakin, “The BCM provides policy makers, business managers, investors, and analysts, with information about current conditions that are representative of the direction of the Nigerian economy. Additionally, it offers strong guide of the overall direction of the economy, it illustrates what is driving change and highlights the key concerns of businesses for policy makers,” he stated.

Sectors Covered

The economic sectors in the report cut across the different sector of the nation’s economy such as Manufacturing, including food, beverage and Tobacco; Textile, Apparel and Footwear; Cement; Chemical and Pharmaceutical Products; Plastic and Rubber products; Wood and Wood Products; Pulp, Paper and Paper Products; Non-Metallic Products; Electrical and Electronics; Basic metal, Iron and Steel; Motor vehicles and assembly and Other Manufacturing.

The sectors also included services such as Telecoms and Information Services; Broadcasting; Financial Institutions; Real Estate; Professional, Scientific and Technical Services. Others are Non-Manufacturing Industries such as Crude Petroleum; Natural Gas, Oil and Services; Construction, as well as wholesale trade and retail trade.

Business in Q1 2017

Analysis from the report showed that on average, more businesses performed poorly between January and March 2017. The BCM’s Business Condition Index exhibits a slight dip in Q1, standing at a net balance of -5.4. Beyond the tendency for economic inertia in every first quarter, the result is a case of uneven business mood being carried forward from unpredictable business climate of 2016.

The report also stated that, “The business operating environment remained the major hurdle for businesses in Q1 2017. The largest negative contributions to the business condition came from cost of doing business index at -41.3 and access to credit index at -23.7. The financial environment continued to constrain the business climate. While drastic intervention by CBN in the FX market provided some liquidity and stability in the market, businesses (particularly manufacturing and non-manufacturing industries) continued to grapple with the issues of access to credit. Consequently, the level of investment declined with an index of -15.3. Similarly, businesses reported that their export order books were below normal levels, resulting in an export index of -4.7. Consequently, the effect was reflected in higher input cost of production.

However, the report posited that “Despite the challenging business environment, some leading indicators such as production, demand conditions and operating profit emerged positive in Q1 2017. Production index stands at +9.8, demand condition and operating profit indices stand at +3.2 and +8.2, respectively. While business activities improved in the services sector, manufacturing, trade, construction, oil and gas sectors reported decline in their activities.”

BCM Q1 2017 Key Findings

According to the report, responses from firms surveyed in Q1 2017 revealed that there was a strong indication that economic activities will continue to gather momentum over the next few quarters, with most of the key BCM leading indicators showing positive outlook. Overall, the BCM index stands at + 14.4.

The report stated that, “Although most business activities declined between January and March 2017 compared to 4th quarter 2016, this does not deter output expansion plan by managers and business executives in the next few months. Such decline crept in from inevitable consequence of domestic policy uncertainties that ravaged the economy in the preceding year. As reflected in the BCM uncertainty index, about 42 per cent of firms reported that the business activities remained unchanged compared to 4th quarter 2016.

“Despite cautious behaviour observed in the first quarter, optimism of businesses regarding the outlook outweighed their actual experience in the first quarter. The future expectation index stood at a balance of +34, suggesting that business and economic activities will witness some moderate bounce-back. With regard to the economic sectors, services and non-manufacturing are considerably more optimistic with positive indices of +28.4 and +24.1 in Q1-2017, respectively. The Manufacturing and Trade sectors exhibit cautious optimism about the outlook with indices of +14.7 and +12.4, respectively,” the report stated.

Continuing, the report further stated that, “Taken alongside the leading indicators, general business situation (+29), production (+20) and demand conditions (+17) will improve in subsequent quarters. The rising producer prices (+1.5), will likely contract investment in trade sector, but manufacturing, services and non-manufacturing industries will likely move into period of business expansion investment, with investment indices of +8.6, +26.7, and +5.2, respectively.

Future Expectations

In terms of future expectations, the BCM revealed a positive index of 34, which indicates positive sentiments and perception of business activities in the next two quarters: Q2 and Q3 2017.

On the future expectations, the report further averred that, “Indeed, expectations for output expansion, increased domestic sales, increased staffing levels and improved demand conditions appeared to drive this positive business outlook for this period. Sectors such as Manufacturing, Construction and Oil & Gas are expected to experience improved output in subsequent quarters. However, trade sector remains pessimistic about the future business activities with an index of -28.

Conclusion

Omisakin explained that, “All leading indicators point to positive sentiment and expectation across the board as managers were generally optimistic about business performance in the next two quarters.”

