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FG Reappoints Consortium of Banks to Handle $2.5bn Eurobond

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Federation Account Allocation Committee
  • FG Reappoints Consortium of Banks to Handle $2.5bn Eurobond

The Federal Executive Council on Wednesday reappointed a consortium of banks to handle the nation’s $2.5bn Eurobond issuance.

The Minister of Finance, Mrs. Kemi Adeosun, disclosed this to State House correspondents at the end of the weekly FEC meeting presided over by President Muhammadu Buhari at the Presidential Villa, Abuja.

Adeosun listed the banks as Citi Group, Standard Chartered, Stanbic IBTC, Whitten-Case and African Practice.

She said the proceeds of the $500m bond issued in November 2017, which she put at about N162.50bn, were used to redeem Nigerian Treasury Bills, which matured in December 2017.

“The immediate impact was a significant drop in the bid rates at the auctions of both the NTBs and FGN Bonds in December 2017 and January 2018,” she stated.

According to the minister, the NTBs dropped from about 16 per cent to 13 per cent, while the bonds dropped from about 16 to 16.50 per cent to 13.50 per cent.

The Minister of State for Aviation, Hadi Sirika, said the council approved the substitution of Lufthansa Consulting with the Airline Management Group and Avia Solutions GE to join the other members of the consortium that would provide transaction advisory services for the establishment of a national carrier at the same cost of N341.2m.

He stated, “Today, the council considered a memo from transportation regarding aviation. It was a memo that was brought to substitute a member of the consortium that will provide transaction advisory services for the establishment of the national carrier. That member of the consortium is Messers Lufthansa Consulting.

“Council considered and approved that substitution with another company called AMG (Airline Management Group) with Avia Solutions GE to join the other members of the consortium to continue providing that at the same cost of N341.2m.”

Sirika attributed the substitution to two reasons, “One, that particular member of the consortium, Lufthansa Consulting, in the wisdom of the council, we felt that Lufthansa Consulting is an appendage of the airline group and that might bring conflict of interests because Lufthansa themselves may want to join, partner or help in the process during the procurement phase of this transaction.

“Of course, they are members of Star Alliance, members of One World and members of Sky Team, others may feel short-changed that the person advising us to set up this airline, which is going to be private sector-driven, is a member of an alliance, which they are not part of.

“Secondly, since we appointed the transaction advisers in various aviation projects in May 2017, about six of them; five of them have gone ahead, the one for construction of airport, the one for aerotropolis and the one for MRO and so on and so forth. Most of them have produced the outline business cases and we are on our way to doing the full business case.

“However, Lufthansa Consulting did not accept the offer, neither have they signed any contract. They countered the offer instead.

“One of the conditions is that we should pay them 75 per cent of the total cost, which is against our procurement law; they also wanted us to change the contract from naira to euro; they also wanted us to open an escrow account in an internationally recognised bank outside the country where the money will be domiciled.”

Sirika added, “So, we found that that was against our procurement law and we have been going back and forth for seven months to see whether they can accept the terms of conditions and even if they had done at a time and they didn’t up till today; we couldn’t continue with them because it will compromise the system, which we thought should be transparent.

“So, that is why we sought the approval of council to substitute them why a neutral person and someone who will accept the terms and conditions given – to accept payment in naira, to accept 15 per cent payment of the entire cost as against 75 per cent etc.”

On his part, the Minister of Interior, Abdulrahman Dambazau, said FEC approved the purchase of 35 operational vehicles for the Nigeria Immigration Service at a cost of N483.21m, including the cost of painting the vehicles in NIS colours for N4.09m.

He said the present administration had approved 17 memos for various procurement and others.

The Minister of Communications, Adebayo Shittu, said the council also approved the purchase of equipment to detect illegal radio signals with a view to blocking them.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Guinness Nigeria Postpones Spirits Importation Exit, Extends Deal with Diageo

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Guinness - Investors King

Guinness Nigeria Plc has announced a delay in its plan to halt the importation of spirits as it extended its agreement with multinational alcoholic beverage company Diageo until 2025.

The decision, communicated through a corporate notice filed with the Nigerian Exchange Limited on Tuesday, cited a longer-than-expected transition period for separating its business from Diageo’s.

Initially slated for discontinuation in April 2024, the importation of premium spirits like Johnnie Walker, Singleton, Baileys, and others under the 2016 sale and distribution agreement with Diageo will now continue for an additional year.

The extension comes as the process of business separation between Guinness Nigeria, a subsidiary of Diageo, and Diageo itself faces unexpected delays.

In October, Guinness Nigeria had announced plans to cease importing spirits from Diageo, a move aimed at reducing its foreign exchange requirements.

However, the separation process has encountered unforeseen hurdles, necessitating the extension of the importation agreement.

