- ‘CBN’s Forex Policy Killing Construction’
Except urgent measures are taken to encourage the use of local building materials, the construction industry will remain in doldrums, stakeholders have said.
They spoke at the ninth Annual Distinguished Lecture of the Nigerian Institute of Quantity Surveyors (NIQS), Lagos Chapter.
At the lecture themed: “Foreign exchange problems, prospects and solutions in Nigeria: Construction industry perspective,” participants called for the use of local building materials.
The guest lecturer, Henry Boyo, in his presentation, titled: “For the successful resolution of oppressive contradictions in Nigeria’s economy”, said: “It is appalling that the country has become so poor, despite her abundant human and material resources.”
He said the distress in the economy, based on available evidence, is a function of “too much money supply,” of the naira, and foreign currencies.
Boyo said the Central Bank of Nigeria’s (CBN’s) failure to manage an “irrepressibly” surplus naira supply has continued to stimulate a higher inflation rate for several years. This, he explained, has serious consequences on the purchasing power of the persons whose incomes are in naira.
He emphasised that the naira and the economy would remain stagnant as long as the CBN persistently auctions the dollar against the naira in a market that is suffocated by excess naira supply, created by the apex bank’s unilateral substitution of naira allocations for distributable dollar-denominated revenue.
“Thus, CBN’s forex interventions are, in fact, deliberate and a suicidal approach to gradually kill the naira, since the CBN would consciously sell its dollar stock for higher naira bids in such auctions. In this situation, the banks flourish, while the rest of the economy wrestles with deepening poverty,” Boyo said.
The Lagos NIQS Chairman, Mr. Bamidele Mafimidiwo, agrees with Boyo on the effect of foreign exchange (forex) on the industry.
He explained that the lingering forex problems had caused a huge disruption to businesses in the sector, a situation that has been compounded by the recession. This has grounded new construction projects, leaving builders and suppliers in difficult financial positions, he added.
To transform the economy and boost industrial activity, Mafimidiwo said there was the need to restructure the monetary framework.
“Construction, housing, infrastructure, manufacturing, mortgage and other business activities of tangible output represent the construction industry and today’s forum is to provide a platform to x-ray the industry vis-a-vis the meltdown effects and chart a way forward for the sector,” he said.
Yet, other stakeholders are convinced that the use of local materials for construction projects is the easiest way out of the scathing effect of forex on the sector. This position was shared by a former President of NIQS, Mr. Oluwasegun Ajanlekoko. He said with the use of local materials, importation would be reduced to the barest minimum.
“It is about time we stopped using blocks when it comes to affordable housing. We have large reservoir of clay and that is far cheaper, durable and more environment friendly. To solve the problems of exchange rate, we are appealing to CBN to give discretionary interest rates to those in the construction industry,’’ he said.
Similarly, Executive Director, UACN Property Development Company Plc (UPDC), Yemi Ejidiran, said the forex challenge affected Grade A and B residential projects. “The government should encourage production of most of our finishing materials locally. We also need to come up with efficient designs, as it is clear that banks are not ready to finance any real estate project,” he said.
BUA Cement Announces 24.6 Percent Increase in Profit to N43.4 Billion in H1 2021
BUA Cement Plc, Nigeria’s second-largest cement manufacturing company, on Thursday reported a 22.7 percent increase in revenue in the six months ended June 30, 2021.
Revenue rose from N101.261 billion recorded in the first half (H1) of 2020 to N124.278 billion in the first half of 2021.
The company disclosed in its unaudited financial statements release through the Nigerian Exchange Limited and seen by Investors King.
As expected, the cost of sales inched higher by 19.1 percent from N55.539 billion in H1 2020 to N66.158 billion in H1 2021. While gross profit expanded by 27.1 percent to N58.120 billion in H1, up from N45.723 billion.
The cement manufacturing company grew other income by 52.3 percent from N47.653 billion filed in H1 2020 to N72.6 billion in H1 2021.
Administrative expenses rose to N4.17 billion in the period under review, representing an increase of 57.9 percent when compared to N2.643 billion recorded in H1 2020.
Operating profit increased by 23.8 percent from N40.809 billion in the corresponding period of 2020 to N50.524 billion in the period under review.
