Headlines news for the day. – First Ideas Limited

Headlines news for the day.

Food gulps 101% of average wages in Nigeria

Food now consumes about 101 percent of the average wages of Nigerians, a report by the Institute of Development Studies has shown. According to the report, Nigeria now ranks second globally where citizens spend almost all their income on food, ranking

Nigeria’s recovery from pandemic is on but there’s one problem

Nigeria’s near-term economic growth is made more uncertain by high inflation which is affecting business sentiments and consumer purchasing power. The Nigerian economy is expected to grow by 1.5 percent in 2021 as the impact of the lockdown in 2020 fades but..

Insecurity to keep food prices surging

Food prices in Africa’s most populous nation are to keep surging as naira – the country’s currency – has weakened to a three-year low in the parallel market, compounding the challenge of worsening insecurity, which already affects local food production

Curious case of agric crowdfunding going comatose after regulation

For almost five years, crowdfunding platforms offering investments in agriculture offered some of the best returns on investment in Nigeria. For many Nigerians with disposable income to invest, these platforms were particularly attractive with fixed..

Sirius Petroleum signs agreement with Baker Hughes for development of Nigerian oil bloc

Sirius Petroleum has signed a Memorandum of Understanding (MOU) with Baker Hughes, one of the world’s largest oil field services companies, for the development of Oil Mining Licence (OML) 65, a large onshore block in the western Niger Delta, Nigeria.

EIU sees Nigeria’s economic growth per head rising for first time in 7yrs

Nigeria’s GDP per capita income or what economists interpret as economic growth per head is projected to rise in 2022, after seven years of decline following a growth forecast of three percent by the Economic Intelligence Unit (EIU), the world leader in global business intelligence.

Naira pares losses in parallel market as bank CEOs expect more gains

The naira appreciated to N520 to a dollar on the parallel market on Thursday after hitting a four-year low of N525 to a dollar the previous day, according to data from Abokifx, a platform that collates prices.

Investors Lose N62.95bn WoW as NSEASI Dips by -0.31% to Close the Week Negative

Equities market closed today on a negative note, as NSEASI depreciated by  -0.16% to close at 38,547.08 basis points as against -0.79% depreciation recorded previously. Its Year-to-Date (YTD) returns currently stands at -4.28%.       

Market breadth closed negative as TRANSCORP led 19 Gainers as against 24 Losers topped by LEARNAFRCA at the end of today’s session – an unimproved performance when compared with previous outlook.         

Market turnover closes positive as volume moved up by +48.92% as against +9.46% uptick recorded in the previous session. TRANSCORP, ELLAHLAKES and OANDO were the most active to boost market turnover.  MTNN and PRESCO topped market value list.  

TRANSCORP leads the list of active stocks that recorded impressive volume spike at the end of today’s session.        

Q2 2021 Capital Importation: FX Liquidity Crunch Subdues Foreign Inflows

According to data released by the National Bureau of Statistics (NBS), Capital importation into Nigeria in Q2 2021 declined 54.1% q/q to US$0.88bn, the lowest since Q1 2016. The decline reflects continued foreign investors’ risk aversion towards Naira assets and weak confidence due to FX liquidity crunch.

 Portfolio investments remained the largest component of capital imported, averaging c.52%, over the past 5years. Inflows from this segment declined 43.4% q/q. The poor outturn was largely driven by weakened inflows into the Money market (-44.1%), the largest portfolio inflow destination. This indicates that foreign investors will rather await clarity on FX repatriation and capital flows than take advantage of carry trade opportunity. The significant decline in foreign inflows into the bonds market is unsurprising, as this has been the trend following Nigeria’s exclusion from the JP Morgan Government Bond Index- Emerging Markets (GBI-EM) and the Barclays Emerging Markets Local Currency Government index in Q4 2015 and Q1 2016, respectively.

 On the other hand, foreign direct investment (-49.6% q/q) remains depressed, reflecting (1) the large infrastructural deficit in the country. For clarity, according to the national integrated infrastructure master plan, Nigeria needs about US$150bn annually for 23 years to address the infrastructural deficit. (2) Policy reversal and inconsistency and (3) lack of major macroeconomic reforms, like the full implementation of fuel and electricity subsidy removal. Beyond this, in the 2020 World Bank Ease of Doing Business report, Nigeria ranked 131 out of 190 countries, well below Ghana (118) and Egypt (114) which are now seen as viable alternatives for long term capital flows.