The notice, signed by the company’s Legal Director/Company Secretary, Abidemi Ademola, highlighted the ongoing efforts by Guinness Nigeria and Diageo to implement the separation, originally scheduled for completion by April 2024.

The extension underscores the complexity of disentangling the businesses and ensuring a smooth transition.

Guinness Nigeria reaffirmed its commitment to the long-term growth strategy, aligning with Diageo’s decision to establish a new, wholly-owned spirits-focused business.

Despite the delay, both companies remain dedicated to managing the importation and distribution of international premium spirits in West and Central Africa, with Nigeria as a key hub.

The postponement comes amid challenges faced by Guinness Nigeria, including significant exchange rate losses, which amounted to N49 billion in the 2023 half-year operations.

Despite these setbacks, the company remains optimistic about its future prospects in the Nigerian market.

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Private Sector Warns: Interest Rate Hike to Trigger Job Cuts and Inflation Surge

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Private employers

As the Central Bank of Nigeria (CBN) announced a hike in the Monetary Policy Rate (MPR) from 22.75% to 24.75%, concerns have been raised by the private sector regarding the potential ramifications on job stability and inflationary pressures.

The move, aimed at curbing inflation and stabilizing the exchange rate, has prompted apprehension among business operators who fear adverse effects on the economy.

Representatives from the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) and the Nigerian Association of Small Scale Industrialists have voiced their worries over the increased difficulty in accessing affordable credit.

They argue that the higher interest rates will impede the private sector’s ability to borrow funds for expansion and operational activities.

This, they fear, could lead to a reduction in business investments and subsequently result in widespread job cuts across various sectors.

The Lagos Chamber of Commerce and Industry (LCCI) acknowledged the necessity of the interest rate hike but emphasized the potential negative consequences it may bring.

While describing it as a “price businesses would have to pay,” the LCCI highlighted the current fragility of the economy, exacerbated by various policy missteps.

They cautioned that the increased cost of borrowing could stifle entrepreneurial activities and discourage expansion plans critical for economic growth and job creation.

Experts have echoed these concerns, warning that the tightening monetary conditions could exacerbate inflationary pressures and hinder economic recovery efforts.

With inflation already soaring at 31.70%, the rate hike could further fuel price hikes, especially in essential goods and services, thus eroding the purchasing power of consumers.

However, CBN Governor Yemi Cardoso defended the decision, citing the imperative to address current inflationary pressures and ensure sustained exchange rate stability.

He emphasized the need to restore the purchasing power of ordinary Nigerians and expressed confidence that the economy would stabilize by the end of the year.

Despite assurances from the CBN, stakeholders remain cautious, calling for a more nuanced approach that balances the need for price stability with the imperative of fostering economic growth and job creation.

As businesses brace for the impact of the interest rate hike, all eyes are on the evolving economic landscape and the measures taken to mitigate its effects on livelihoods and inflation.

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Breaking Barriers: Transcorp Hotels CEO Shares Journey from Crisis to Success

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Dupe Olusola

Dupe Olusola, the Managing Director/CEO of Transcorp Hotels Plc, reflects on her remarkable journey from navigating the depths of a global pandemic to achieving unprecedented success in the hospitality industry.

Appointed in March 2020, amidst the onset of the COVID-19 pandemic, Olusola found herself at the helm of a company grappling with the severe economic fallout and operational challenges inflicted by the crisis.

Faced with a drop in occupancy rates from 70% to a mere 5%, Olusola and her team were confronted with the daunting task of steering Transcorp Hotels through uncharted waters.

Undeterred by the adversity, they embarked on a journey of transformation, leveraging creativity and resilience to navigate the turbulent landscape.

Implementing innovative strategies such as introducing drive-through cinemas, setting up on-site COVID-19 testing facilities, and enhancing take-away services, Transcorp Hotels adapted to meet the evolving needs of its guests and ensure continuity amidst the crisis.

Embracing disruption as a catalyst for growth, Olusola fostered a culture of collaboration and teamwork, rallying her colleagues to overcome obstacles and embrace change.

Through unwavering determination and a commitment to excellence, Transcorp Hotels emerged from the pandemic stronger than ever, breaking profit and revenue records year after year.

“It’s indeed been a great opportunity to learn and relearn, to lead and to grow. When you see success stories, remember it’s a journey with twists, turns, ups and downs but in the end, it will all be okay”, she said.

Olusola’s leadership exemplifies the power of adaptability and perseverance, inspiring her team to transcend limitations and chart a course towards unprecedented success.

As Transcorp Hotels continues to flourish under her stewardship, Olusola remains steadfast in her dedication to driving innovation, fostering growth, and breaking barriers in the hospitality industry.

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