- ‘FG’s Proposed Fundraising in Capital Market for Varsities Unviable’
The Head of Department of Banking and Finance, University of Lagos, Prof. Rufus Olowe, has said the plan by the Federal Government to raise funds for universities through the capital market is not viable.
President Muhammadu Buhari, who was represented by Vice-President, Prof. Yemi Osinbajo, at the convocation of the University of Ibadan, stated that university education was really being under-funded and that the Academic Staff Union of Universities had a point for its ongoing strike.
He revealed that some of the options that the Federal Government was working on “are the details of education funding for the public universities, which will involve raising funds from the capital market to give a push to the infrastructure in our universities.”
According to Olowe, the planned fundraising will not be viable because the repayment will be tied to the internal revenue of the government and the pressure on government revenue is already very high.
He said, “The government has in the past raised so many bonds and there is a heavy commitment on the part of the government because it has too much debt. Adding another one for the universities will further increase the already heavy debt portfolio of the government.”
He added that another reason he described the project as unviable was that “the capital market is commercial, and universities are not run fully on a commercial basis.”
The Managing Director, Afrinvest Securities Limited, Mr Ayodeji Ebo, said he did not think the repayment would be a problem.
He said the challenge the government had been having was high recurrent expenditure, which could be controlled.
Ebo described the proposed fundraising as a wise decision, saying it was targeted at a specific sector.
He stated that it would have a long-term effect on the economy in terms of building quality human capital as well as deepening the capital market, adding that it would be a win-win situation for both the government and the capital market.
Ebo said, “Government should adopt more of these targeted borrowings as it can easily be traced and the effectiveness can easily be measured.
“We have always been saying borrowing is not bad on its own, but where it is directed to. The educational sector needs a serious intervention, and if the proceeds can be channelled effectively, we will see the effect in terms of improving the quality of the output of our educational system.”
He noted that the fundraising would be successful as long as returns were guaranteed because “there exists a huge appetite for debt in the Nigerian capital market.”
“This is what we have all been clamouring for; it will create more products for the capital market, in addition to the Sukuk and infrastructure bonds, among others,” Ebo added.
The Vice-President, Association of Stockbroking Houses of Nigeria, Mr Akinsola Akeredolu-Ale, said, “It is a welcome development for the long-term planning and continuity in the funding process for our educational system.”
The Chief Executive Officer, Financial Derivatives Company, Mr Bismarck Rewane, described the educational sector as a good business opportunity.
He, however, added that he could not understand how and why the Federal Government decided to take such a decision with the current delicate state of the capital market.
Ecobank Partners NiDCOM to Mobilise Nigerians Abroad for National Development
In a bid to fulfill it’s objectives and mandate, the Pan African Bank has promised to support Nigerians living and working abroad through it’s partnership with NiDCOM.
The Managing Director, Ecobank Nigeria, Patrick Akinwuntan has stated that the bank is privileged to work closely with the Nigerians in Diaspora Commission, (NiDCOM) and will continue to pursue one of its key mandates of helping to enhance the economic development and integration of Africa through its support to Nigerians living and working abroad.
Speaking at the maiden edition of the Diaspora Quarterly Lecture Series with Ecobank as the sole banking partner which took place on Saturday, 8th May 2021, he noted that Ecobank remains a critical bridge for Nigerians abroad, as it has made huge investments in the necessary platforms to enable them connect with home seamlessly. The event held online and had over 2000 participants from across all the continents in attendance.
“Nigerians in the diaspora play a major role in nation building, their contribution goes a long way to catalyse economic development. For us at Ecobank, we are a pan-African institution positioned to foster the economic growth and integration of our continent, so we are particularly pleased to work closely with the Nigerians in Diaspora Commission (NiDCOM), ably led by the Chairman/CEO, Hon Abike Dabiri-Erewa”.
“We are committed to ensuring that every Nigerian living abroad is able to remit home seamlessly and affordably, access viable investment opportunities and as the financial institution of choice for Nigerians abroad, we have deployed the necessary resources to actualise this.” He stated.