Qatar Investment Authority To Invest $200m in Airtel Africa’s Mobile Money Business

Airtel Africa, a leading provider of telecommunications and mobile money services, with a presence in 14 countries across Africa, today announces the signing of an agreement under which Qatar Holding LLC, an affiliate of the Qatar Investment Authority (“QIA”), will invest $200 million in Airtel Mobile Commerce BV (“AMC BV”), a subsidiary of Airtel Africa plc (the “Transaction”). AMC BV is the holding company for several of Airtel Africa’s mobile money operations; and ultimately is intended to own and operate the mobile money businesses across all of Airtel Africa’s fourteen operating countries.

The Transaction values Airtel Africa’s mobile money business at $2.65 billion on a cash and debt free basis. QIA will hold a minority stake in AMC BV upon completion of the Transaction (alongside other minority investors), with Airtel Africa continuing to hold the majority stake. The Transaction is subject to customary closing conditions.

Following the announcement on 18 March 2021 of a $200m investment in AMC BV by TPG’s The Rise Fund, on 1 April 2021 of a $100m investment in AMC BV by MasterCard and the sale of the Group’s telecommunication towers companies in Madagascar and Malawi on 23 March 2021, the Transaction is a continuation of the Group’s pursuit of strategic asset monetization and investment opportunities, and it is the aim of Airtel Africa to explore the potential listing of the mobile money business within four years.

The proceeds from the Transaction will be used to reduce Group debt and invest in network and sales infrastructure in the respective operating countries

Release on Airtel Africa Mobile Money Services

Operating under the Airtel Money brand, Airtel Africa’s mobile money services is a leading digital mobile financial services platform catering to a large addressable market in Africa (characterised by limited access to formal financial institutions with limited banking infrastructure) and includes mobile wallet deposit and withdrawals, merchant and commercial payments, benefits transfers, loans and savings, virtual card and international money transfers.

Mobile money services are available across the Group’s 14 countries of operation, however in Nigeria the Group offers Airtel Money services through a partnership with a local bank and has applied for its own mobile banking licence. It is the intention that all mobile money operations will be owned and operated by AMC BV.

In our most recent reported results for Q1’22, the mobile money services (corresponding to all the businesses that are intended to be transferred to AMC BV) delivered a strong operational performance:

  • Generated revenue of $124m ($496m annualised), and underlying EBITDA of $60m ($240m annualised) at a margin of 48.8%.
  • Year on year revenue growth for the quarter was 53.7% in constant currency, largely driven by 24.6% growth in the customer base to 23.1 million, and 25.4% ARPU growth.
  • Growth in transaction value was 64.4% (constant currency) to $14.7bn ($59bn annualised)

Our mobile money business benefits from strong network presence with our core telecom business through the extensive distribution platform of kiosks and mini shops as well as dedicated Airtel Money branches supplementing our extensive agent network, to facilitate customers’ access to assured wallet and cash.

We have a clear strategy to continue to drive sustainable long-term growth in Airtel Money with a focus on assured float availability, distribution expansion and increased usage cases for our customers.

Last year we added partnerships with Mastercard, Samsung, Asante, Standard Chartered Bank, MoneyGram, Mukuru and WorldRemit to expand both the range and depth of the Airtel Money offerings and to further drive customer growth and penetration.

The profits before tax in the full year ending 31 March 2021 and the value of gross assets as of that date, attributable to the mobile money businesses were $185m and $668m, respectively.

Key Elements of the Transaction

  • Agreement values Airtel Africa’s mobile money business at $2.65bn on a cash and debt free basis.
  • AMC BV, a subsidiary of Airtel Africa, is the holding company for several of Airtel Africa’s mobile money operations; and it is intended that ultimately it shall own and operate the mobile money businesses across all of Airtel Africa’s fourteen operating countries once the inclusion of the remaining mobile money operations under AMC BV perimeter is completed.
  • QIA will invest $200m through a secondary purchase of shares in AMC BV from Airtel Africa. The transaction will close in two stages: $150m will be invested at first close, subject to customary closing conditions, including necessary regulatory filings, with $50m to be invested at second close once further transfers of certain mobile money operations and contracts into the AMC BV perimeter have been completed.

The Transaction first close is expected in August. From first close, QIA will be entitled to appoint a director to the board of AMC BV and to certain customary information and minority protection rights.

About the Author


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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