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CBN Disburses N3bn Under Nigeria Youth Investment Fund (NYIF)

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Godwin Emefiele - Investors King

The Central Bank of Nigeria (CBN), as part of its development finance initiatives in collaboration with the Federal Ministry of Youth and Sports Development, has so far released the sum of N3 billion to 7, 057 beneficiaries across the country under the Nigeria Youth Investment Fund (NYIF).

The CBN Governor, Mr. Godwin Emeele disclosed this during the press briefing at the end of the 280th Monetary Policy Committee (MPC) meeting on July 28, 2021 in which he noted that of the beneficiaries, 4, 411 were individuals and 2,646 were SMEs.

The NYIF programme, which was launched as part of the Bank’s drive to improve access to nance for youth and youth-owned enterprises; generate employment opportunities to curb youth restiveness; and boost the managerial capacity of
the youth while developing their potential to become future large corporate organizations.

The NYIF seeks to provide Nigerian youth between the ages of 18-35 years with investment inputs required to build successful businesses; become sustainable employers of labour by generating at least 500,000 jobs in critical economic and social sectors between 2020 and 2023.

Other disbursements in the report on the Bank’s development nance initiatives included the Creative Industry Financing Initiative (CIFI) in which the sum of N3.22 billion has been disbursed to 356 beneficiaries across movie production, movie distribution, software development, fashion and IT verticals.

The CBN has also disbursed N923.41 billion to 251 real sector projects of which 87 were in light manufacturing, 40 in agro-based industry, 32 in services and 11 in mining. Five beneficiaries have also received grants totaling 232.54 million for the development of testing kits and devices for COVID-19 and Lassa Fever under the CBN Healthcare Sector Research and Development Intervention Scheme (HSRDIS).

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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Insurance

Sanlam to Acquire 60% Stake in MultiChoice’s Insurance Arm for R1.2bn

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South African insurance giant Sanlam Limited has announced plans to acquire a 60% stake in NMS Insurance Services (NMSIS), the insurance subsidiary of pay TV operator MultiChoice Group, for R1.2 billion.

This strategic acquisition aims to enhance Sanlam’s footprint in the African insurance market and leverage MultiChoice’s extensive subscriber base across the continent.

In a joint statement released on Tuesday, both companies revealed that the deal includes a long-term commercial arrangement designed to expand insurance and related financial services to MultiChoice’s diverse audience.

The transaction also features a performance-based cash earn-out potential of up to R1.5 billion, contingent upon the gross written premium generated by NMSIS by the end of 2026.

Paul Hanratty, CEO of Sanlam Group, expressed optimism about the acquisition, stating, “This partnership provides a unique opportunity to combine our market presence and technological capabilities, fostering growth and market penetration while creating synergies beneficial to all stakeholders.”

Calvo Mawela, CEO of MultiChoice, highlighted the strategic significance of the collaboration, noting, “This deal not only enhances the value we provide to our subscribers but also taps into Sanlam’s expertise to drive innovation and growth in our insurance offerings across Africa. It’s a testament to the hard work and dedication of our teams.”

NMSIS has shown impressive growth, with gross written premiums increasing by 36% year-on-year and profit after tax rising by 51% in the first quarter of 2024.

MultiChoice plans to use the proceeds from the sale for working capital while retaining a 40% interest in NMSIS.

The move comes as MultiChoice faces economic challenges, including a 13% drop in subscribers in key markets such as Nigeria, Angola, Kenya, and Zambia due to economic hardships and currency devaluations.

Despite these setbacks, the partnership with Sanlam is seen as a strategic step to bolster its financial services offerings and stabilize revenue streams.

The announcement also follows recent regulatory developments, with MultiChoice entering a Cooperation Agreement with Groupe Canal+ SA after Canal+ acquired a 45.20% stake in MultiChoice, necessitating a mandatory offer under South African takeover regulations.

As the African insurance market continues to grow, Sanlam’s acquisition of a significant stake in NMSIS positions both companies to capitalize on emerging opportunities, providing innovative insurance solutions to millions of customers across the continent.

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Finance

GTBank Takes 60 Bank Executives to Court Over N17bn Loan Dispute

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GTBank -Investors King

Guaranty Trust Bank (GTBank) has initiated legal proceedings against 60 top executives from 13 commercial banks in Nigeria.

The action stems from an ongoing dispute involving a N17 billion Anchor Borrowers Programme loan granted to AFEX Commodity Exchange.

The executives, including chairmen, chief executive officers, directors, and company secretaries, are facing contempt of court charges for allegedly failing to enforce a No-Debit-Order on AFEX Commodity Exchange’s accounts. The legal battle, which has drawn significant attention in the financial sector, is being closely monitored by industry stakeholders.

Details of the Case

The Federal High Court in Lagos, presided over by Justice CJ Aneke, signed an order to hold the executives accountable for disobeying its ruling dated May 27, 2024.

