Economy
Nigeria to Make $3.98b from Business Deals in 2018—Report
By Dipo Olowookere
A new report released by Baker McKenzie, a multinational law firm, has predicted an increase in global deal activity next year.
The report, titled Global Transactions Forecast, which is in its third edition, attributed this rise to the easing of key economic and political risks as well as the emergence of positive macroeconomic deal drivers.
It specifically noted that deal making in Nigeria looks set to increase in 2018 and 2019 after a period of policy uncertainty which saw M&A transactions decrease.
Conditions in South Africa are also predicted to improve, but this will depend on political and economic conditions in the country in the next two years, the report added.
According to Baker McKenzie, globally, 2017 has been a period of apprehension for dealmakers and while economic growth has certainly slowed, the cliff-edge some were predicting has failed to materialise.
Following on the momentum created in the second half of 2017, The Global Transactions Forecast, developed in association with Oxford Economics, predicts a cyclical peak in 2018 for several macroeconomic and financial deal drivers, with 2018 marking the high point of the deal cycle for the world’s largest transaction centres.
Head of Africa at Baker McKenzie in Johannesburg, Mr Wildu du Plessis, noted that in Nigeria, policy and economic uncertainties had contributed to stalled dealmaking in the country. Uncertainties included a lack of access to foreign exchange, blockages to the government budget process, and low oil production that had constrained GDP growth.
“As these conditions ease in the final months of 2017 and into 2018, a rebound in M&A to around US$4 billion in both 2018 and 2019 is forecasted,” Mr du Plessis was quoted as saying in the statement made available to Business Post by Baker McKenzie on Tuesday.
In Nigeria, M&A transactions were valued at $1.2 billion in 2016, this is predicted to drop to $716.4 million in 2017.
In 2018, this is predicted to rise to $3.98 billion and to $3.94 billion in 2019.
There were 28 M&A transactions in 2016 and 28 are predicted again in 2017, 35 deals are expected in 2018, rising to 40 in 2019.
In South Africa, the forecast is similar. Growing political risk and a sluggish economy contributed to a halving in total M&A in 2017 versus 2016.
However, the forecast predicts that economy should improve in 2018 thanks to the impact of monetary policy easing and stronger commodity prices. But at around $9 billion in 2019, the forecast for the peak in M&A activity in this region will be less than a third of the level seen in 2015.
Mr Du Plessis noted, however, “For South Africa, there is no guarantee that the predicted upswing will come to pass. There is just too much political uncertainty. If the ANC National Conference in December does not deliver the solution that markets are hoping for, then deal flow and IPO activity will be affected and depressed. If on the other hand there is some hope of a change to the political situation, things may well indeed change for the better.”
Morne van der Merwe, Managing Partner of Baker McKenzie in Johannesburg said, “Current conditions in South Africa have slowed M&A growth in that international investors are reluctant to invest in South Africa due to the political and economic uncertainty. This uncertainty has caused a reduction in Foreign Direct Investment, which, in turn, hindered deal-making. Due to the downgrades and potential for further downgrades, the cost of raising capital for acquisitions has also become more expensive.”
In South Africa, M&A transactions were valued at $10.7 billion in 2016, this is predicted to drop to $4.5 billion in 2017.
In 2018, this is predicted to rise to $8.5 billion and to $9.2 billion in 2019.
In terms of deal volume, there were 115 M&A transactions in South Africa in 2016, this is predicted to rise to 172 transactions in 2017, 273 deals are expected in 2018, rising again to 295 in 2019.
Globally, “After a few soft patches in 2017 we have a more optimistic outlook for the global economy and dealmaking in 2018, as long as the brakes are not put any further on global free trade. We see an uplift in both M&A and IPO activity as dealmakers and investors gain greater confidence in the business prospects of acquisition targets and newly-listed businesses,” added Paul Rawlinson, Baker McKenzie’s global chair. “However, it’s not a done deal, with the threat of a Hard Brexit and a NAFTA collapse both still very real. Business will need to continue to make the case for liberal trade and investment frameworks.”
