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SEC To Collaborate With Ministry of Mines and Steel Development

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Nigeria SEC- Investors king

The Securities and Exchange Commission is seeking to collaborate with the Ministry of Mines and Steel Development to address some of the challenges faced by the solid minerals sector through the Commodities Exchanges.

This was stated by Director General of the SEC, Mr. Lamido Yuguda during a meeting with the Minister of State for Solid Mineral, Dr. Uchechukwu Ogah, in Abuja weekend.

Yuguda disclosed that the core function of a Commodity Exchange is to create markets by providing a setting where multiple buyers and sellers can trade commodity-linked contracts thereby reducing the costs associated with finding a buyer or seller to whom to transact. Other benefits of a Commodity Exchange include, improved quality, standardization, traceability (tracking the source of every solid mineral), price discovery, price risk management, accepted dispute resolution procedures and facilitating provision of commodity financing.

He said in the last couple of years however, Nigeria has been confronted by significant threats which include, structural fiscal challenges underlined by heavy reliance on crude oil for revenue, youth unemployment and increasing insecurity. This worrisome situation he said, has been exacerbated by the Covid-19 pandemic.

According to the SEC Boss, “In a bid to address these challenges, the Federal Government is aggressively growing its agricultural and solid minerals sectors as a catalyst for economic growth and diversification. To complement government efforts and deepen the capital market, the Commission set up a market-wide technical committee to undertake a holistic assessment of the existing framework of the Nigeria Commodity Ecosystem.

“The Committee grouped its recommendations in phases: In the first phase, the objective is to ensure food sufficiency and security, price discovery and market development while in the second phase, the focus would include developing strong trades in export commodities. The third phase should see the introduction of solid minerals, energy and derivatives while the last phase should be geared towards ensuring a strong international presence in the local exchanges.

“In furtherance of this objective, the Commission is actively promoting the development of the commodities market especially in areas of Nigeria’s comparative advantage such as solid minerals and agriculture”.

Yuguda stated that the Commission is currently implementing the 10-year Nigerian capital market master plan which was launched in 2015. It aims to: position the capital market to play a pivotal role in the emergence of Nigeria as a top 20 global economy; have a highly competitive market that engenders best practice, innovation and efficiency; and operate a capital market that combines all the elements needed to actualize Nigeria’s developmental aspirations.

In his remarks, the Minister of State in the Ministry, Dr. Uchechukwu Ogah, described solid minerals as a thing of the future and expressed the belief that in the near future it could assist greatly in the development of the economy of the country.

He said, “ We are moving away from oil because we believe that mineral is a thing of the future and the President has done a lot in initiating projects that are helping us to explore some of the few minerals that are of high value in the country.

“Apart from that, the President has equally initiated what we call Presidential Artisanal Gold Mining initiative which led to the presentation of the first locally mined artisanal miner’s gold bar to Mr. President. The proposal is that we are looking at a good policy where these golds would be explored, produced and if possible refined in Nigeria so that we can use it to shore up our reserve and to ensure that the depreciation on our Naira is controlled when we have a good number of raw resources to shore-up our reserve.

“So we believe that there is a lot we can do together that will be mutually beneficial to both parties and our country. I believe that both of us can work purposefully to grow the sector collectively for the interest of the nation”.

Ogah described the sector as a huge one that could help the country grow its, economy, as well as shore up its external reserve and commended the SEC on the collaborative offer.

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Capital Market

Fixed Income Market Turnover Sees 30.47% Decline Despite Bond Activity

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Bonds- Investors King

In June 2024, the FMDQ Securities Exchange reported a 30.47% decline in the fixed-income market turnover from the previous month.

Despite this downturn, bond trading showed resilience, particularly in the Other Bonds category, which saw a 60.51% increase.

The overall turnover for fixed income products, including FGN Bonds and T-Bills, fell to N7.72 trillion.

This decrease was attributed to lower trading volumes across all major categories, although bond activity remained a bright spot.

Trading intensity for FGN Bonds and T-Bills slightly decreased, reflecting reduced investor activity.

