Economy
Africa Still Attractive To Investors—PenCom Boss
By Modupe Gbadeyanka
Nigeria’s National Pension Committee (PenCom) boss, Mrs Chinelo Anohu-Amazu, has disclosed that despite how people downgrade Africa, the continent was still very attractive to foreign investors.
Mrs Anohu-Amazu said, “There is a lot of talk around retrenching from Africa but I’m not seeing this at all,” pointing out that, “Look at what the International Finance Corporation (IFC) are doing in the region for instance. If you look at the amount of money they are putting into Africa, I wouldn’t say this meant that investment was scaling back at all.”
Her remarks come at a time when private equity, the long-term investment vehicle often heralded as complimenting Africa’s long-term development needs, in the continent appears to be losing its shine.
Most recently, the IFC has leant $25m to support the expansion of Nigerian dairy company, Promasidor, invested $200m in Guinea’s bauxite mining sector and arranged a financing package to expand Ghana’s seaport to boost trade.
Although the IFC as part of its mandate often invests in sectors and countries that are not as popular for mainstream investors, for Mrs Anohu-Amazu, this highlights an interesting point: “Institutions such as the IFC are coming into Africa because there are still obvious returns to be made – impact investing can still be profitable.”
In September, Marlon Chigwende announced his departure from Carlyle, and in August, Peter Baird was removed as Africa head from Standard Chartered private equity team. Meanwhile, it is rumoured that John van Wyk may be leaving his post as head of Africa at Actis.
According to the African Economic Outlook Report 2016, published by the AfDB, the OECD and the UNDP, portfolio flows into Africa have fallen from $23bn in 2014 to $13bn in 2015. In the second half of 2015, there was a net portfolio exit of equity while bond flows remained relatively stable. Remittances are still the most important source of external finance accounting for $64bn in 2015.
“Portfolio flows in and out of Africa can be more reactionary,” says Mrs Anohu-Amazu. “Many of these investors will be waiting to see how policy changes react to recent economic headwinds affecting the region.”
The recent fall in commodity prices, inflation and stringent foreign exchange policies that commodity producers have introduced in response to fiscal and economic pressure has been a turn off for some investors.
Nigeria, one of Africa’s major oil producers, has seen foreign direct investment fall 27% from $4.7bn in 2014 to $3.4bn in 2015.
“Foreign exchange receivables from oil in Nigeria have fallen which in itself reduces portfolio flows into the country, but the downturn in the global oil price marks a period of readjustment for commodity and oil exporters, and we hope that in Nigeria, this will mean that government policy will reinvigorate investment into agriculture and technology for instance,” says Mrs Anohu-Amazu.
“I don’t think there is a scaling back in terms of investment into Africa, more a realignment. Investment into the continent is changing,” she adds.
She further said in June 2016, total assets under management for PenCom reached N5.73 trillion up from N2 trillion in 2010 with an average annual growth of 20 percent.
Around 11.43 percent of Nigeria’s total labour force and 3.95 percent of the population contribute to a pension, but new initiatives coming in to increase this.
“Our micro pension initiative aims to attract contributions from the 20m Nigerians who work in the informal sector. The rules for these types of contributors will be more flexible, however, to fit in with the way in which they work,” says Mrs Anohu-Amazu.
“Education around pensions will also be a key part of the initiative,” she added.
By Dipo Olowookere
About 0.04 per cent was recovered on Friday from the loss recorded by the Nigerian Exchange (NGX) the previous due to profit-taking.
Yesterday, investors were in the market with renewed vigour, mopping up stocks trading at relatively cheaper prices.
According to data, the insurance counter gained 0.41 per cent, the banking sector appreciated by 0.38 per cent, and the consumer goods index grew by 0.14 per cent.
The gains achieved by these three sectors were enough to lift Customs Street at the close of business despite the 0.26 per cent decline printed by the industrial goods segment and the 0.14 per cent loss suffered by the energy industry. The commodity counter was flat during the session.
A total of 43 equities gained weight on the last trading day of this week, while 26 equities shed weight, indicating a positive market breadth index and strong investor sentiment.
Red Star Express increased its share price by 10.00 per cent to N13.20, NCR Nigeria grew by 9.97 per cent to N128.55, SCOA Nigeria inflated by 9.96 per cent to N14.90, Omatek appreciated by 9.94 per cent to N1.77, and Deap Capital expanded by 9.85 per cent to N4.46.
On the flip side, McNichols decreased by 8.81 per cent to N6.00, Legend Internet crumbled by 7.56 per cent to N5.50, Cornerstone Insurance crashed by 6.48 per cent to N6.35, C&I Leasing contracted by 6.29 per cent to N8.20, and Austin Laz slipped by 5.78 per cent to N3.75.
Yesterday, 539.9 million shares valued at N16.7 billion were transacted in 48,023 deals versus the 1.0 billion shares worth N31.6 billion executed in 51,227 deals in the preceding day, implying a shrink in the trading volume, value, and number of deals by 46.01 per cent, 47.15 per cent, and 6.26 per cent apiece.
