headlines news for the day.

Agricorp raises $17.5m, to boost production capacity for African expansion

Nigerian-based company Agricorp International, which specializes in producing, processing, and exporting spices has successfully raised $17.5 million in Series A funding, which will help boost its operations locally and globally.

Why Nigeria’s 2021 broadband penetration may not beat 2020 peak

Twenty-twenty was the year Nigeria saw the most growth in broadband penetration and by December of every year since 2018, the numbers have closed higher than what it began with in January. This is likely not going to repeat in 2021

Why Nigeria’s real estate sector grew by most in 6yrs

Nigeria’s real estate sector posted 3.85 percent growth in the second quarter of 2021, representing its highest growth in six years, thanks to the full re-opening of the economy and increased investment interest.

Shadows of squandered oil-boom haunt Nigeria’s future

Nigeria’s Niger Delta region may be home to some of the country’s most prolific oil fields but host communities of these fields have also had to endure social and environmental degradation in consequence

Money laundering: 100 Nigerians under security watch

In a bid to rid Nigeria of money laundering and other crimes, anti-graft agencies have allegedly placed over 100 Nigerians with fat bank accounts of N1billion and above under close scrutiny, Businessday can authoritatively report

Total inks $27bn energy pact with Iraq as big deals still elude Nigeria

Iraq’s government and TotalEnergies agreed on a $27bn package of investment deals aimed at boosting oil and gas output and reducing power outages in oil cartel Opec’s second-biggest producer

Arise B.V. Makes US$75m Perpetual Non-Cumulative AT1 Capital Investment in Ecobank Group

Ecobank Transnational Incorporated (“ETI”), the Lome-based parent company of the Ecobank Group is pleased to announce a US$75 million Additional Tier 1 (“AT1”) investment by Arise B.V. (“Arise”). This Basel III compliant instrument is the first AT1 instrument issued by ETI and a landmark transaction in the sub-Saharan Africa region. The investment will optimize and improve ETI’s Tier 1 capital by US$75 million.

 The investment by Arise, a leading equity investor in financial institutions in Sub-Saharan Africa and one of ETI’s existing major institutional shareholders, demonstrates the support, commitment and capacity of Ecobank’s international shareholder base. This additional investment will be used by ETI for its general corporate purposes which will include loan growth and strengthening the capital buffers of profitable subsidiaries in two of the Group’s cornerstone regions, Francophone West Africa and Anglophone West Africa.

 Ade Ayeyemi, Group Chief Executive Officer of ETI, stated: “This investment by Arise is a testament to continued support and confidence from our shareholders; their commitment to, and belief in our strategy which we remain focused on executing to deliver value to our shareholders and excellence to our customers. Indeed, in addition to improving our double leverage ratio, it is also a good boost for the firm and its staff”.

 Deepak Malik, Chief Executive Officer of Arise stated: “ETI is our primary banking investment in Francophone West Africa and Anglophone West Africa. We are very supportive of ETI’s growth ambitions and its ability to increase financial services to Agri, SMEs & retail customers. Our investment will also strengthen the balance sheet of ETI and provide additional risk capital”.

 The AT1 investment follows ETI’s ground-breaking US$350 million subordinated Sustainability Eurobond issued in June 2021 which was very well received by international investors across multiple continents. The Eurobond, which qualifies as Tier 2 capital, is listed on the London Stock Exchange.

Nigeria’s Pension Industry Asset Under Management Increased by 13% YoY to N12.78trn in July 2021

We learn from PenCom’s latest monthly report that the assets under management (AUM) of the regulated pension industry increased by 13.0% y/y to NGN12.78trn (USD31.1bn) at end-July and by 1.0% m/m. FGN debt securities represented 64.2% of the total at end-July. When we include corporate and state government issuance, we find fixed-income exposure equivalent to 72.4% of the industry’s AUM. This is a highly skewed allocation of assets in the EM universe, for which some explanations are warranted. 

The share of domestic equities rose from 4.6% to 6.7% of AUM over the twelve months, and members’ holdings by 65% to NGN862bn. Over the same period the all-share index (ASI) increased by 56%, indicating a small underlying shift by the institutions into domestic equities. It may qualify as distant history in some eyes, but we should recall the beating the PFAs took from the stock market crash of 2008/09.

 Another trend to report that is not strictly fixed income is the steady rise over several years in holdings of money market securities. The share of AUM has increased to 16.5% in July from 15.8% twelve months earlier. These are mostly bank placements.  We suspect that the pressure from the regulator on DMBs to meet its tighter loans-to-deposit ratio requirements has created good opportunities for the nimbler domestic institution.

 The holdings of FGN paper are predominantly the bonds, which represented 59.9% of total AUM. Investors have enjoyed a very healthy run since the start of the year following the anomalous Q4 ’20. The driver in our view has been the huge deficit financing requirement of NGN5.60trn in the 2021 budget (before the passage of the supplementary by the National Assembly before the summer recess).

 The Debt Management Office (DMO) has raised NGN1.92trn from bond auctions in eight months this year (including non-competitive bids). It is on schedule to raise its initial domestic funding target for the year of NGN2.34trn, an increase of more than 40% on its collection from auctions in 2020.

 The average value of a retirement savings account (RSA) at end-July was NGN1.08m, marginally higher than the previous month.

 Just NGN177m was invested at end-July in the newest RSA fund (no V), which has been created for micro pensions for the self-employed and SMEs.

AUM of PFAs, Jul 21 (% shares)
Proshare Nigeria Pvt. Ltd.
Sources: National Pension Commission (PenCom)

Osinbajo: Africa’s Cross-Border Trade Worth $93b

The Vice President, Professor Yemi Osinbajo, has estimated the value of informal trade in the African Continent to be in the region $93 billion yearly. 

Concerns as Abandoned Containers Litter Nigerian Ports

 The increasing rate of abandoned cargoes currently causing congestion at the seaports has triggered concerns among the stakeholders. The Nigerian Ports Authority (NPA) and the Nigeria Customs Service (NCS) have immediately swung into action to decongest the ports.  

Nigerian Govt Outlines Firms for Sale, Concession – (FULL LIST)

The Nigerian government hopes to sell or temporarily hand over control of dozens of state-owned businesses in a bid to resuscitate them in 2021 and beyond. An investors’ guide by the Bureau of Public Enterprises (BPE) invites potential investors to take advantage of the opportunities available and incentives offered by the government and buy into those businesses. 

About the Author

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First Ideas Limited is an investment and financial advisory company established in 1994 to provide advisory services to high net worth individuals, trust funds, financial institutions and medium sized companies in growth sectors.

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