According to him, “This outlook is intuitively driven by improved efficiency in economic management (monetary, fiscal and trade). For instance, the recent launch of the Economic Recovery and Growth Plan (ERGP), which aims to deliver a Gross Domestic Product (GDP) growth of 2.2 per cent in 2017 coupled with reforms to ease the business environment, obviously influenced the perception of business and economic outlook in Nigeria.”

“Going forward, the NESG expects improvement in local production and increased patronage of Nigerian-made goods and services. Overall, by our forecast released in January 2017, we project positive GDP growth rate and general economic outlook in the year 2017,” he added.

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.

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Plant Power: Nestlé Launches Dairy Free Milo in Asia

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As consumers in Asia are including more dairy alternatives in their diet, Nestlé is launching plant-based versions of some of its most-loved brands in the region.

That now includes a new plant-based version of Milo, the world’s leading chocolate malt beverage that is enjoyed in many Asian countries.

It will be launched in Asia, starting first in Malaysia, a country with generations of Milo fans going back 70 years to its launch there in 1950. Nestlé Malaysia will also be introducing a range of plant-based Nescafé lattes. Both will appear on shelves this April.

Chocolate malt plant-based deliciousness

People are deeply passionate about their Milo, so the development teams worked hard to deliver the ionic Milo taste while using only plant-based ingredients.

This new version replaces the milk in the original recipe with almond and soy, but the other two core ingredients – malt and cocoa – remain the same.

Each bottle offers 6.5 grams of protein and is also low in sugar, with a combination of vitamins and minerals to support effective energy release.

It follows the launch of a plant-based Milo powder in Australia in 2020, a launch that created huge excitement in the country where Milo was first introduced in 1934.

Mayank Trivedi, Head of the Dairy Strategic Business Unit at Nestlé, said: “Milo is an iconic brand in Malaysia and across Asia, and much-loved across generations. We want to provide consumers with on-trend alternatives in formats they want. That’s why we’re delighted to launch Milo Dairy Free to support people’s lifestyle choices.”

A whole ‘latte’ flavor

Nestlé is a pioneer in innovate plant-based coffee mixes, and Nestlé Malaysia is now introducing a plant-based version of another iconic brand – Nescafé oat and almond lattes.

Plant-based coffee mixes are a popular and growing category. Nestlé has already launched them cross a number of countries in Europe, Latin America and Oceania, and most recently launched a range of plant-based Nescafé and Starbucks lattes in Japan.

The Nescafé Dairy Free Almond Latte combines almond and pea, while oat and soy are the main ingredients for the Nescafé Dairy Free Oat Latte. Both are blended perfectly with smooth Nescafé coffee and can be enjoyed hot or cold.

Plant-based discovery

Using its expertise in dairy products and plant-based proteins, Nestlé is focused on developing a wide variety of dairy alternatives that complement the everyday diet of people. This includes products made from pea, rice, oat, soy, coconut and almonds.

“We’re expanding our offerings across Asia by developing a variety of great-tasting, nutritious and sustainable plant-based products.” says Guglielmo Bonora, Head of Nestlé’s R&D Center in Singapore. “We want to make it easier for people to embrace plant-based alternatives in their diet, while also reducing our carbon footprint across the supply chain.”

Nestlé’s R&D center in Singapore serves as the regional innovation hub for the development of plant-based dairy alternatives in Asia. The center collaborates closely with Nestlé’s global R&D network of around 300 scientists, engineers, and product developers who are active in the research and development of plant-based products.

A rising trend

According to a recent survey by GlobalData, over 40% of consumers in the Asia region are shifting to more plant-based diets, with 11% opting for vegetarian and vegan food, and a third moving to a ‘flexitarian’ diet that is lighter on meat and dairy products.

The need for plant-based dairy alternatives that taste great and offer strong nutritionals is rising, as more families are following this trend. In particular, many consumers cite environmental reasons, as plant-based proteins are produced with significantly lower emissions, land- and water usage.

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MoneyGram Advances Payments As A Service Offering With Sigue Partnership

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MoneyGram International, Inc., a global leader in the evolution of digital P2P payments, today announced a partnership with Sigue Corporation, a leading U.S. based transnational P2P and B2B payment company. 

The partnership enables Sigue’s U.S. customer base to access MoneyGram’s domestic and international receive network, adding scale to Sigue’s existing global footprint.

“Over the last few years, we’ve built a modern, mobile, and API-driven organization that enables companies to seamlessly plug into our global network to provide expanded services for their customers, and we’re thrilled to announce our latest partner integration with Sigue,” said Alex Holmes,MoneyGram Chairman and CEO.