By Adedapo Adesanya
The Nigeria Employers’ Consultative Association (NECA) and the Centre for the Promotion of Private Enterprise (CPPE) have separately commended the Central Bank of Nigeria (CBN) for reducing the Monetary Policy Rate (MPR) from 27.0 per cent to 26.5 per cent at its 304th Monetary Policy Committee (MPC) meeting.
In reaction, NECA Director-General, Mr Adewale-Smatt Oyerinde, praised the decision in a statement, noting that the 50 basis-point cut is “a cautious but noteworthy signal” that authorities were responding to sustained pressures on businesses.
He said the marginal reduction might not immediately lower lending rates, but reflected “a gradual shift toward supporting growth without undermining price stability”.
According to him, the overall stance remained tight, with the Cash Reserve Ratio retained at 45 per cent and the liquidity ratio at 30 per cent.
He added that the asymmetric corridor around the MPR was also maintained, reinforcing a cautious monetary approach.
“With a substantial portion of deposits still sterilised, banks’ capacity to expand credit to the real sector may remain constrained in the near term,” he said.
Mr Oyerinde described the move as “a careful balancing act” aimed at moderating inflation without worsening pressures on businesses.
He noted that firms continued to grapple with high operating costs, exchange rate volatility and weakened consumer demand.
“Inflation, particularly in food, energy and transportation, remains a significant challenge to employers and households,” he said.
He stressed that the modest easing must be supported by coordinated fiscal and structural reforms to address supply-side constraints.
Such reforms, he said, should improve infrastructure and enhance productivity across key sectors of the economy.
Mr Oyerinde urged financial institutions to ensure the MPR reduction was gradually reflected in lending conditions for manufacturers and SMEs.
He affirmed that although the MPC had not fully relaxed its tightening stance, the rate cut signalled cautious optimism.
“Sustained improvements in inflation, exchange rate stability and investor confidence will determine scope for further easing that supports growth and employment,” he said.
On its part, the CPPE said the decision reflected improving macroeconomic fundamentals and a cautious shift from aggressive tightening.
The organisation noted that sustained disinflation, stronger external reserves, an improved trade balance and relative exchange-rate stability had created room for monetary easing.
It said the rate cut could boost investor confidence and support private-sector growth, but cautioned that weak monetary transmission might limit its impact on lending rates.
The CPPE identified high cash reserve requirements, elevated lending rates, government borrowing and structural banking costs as major constraints to effective transmission.
The group also stressed the need for fiscal consolidation, citing high public debt, persistent deficits and rising debt-service obligations as risks to macroeconomic stability.
According to the chief executive of CPPE, Mr Muda Yusuf, effective policy coordination and stronger transmission mechanisms were critical to unlocking investment and sustaining growth, lauding the CBN for what he described as a measured and data-driven policy adjustment.
The CPPE boss noted that the easing reflected strengthening macroeconomic performance, declining inflation, growing reserves, improved trade balance and enhanced foreign exchange stability.
Mr Yusuf added that for the benefits of monetary easing to be fully realised, authorities must strengthen transmission to ensure lower lending rates for the real sector and advance credible fiscal consolidation to safeguard stability.
He said that if supported by structural reforms and disciplined fiscal management, the current policy direction could unlock a stronger investment cycle and more durable economic growth.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange extended the negative start to the week by 0.28 per cent on Tuesday, February 24, with the market capitalisation down by N6.64 billion to close at N2.378 trillion versus Monday’s N2.384 trillion, and the NASD Unlisted Security Index (NSI) falling by 11.1 points to 3,974.80 points from 3,985.90 points.
At the session, transaction value skyrocketed by 1,706.3 per cent to N1.2 billion from the previous day’s N61.8 million, as the transaction volume increased by 59.1 per cent to 11.6 million units from 7.3 million units, and the number of deals expanded by 23.1 per cent to 48 deals from the preceding session’s 39 deals.