Zenith Bank was the most active for the day with 54.6 million stocks sold for N3.8 billion, Jaiz Bank traded 41.5 million units worth N359.4 million, Secure Electronic Technology transacted 37.7 million units valued at N39.2 million, Access Holdings exchanged 30.5 million units for N699.2 million, and Lasaco Assurance transacted 27.2 million units worth N68.3 million.
When the market closed for the day, the All-Share Index (ASI) went up by 72.21 points to 166,129.50 points from 166,057.29 points and the market capitalisation gained N31 billion to N106.354 trillion from N106.323 trillion.
By Adedapo Adesanya
It was a positive ending for the Naira this week after it further appreciated against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday, January 16 by N1.33 or 0.09 per cent to sell for N1,417.95/$1 compared with the previous day’s N1,419.28/$1.
The domestic currency also gained N2.41 against the Euro in the official market to close at N1,647.51/€1 versus the preceding session’s closing price of N1,649.92/€1, however, it suffered a N7.97 loss against the Pound Sterling in the same market window to trade at N1,901.32/£1, in contrast to Thursday’s closing price of N1,893.35/£1.
In the same vein, the Nigerian Naira depleted against the Dollar at the GTBank FX counter by N2 to quote at N1,427/$1 compared with the previous day’s N1,425/$1, but strengthened against the greenback at the black market yesterday by N5 to settle at N1,485/$1 versus the N1,490/$1 it was exchanged a day earlier.
Improved supply conditions helped keep the market within range as exporters’ and importers’ inflows in addition to non-bank corporate supply enhanced liquidity as the Central Bank of Nigeria (CBN) made no visible intervention.
Stronger external inflows from foreign portfolio investors (FPIs) and improving current account dynamics, continue to align with structural support in the wider economy.
Nigeria has seen projections of a stronger economic or gross domestic product (GDP) growth and lower inflation in 2026, with these forecasts citing improved macroeconomic fundamentals and reform impacts.
As for the cryptocurrency market, it was mixed following selloff in precious metals and lower US stocks appeared to be denting crypto sentiment.
Gold and silver, both of which also enjoyed big rallies earlier this week, tumbled 1.2 per cent and 5 per cent, respectively while key US stock indexes — the Nasdaq, S&P 500 and Dow Jones Industrial Average — all reversed from early gains to modest losses in Friday trade.
Dogecoin (DOGE) shrank by 2.2 per cent to $0.1370, Ripple (XRP) slipped by 0.8 per cent to $2.05, Ethereum (ETH) went down by 0.7 per cent to $3,228.56, and Bitcoin (BTC) slumped by 0.6 per cent to $95,086.80.
Conversely, Litecoin (LTC) appreciated by 3.2 per cent to $74.48, Solana (SOL) rose by 0.4 per cent to $143.70, Cardano (ADA) jumped by 0.2 per cent to $0.3942, and Binance Coin (BNB) increased by 0.1 per cent to $935.88, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
By Adedapo Adesanya
Oil prices settled higher amid lingering worries about a possible US military strike against Iran, a decision that may still occur over the weekend.
Brent crude settled at $64.13 a barrel after going up by 37 cents or 0.58 per cent and the US West Texas Intermediate (WTI) crude finished at $59.44 a barrel after it gained 25 cents or 0.42 per cent.
The US Navy’s aircraft carrier USS Abraham Lincoln was expected to arrive in the Persian Gulf next week after operating in the South China Sea.
Market analysts noted that it doesn’t seem likely anything will happen soon. However, the weekends have become the perfect time for actions so as not offset the markets.
The market had risen after protests flared up in Iran and US President Donald Trump signalled the potential for military strikes, but lost over 4 per cent on Thursday as the American president said Iran’s crackdown on the protesters was easing, allaying concerns of possible military action that could disrupt oil supplies.
Iran produces approximately 3.2 million barrels per day, accounting for roughly 4 per cent of global crude production, so it was not a coincidence that markets rallied sharply through Tuesday and Wednesday as President Trump canceled meetings with Iranian officials and posted that “help is on its way” to Iranian protesters, raising fears of potential US military strikes that sent prices surging toward multi-month highs.
Weighing against those fears are potential supply increases from Venezuela.
The Trump administration is exploring plans to swap heavy Venezuelan crude for US medium sour barrels that can actually go straight into Strategic Petroleum Reserve (SPR) caverns, since not all all oil belongs in the reserve.
According to Reuters, the Department of Energy is considering moving Venezuelan heavy crude into commercial storage at the Louisiana Offshore Oil Port, while US producers deliver medium sour crude into the SPR in exchange.
Analysts expect higher supply this year, potentially creating a ceiling for the geopolitical risk premium on prices.
Some investors covered short positions ahead of the three-day Martin Luther King holiday weekend in the US.
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