The court’s decision mandates the executives, including those from prominent banks such as Access Bank, Citibank, Jaiz Bank, Union Bank, Fidelity Bank, and First Bank of Nigeria Plc, to comply with the directive or face jail time.

The case, registered as FHC/L/CS/911/2024, involves GTBank and AFEX Commodity Exchange. The court had previously ordered 20 banks to transfer funds from AFEX’s accounts to GTBank until the outstanding N17.81 billion loan is repaid.

This sum includes the principal amount of N15.77 billion and additional recovery costs and expenses totaling N2.04 billion.

Contempt Proceedings

The legal notice, titled ‘Order to Serve Notice of Disobedience to Order of Court via Newspaper Publication,’ was published in national dailies, signaling the gravity of the situation.

The notice serves as a warning to the bank executives about the consequences of failing to adhere to the court’s order.

In addition to the commercial banks, the Nigerian Deposit Insurance Corporation (NDIC), acting as the liquidator for Heritage Bank, has also been cited for contempt.

The matter is set for further hearing next Thursday, where the court will decide the fate of the implicated executives.

Background and Implications

The dispute originates from a loan facility extended to AFEX Commodity Exchange under the Central Bank of Nigeria’s (CBN) Anchor Borrowers Programme.

The loan was intended to finance smallholder farmers, with repayment expected through the sale of agricultural produce. However, AFEX reportedly defaulted on the loan, prompting GTBank to seek legal recourse.

AFEX has countered by stating that it has repaid 90% of the loan and is in ongoing discussions with the CBN regarding the remaining balance. The commodities exchange has cited economic challenges and macroeconomic policies, such as the naira redesign, which adversely affected the farmers’ ability to repay the loans.

The court has also permitted GTBank to take control of AFEX’s 16 warehouses across seven states, allowing the bank to sell the stored commodities to recover the outstanding loan.

Industry Reaction

The case has sparked concerns about the efficiency and integrity of Nigeria’s banking and financial sectors.

Charles Akinbobola, a senior energy analyst at Sofidam Capital, said, “The challenge of the power sector has not entirely been the scarcity of funds. Several trillions of naira have been pumped into that industry. The sector has been plagued by the shortcomings of its managers.”

Experts like Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, emphasize the need for addressing fundamental issues in the electricity value chain, such as technical and commercial losses, which continue to burden consumers with inefficiency costs.

As the legal proceedings unfold, the financial community will be watching closely to see how this high-stakes battle impacts the involved parties and the broader financial sector in Nigeria.

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Banking Sector

Guaranty Trust Holding Plans N500 Billion Share Offering

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Guaranty Trust Holding Company Plc (GTCOPLC) has announced plans to raise up to N500 billion through a new share offering, according to a preliminary prospectus filed with the Securities and Exchange Commission (SEC).

This move aims to support the company’s ambitious growth and expansion strategy.

GTCOPLC’s proposed offering will involve the subscription of ordinary shares of 50 kobo each, although the exact number of shares and the price range are yet to be determined.

The offering includes a concurrent filing of a preliminary universal shelf registration statement, allowing the company to issue various types of securities, potentially raising up to $750 million in multiple currencies.

Purpose of the Offering

The funds raised from this offering will primarily be allocated towards:

  1. Business Growth and Expansion: GTCOPLC plans to invest significantly in technology infrastructure to enhance its current operations. Additionally, the company intends to establish new subsidiaries and make selective acquisitions of non-banking businesses.
  2. Recapitalization of Guaranty Trust Bank Limited: Part of the proceeds will be used to strengthen the capital base of its banking subsidiary.

Target Investors and Structure

The offering is structured to attract both institutional and retail investors. It will be divided into two main tranches:

  • Nigerian Tranche: An institutional and retail offering aimed at eligible investors within Nigeria.
  • International Tranche: A private placement targeting qualified institutional buyers outside Nigeria.

Listing and Trading

GTCOPLC has also filed an application with the Nigerian Exchange Limited (NGX) to list and admit the new ordinary shares for trading on the NGX Official List.

The company anticipates opening the offering by July 2024.

Financial Strategy

The universal shelf registration will enable GTCOPLC to issue a variety of securities over time, with a total value of up to $750 million (or its equivalent in Nigerian Naira).

This approach provides the company with flexibility to raise capital in different markets during the programme’s validity period. The current proposed offering will be the first issuance under this new programme.

Regulatory Compliance

GTCOPLC emphasized that this notice does not constitute an offer of securities for sale in the United States or to U.S. persons, as defined under Regulation S of the U.S. Securities Act of 1933.

The offered shares have not been, and will not be, registered under the U.S. Securities Act or any state securities laws, and cannot be sold in the United States without proper registration or an applicable exemption.

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