Central Securities Clearing System (CSCS) Plc remained the most active stock by value on a year-to-date basis with 33.7 million units exchanged for N2.0 billion, Okitipupa Plc was next with 6.2 million units traded for N1.1 billion, and Geo-Fluids Plc occupied the third position with 121.0 million units valued at N474.9 million.
Resourcery Plc emerged as the most traded stock by volume on a year-to-date basis with 1.05 billion units worth N408.7 million, followed by Geo-Fluids Plc with the sale of 121.0 million units for N474.9 million, and CSCS Plc with 33.7 million units worth N2.0 billion.
Yesterday, the market breadth was flat after the bourse finished with three price gainers and three price losers led by MRS Oil Plc, which shed N14.50 to close at N200.00 per share versus the previous day’s N214.50 per share, CSCS Plc depleted by N1.39 to N65.82 per unit from N67.21 per unit, and Geo-Fluids Plc depreciated by 1 Kobo to close at N3.30 per share versus Monday’s N3.31 per share.
The price gainers were led by FrieslandCampina Wamco Nigeria Plc, which improved its value by N1.60 to close at N95.00 per unit compared with the preceding session’s N93.40 per unit, Afriland Property Plc gained 83 Kobo to sell at N18.00 per share versus N17.17 per share, and First Trust Mortgage Bank Plc advanced by 13 Kobo to N1.45 per unit from N1.32 per unit.
By Dipo Olowookere
The Nigerian Exchange (NGX) Limited depreciated by 0.92 per cent on Tuesday after the Central Bank of Nigeria (CBN) slashed the benchmark interest rate by 0.5 per cent to 26.50 per cent at the end of its first Monetary Policy Committee (MPC) meeting for 2026.
Sell-offs mainly occurred in the consumer goods and insurance sectors, shedding 4.74 per cent and 1.31 per cent, respectively.
However, bargain-hunting remained in the others, with the industrial goods index gaining 1.92 per cent, the banking counter grew by 1.23 per cent, and the energy sector soared by 0.15 per cent.
When the bourse ended for the session, the All-Share Index (ASI) gave up 1,779.03 points to close at 194,484.52 points compared with the previous day’s 196,263.55 points, and the market capitalisation declined by N1.142 trillion to N124.827 trillion from N125.969 trillion.
DAAR Communications depreciated by 10.00 per cent to N2.25, Tantalizers also declined by 10.00 per cent to N4.86, BUA Foods shrank by 9.99 per cent to N760.60, Ellah Lakes slumped 9.96 per cent to N10.40, and Japaul lost 9.95 per cent to trade at N3.80.
Conversely, Jaiz Bank appreciated by 10.00 per cent to N12.76, Infinity Trust Mortgage Bank went up by 9.83 per cent to N19.00, FCMB gained 9.72 per cent to close at N13.55, Fortis Global Insurance chalked up 9.09 per cent to finish at 72 Kobo, and Sterling Holdco grew by 7.50 per cent to N8.60.
A total of 27 stocks ended on the gainers’ chart and 40 stocks finished on the losers’ table, indicating a negative market breadth index and weak investor sentiment.
Yesterday, investors bought and sold 1.1 billion equities worth N53.4 billion in 72,218 deals compared with the 1.3 billion equities valued at N31.5 billion in 95,091 deals recorded a day earlier.
This showed that the value of transactions went up by 69.52 per cent, the volume of trades declined by 15.39 per cent, and a slip in the number of deals by 24.05 per cent.
During the session, Japaul was the most active stock with 102.4 million units worth N399.8 million, Access Holdings exchanged 97.9 million units valued at N2.6 billion, Fortis Global Insurance traded 75.2 million units for N54.1 million, Zenith Bank sold 67.6 million units valued at N6.2 billion, and FCMB transacted 46.4 million units worth N612.2 million.
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