The Minister of Interior, Ogbeni Rauf Aregbesola, who was also present, reiterated the readiness of the government to collaborate with Nigerians in the diaspora, highlighting the new processes put in place to facilitate passport issuance, noting that all backlog of passport applications would be cleared by the end of May 2021.
Also speaking, the Hon. Minister of State, Foreign Affairs Amb. Zubairu Dada said harnessing the human capital and material resources of Nigerians in the diaspora towards the socio-economic, cultural, and political development of Nigeria can no longer be ignored. He pointed out that the Nigerian diaspora community is well educated, resourceful, skilled, and exposed to global best practices.
The NiDCOM Chairman/CEO, Hon. Abike Dabiri- Erewa explained that the Diaspora Quarterly Lecture Series is projected to be a major aspect of national discourse, where Nigerians abroad can be kept abreast of the government’s policies, programmes and projects.
Increase in Price Boosts Revenue of Dangote Sugar by 41.5 Percent in Q1 2021
Revenue of Dangote Sugar Refinery Plc rose by 41.5 percent to N67.394 billion in the first quarter (Q1) of 2021 from N47.643 billion recorded in the same quarter of 2020.
According to the leading sugar manufacturer, the increase in revenue was a result of the increase in the price of sugar in the first quarter. The company claimed price adjustment was necessary to mitigate the negative effect of inflation and depreciation on the company.
Volumes only rose by 5.7 percent during the quarter despite a 41.5 percent increase in revenue, meaning the increase in price was the main sales catalyst.
In the company’s unaudited financial statements, gross profit grew from N12.721 billion in Q1 2020 to N18.044 billion in Q1 2021.
Similarly, operating profit stood at N15.884 billion, up from N10.747 billion posted in Q1 2020.
Finance cost more than double from N1.353 billion in Q1 2020 to N3.412 billion in Q1 2021.
Dangote Sugar’s profit before tax rose from N9.509 billion recorded in the corresponding quarter to N11.949 billion in the quarter under review.
The company paid N3.646 billion in income tax, slightly higher than N3.137 paid in the same quarter of 2020.
Profit for the period grew from N6.372 billion in Q1 2020 to N8.302 billion in Q1 2021.
Commenting on the company’s performance, Dangote Sugar said “EBITDA increased by 34.7% to N17.02 billion (2020: N12.64 billion) on account of increased earnings. Group profit after taxation for the period increased by 30.3% to N8.30 billion (2020: N6.37 billion) reflecting management’s unrelenting drive to deliver consistent shareholder value.”
On price increase, the company hinged it on series of devaluation carried out in 2020 by the Central Bank of Nigeria (CBN), escalating inflation, port congestion and rising in price of global sugar. Dangote Sugar said its imported raw sugar from Brazil under Federal Government’s backward integration plan.
“We have continued to witness high cost of raw materials, energy costs and other input costs due to rising inflation and FX rate fluctuation. Further cost escalation is anticipated in the year as inflationary pressure mounts,” the company said.
FBN Holdings Suffers 39 Percent Drop in Profit to N15.6 Billion in Q1 2021
FBN Holdings Plc profit after tax declined by 39 percent from N23.140 billion recorded in the first quarter (Q1) of 2020 to N15.6 billion in the first quarter of 2021.
In the leading financial institution’s unaudited financial statements released through the Nigerian Exchange Limited, gross earnings declined by 14.5 percent to N137 billion in the period under review, down from N160 billion filed in the previous quarter.
Similarly, net interest income declined from N60.253 billion achieved in Q1 2020 to N52.793 billion.
Net interest income after impairment charge for losses also dipped from N50.547 billion in Q1 2020 to N39.619 billion in Q1 20201. While net fee and commission income rose from N20.773 billion in Q1 2020 to N28.427 billion in Q1 2021.
Profit before tax declined by 34 percent to N18.906 billion in the quarter under review, down from N28.680 billion posted in the corresponding quarter of 2020.
FBN Holdings paid N3.285 billion in income tax in the first quarter of 2020.
Therefore, profit for the period stood at N15.621 billion. While Net Assets contracted from N765.2 billion to N764.8 billion.
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