“Opening our global platform to companies like Sigue enables us to increase payment volumes through our network and process additive transactions. MoneyGram has built an extremely valuable, tech-enabled, and scalable global payments infrastructure that can absorb significant volume at very low marginal cost. As other companies plug into our platform, we have the opportunity to create meaningful processing revenue in the years ahead, and I’m excited about the momentum in the market leading to a strong partnership pipeline.” He added.

The MoneyGram and Sigue partnership is the most recent successful integration in the new MoneyGram as a Service business line. Partnerships such as this expand processing volume by enabling other financial institutions to access the Company’s global payout capabilities through its powerful API-driven infrastructure and best-in-class technology.

“We are very enthusiastic about our partnership with MoneyGram, as it allows us to scale further, quicker and keep our resources free to focus on creating the best money remittance experience in the business. It strengthens our market presence as the world’s leading privately owned remittance business and confirms our credentials as a leading technology innovator for the global money services industry,” said Guillermo de la Viña, Sigue CEO and Founder.

“This reaffirms our commitment to serving millions of families through our secure, reliable, and innovative services, with the dignity and respect our customers demand and deserve. The partnership further enables Sigue to better serve our customers by expanding our commitment to provide the value-added services that our customers and agent base expect, which is the cornerstone of our success.” He added

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CAC Seeks FEC’s Approval to Bar Non-Remitting Entities from Public Contracts

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Corporate Affairs Commission

The outgoing Chairman, Corporate Affairs Commission (CAC) Governing Board, and Nigerian Ambassador designate to Spain, Mr. Ademola Seriki, has said the commission is presently seeking the approval of the Federal Executive Council (FEC), to ensure that registered entities do not benefit from government contracts unless they filed their annual returns.

Speaking to journalists during an appreciation dinner in his honour, which was organised by the CAC, he said the adoption of Good Standing Certificate was particularly historic, pointing out that, “most companies don’t pay annual returns and it’s a problem”.

Seriki, however, said he will use his new position to enhance the country’s bilateral trade relations with Spain, adding that a team would be set up to monitor the implementation of trade treaties between both countries.

He said implementation remained one of the greatest challenges affecting Nigeria’s international bilateral relations.

He expressed concerns that people who don’t pay annual returns bid for procurements and contracts, and oftentimes, won in the exercise even though they do not comply with their financial obligations to the government, adding that there was need to put an end to the trend going forward.

He said: “So, we need to pay our annual returns and we have started the issue of Good Standing Certificate which is awaiting FEC approval. It’s going to the president and by God’s grace, I hope it will be approved.”

Seriki, who played a significant role in the current reforms being undertaken at the CAC, also said, the introduction of notification alerts on accounts transactions by the commission remained not only formidable but unprecedented.

He said he would love to see the reforms initiatives actualised to usher a regime of world class services in company registration in Nigeria.

He said: “We did something formidable in the issue of Good Standing Certificate, it has not been done in history because most companies don’t pay annual returns and it’s a problem.

“And you will see a company that would bid for procurements of hundreds of billions of dollars and never paid annual returns in 20 to 30 years.

“In a very civilised country, even in Ghana, I was in Ghana two weeks ago and I met with the registrar general- all companies that have not paid their annual returns, they have to pull down their names and will no longer be valid.”

According to him:”People register companies to buy properties as a matter of hiding their identities from the public – they should be paying annual returns.”

On the alert notifications option, the outgoing chairman, assured that it will stem abuses from unilateral accounts alterations without full consent of interest parties.

He said: “Husband and wife who have being together do fight, either of them will go behind and change the ownership or siblings when their father and mother die, you know all kinds of things. People do a lot of illegalities and they commit such without having to regret it.

“So, when you opt for notification alert, you get a short code, you get a text message and you get email that your file had been tampered with.

“And that way, you are on the alert and you can go back to CAC and say look, I didn’t do this.”
He added: “We have thousands of cases where people change information without the principal owner’s consent or knowledge.”

Seriki, added that as much as he would have loved to see the reforms come into force, his new ambassadorial assignment, “is a higher job for me, it’s a higher assignment of which I believe it will put my name on a good stead.”

Also, in his remarks at the dinner, Minister of Industry, Trade and Investment, Mr. Niyi Adebayo, commended the ambassador designate for having a among the staff of the commission, which helped to achieve significant milestones within his one-year duration.

Similarly, the Minister of State for Industry, Trade and Investment, Mrs. Maryam Katagun, urged Seriki, to make a difference in spain not only in bilateral relations but also pay attention to Nigerians in diaspora.

Meanwhile, the Registrar-General of CAC, Mr. Garba Abubakar, has assured that companies’ registration procedures would be completed within three hours before the end of the year as part of measures to ensure efficient service delivery to the public.

He added that companies’ registration can now be completed without physical presence at the commission’s offices.

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