However, T-Bills with maturities between six months and a year, alongside FGN Bonds with terms between five and ten years, were the most traded, accounting for a significant portion of the market turnover.

The sovereign yield curve continued its inversion trend, with real yields staying negative due to inflation outpacing policy interest rates.

The money market also experienced a decline, with turnover dropping by 34.50% to N8.22 trillion. Repos and unsecured transactions were primarily responsible for this decrease.

Conversely, the FX derivatives market saw growth, rising by 43.20% due to increased FX swap activities, despite a downturn in FX forwards.

These fluctuations highlight the ongoing challenges in Nigeria’s financial markets, with inflation and currency depreciation posing significant hurdles.

The decline in turnover suggests cautious investor sentiment amidst an uncertain economic landscape.

Despite these challenges, certain segments like bond trading and FX derivatives continue to show potential, offering avenues for strategic investment and market stability.

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Capital Market

Nigeria Leads Africa in Private Equity Deals, Records $2.59 Billion in Q1 2024

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Nigeria has emerged as the epicenter of private equity activity across Africa as $2.59 billion worth of deals were done in the first quarter of 2024.

This surge represents a 321.8% increase compared to the same period last year, indicating Nigeria’s robust potential amidst global economic shifts.

The data, analyzed by DealMakers Africa, a leading authority on mergers, acquisitions, and corporate finance in the continent, revealed Nigeria’s pivotal role in driving regional investment trends.

According to the report, this surge in private equity investments was predominantly fueled by strategic transactions in the energy sector and the burgeoning educational technology (edtech) industry.

Nigeria’s ascendancy in private equity deals marks a reversal from previous trends, where in Q1 2023, other African nations like Zimbabwe had momentarily surpassed it in mergers and acquisitions value.

This year, however, Nigeria not only reclaimed its leading position but also outpaced other significant economies in the region, with Zambia, Morocco, Kenya, and Egypt following with notable but comparatively lower investment figures.

Among the standout deals contributing to Nigeria’s stellar performance, Shell’s $2.4 billion divestment of its onshore oil and gas subsidiary to Renaissance Africa Energy stands as the largest transaction in the quarter.

This landmark deal not only bolstered Nigeria’s overall investment portfolio but also signaled continued interest and confidence from global investors in the country’s energy sector potential.

Commenting on the findings, analysts highlight Nigeria’s strategic advantages, including a sizable market, abundant natural resources, and a dynamic entrepreneurial ecosystem that continues to attract substantial foreign and domestic capital.

The report also emphasizes West Africa’s prominence in regional investments, with Nigeria at its core, recording a cumulative $2.6 billion in deal value across various sectors.

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Capital Market

Stanbic IBTC Holdings to Raise N550bn Through Debt Issuance, Rights Issue

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Stanbic IBTC - investorsking.com

Stanbic IBTC Holdings, one of Nigeria’s leading financial institutions, is set to raise a total of N550 billion through a combination of debt issuance and a rights issue.

This ambitious move comes amidst the backdrop of regulatory changes and the need for financial institutions to bolster their capital bases to meet new requirements set by the Central Bank of Nigeria (CBN).

The announcement was made in a notice of the company’s annual general meeting filed with the Nigerian Exchange Limited.

According to the disclosure, Stanbic IBTC Holdings plans to establish a debt issuance program with a capacity of up to N400 billion.

This program will enable the company to issue various forms of debt securities, including senior unsecured or secured, subordinated, convertible, preferred, equity-linked, or other forms of debt obligations.

Also, the board of Stanbic IBTC Holdings is seeking shareholder approval to raise additional equity capital of up to N150 billion through a rights issue or offer for subscription.

Shareholders will also vote on increasing the company’s issued and paid-up share capital to accommodate the proposed capital raise.

Stanbic IBTC Holdings has been a key player in Nigeria’s financial landscape, with a strong track record of performance and a diverse range of financial services.

The proposed capital raise is expected to provide the company with the necessary resources to pursue growth opportunities, enhance its market position, and continue delivering value to shareholders and stakeholders alike.

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