Profit before income taxes rose by 26.9 percent to N49.700 billion in H1 2021 from N39.165 billion in H1 2020.
The company paid N6.3 billion in income tax in the first half of 2021.
Therefore, profit after tax stood at N43.396 billion in the first six months of 2021, an increase of 24.6 percent when compared to N34.819 billion achieved in the same period of 2020.
Seplat Energy Appoints Dr. Emma FitzGerald as an Independent Non-Executive Director
Seplat Energy Plc has appointed Dr. Emma FitzGerald as an Independent Non-Executive Director of the Company, the company disclosed on Thursday.
Dr. FitzGerald will replace Lord Mark Malloch-Brown who retired from the Board of the Company on 1st August 2021.
Dr. Emma FitzGerald Profile
Dr. FitzGerald is a seasoned executive in Energy & Water, with hands-on experience in transformation through her many years of working at Shell, ranging from building its lubricants business in China to running its Global Retail network.
From 2007-2010, she was accountable for Shell’s Downstream strategy and played a key role in reshaping Shell’s renewables strategy including the creation of Raizen, a game changing biofuels JV with Cosan. From 2013 to 2018 she ran gas distribution and water & waste networks for National Grid and Severn Trent where she successfully
positioned them as sustainability thought leaders in their Industries.
Most recently Dr. FitzGerald served as CEO of Puma Energy International, a global energy company owned by Trafigura and Sonangol, which is focused on high potential developing markets in Africa, Asia and Central America. In 2020 she set up Puma’s Future Energies division to play a critical role in helping customers and communities find the right energy solutions to support the energy transition. Over the last 10 years she has served on various Boards in executive and non-executive capacities and currently sits on the board of UPM Kymmene, an international paper & biomaterials business focused on innovating for a future beyond fossil fuels.
Commenting on the appointment, Dr. A. B. C. Orjiako, Chairman of SEPLAT Energy said: “The Board of SEPLAT Energy is indeed delighted to have Dr. Emma Fitzgerald on board as she brings vast knowledge in important areas such as the energy sector, renewables and sustainability. SEPLAT Energy has a great future ahead and looks forward to the enormous contribution she will make towards its continuing global success.”
Robinhood IPO Priced at Lower End of Range, Firm Valued at $32B
Stock and crypto-trading app Robinhood has secured a $32 billion valuation via its initial public offering (IPO) and is set to debut on the Nasdaq exchange on Thursday.
According to a press release on Wednesday, Robinhood has priced its offering at $38 per Class A common stock share.
The pricing is at the lower end of the $38-$42 per share price range the company had targeted and had planned on selling 5.5 million shares targeting a $1.89 billion raise.
Net proceeds from the sale will go toward working capital, capital expenditures, funding tax obligations, hiring efforts, customer support services, among others.
Shares will be listed on the Nasdaq Global Select Market on Thursday, according to the release.
Earlier this month, Robinhood began unconventionally offering a portion of its IPO to users via its app — a view some consider to be a risky gamble.
Known for its zero-fee trading structure, the company has continued to endure hits to its image as well as legal and political ramifications stemming from the fallout of the GameStop saga and limitations to users trading crypto.
The company is trying to reshape that image and is reportedly working on a new feature that will help protect users from crypto price volatility while hiring a former Google alumn to improve its overall product design.
“Robinhood intends to use the net proceeds for working capital, capital expenditures, funding its anticipated tax obligations related to the settlement of RSUs, and general corporate purposes including increasing its hiring efforts to expand its employee base, expanding its customer support operations and satisfying its general capital needs,” the firm said in the announcement.
Robinhood filed the public offering prospectus on July 1, noting at the time that 17 percent of its total revenue in Q1 came from crypto trading transaction fees, which represented a big jump from the 4 percent in Q4 2020.
“While we currently support a portfolio of seven cryptocurrencies for trading, for the three months ended March 31, 2021, 34 percent of our cryptocurrency transaction-based revenue was attributable to transactions in Dogecoin, as compared to 4 percent for the three months ended December 31, 2020,” the firm said in the initial filing.
Still, the company’s CEO Vlad Tenev is staring down allegations from the Financial Industry Regulatory Authority over his failure to register Robinhood Financial relating to compliance issues.
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