Economy
Business Profit, Consumer Income to Increase
FSDH Research expects business profit and consumer income to grow higher in 2018 than in the last three years. Our analysis of the recent data from the Central Bank of Nigeria (CBN) on the business and consumer expectations confirms this position.
The surveys that the CBN conducted in December 2017 show that the expectations of firms and consumers about the next 12 months improved from previous months.
The improvement in the business expectations should drive business expansion and increase the employment of labour.
This in turn will increase the consumers’ purchasing power. On the other hand, the increase in consumer expectations will increase spending which will have positive impact on businesses. The interrelationship between the two economic agents (business and consumer) will drive business profit and consumer income.
The latest Purchasing Managers’ Index (PMI) report that the CBN published for the month of December 2017 shows improved business activities in both the manufacturing and nonmanufacturing sectors.
At 59.3 and 62.1 points, the Composite Manufacturing PMI and Composite Non-Manufacturing PMI respectively attained the highest levels since January 2015.
The impact of the expected growth in the business profit and consumer income is positive to the financial market. We expect it to drive equity market investments and position corporates to access long-term capital needed for expansion. Banks should also be more favourable to extend credit to both businesses and individuals, leading to a growth in the National Disposable Income.
The recent drop in the yields on the Nigerian Treasury Bills (NTBs) should also lower the borrowing cost for the business sector, boost production activities and increase profits. This will in turn boost activities in the Corporate Bond Market (CBM) in Nigeria.
By Adedapo Adesanya
The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) could impose fines of up to five per cent of the annual turnover of petroleum operators found guilty of serious anti-competitive practices in the midstream and downstream sectors.
This was contained in the draft regulations of the proposed Midstream and Downstream Petroleum Prevention of Anti-Competitive Practices and Behaviour Regulations, 2026.
According to the proposal, errant companies of serious offences such as price-fixing, bid-rigging, market allocation, abuse of market dominance and other conduct capable of causing significant harm to competition could be fined between three and five per cent of their annual turnover.
It further proposed that persistent or serious offenders may also have their licences suspended or revoked, while the NMDPRA may impose daily penalties on operators that fail to comply with its orders or continue prohibited conduct after being directed to stop.
The draft regulation stated: “Where the Authority determines, after investigation and due process, that a licensee or any other person has engaged in anti-competitive conduct or breached any provision of this Regulation or the Act, it may impose administrative fines as provided herein.
The maximum administrative fine shall not exceed five per cent of the annual turnover of the offending undertaking for the preceding financial year.
“For purposes of these regulations, ‘annual turnover’ means gross revenues or sales derived from the regulated business activities in Nigeria. Where multiple entities or group structures are involved, the Authority may consider the turnover of the group, subsidiary, or segment most directly involved in the infringement.”
“Where a licensee or person fails to comply with an order or directive of the Authority, a daily penalty may be imposed for each day the violation continues.
“Where a prohibited practice continues after a final order, the daily penalty could rise to between N10m and N50m. Before imposing a fine, the NMDPRA would issue a Notice of Intention to Fine setting out the facts and findings, the nature of the infringement, the basis for calculating the proposed fine and the proposed deadline for payment,” it proposed.
By Adedapo Adesanya
Nigerian billionaire, Mr Femi Otedola, the chairman of First HoldCo, has acquired an additional 147.74 million shares of the financial services group through his investment vehicle, Calvados Global Services Limited.
According to a regulatory filing obtained from the Nigerian Exchange (NGX) Limited on Monday, Mr Otedola purchased the stocks valued at N20.68 billion.
The notice said the investor purchased about 147,737,699 ordinary shares at N140 per share on August 14.
The transaction increases Mr Otedola’s stake in the financial services group from 11.99 billion shares (26.1 per cent) to 12.13 billion shares (26.4 per cent).
The acquisition comes less than two weeks after the billionaire bought 138.04 million ordinary shares for about N18.11 billion.
Prior to that, Mr Otedola had said he had invested more than N600 billion of his personal wealth in the bank, describing the investment as a “long-term generational commitment” rather than a turnaround play.
Responding to speculation about increasing his stake, Mr Otedola said his investment philosophy favours majority control.
“My investment threshold is always over and above 51 per cent,” the billionaire had said.
“One of my key investment principles is that firm shareholder control, with due regard for minority interest, is a key ingredient to executing reforms and restructuring to deliver value to all stakeholders.”
The bank’s share price had recently risen to an all-time high of N140 per share, pushing its market capitalisation to N6.37 trillion.
In recent months, Mr Otedola has also made other high-profile investments outside the banking sector, including the acquisition of a luxury residence in London’s exclusive Mayfair district, further expanding his international real estate portfolio.
He is also believed to have participated in a financing arrangement involving the Dangote Refinery, providing funds to support its working capital needs as the facility scaled up operations.
By Adedapo Adesanya
The duo of FrieslandCampina Wamco Nigeria Plc and Central Securities Clearing System (CSCS) Plc pulled down the NASD Over-the-Counter (OTC) Securities Exchange by 0.89 per cent on Monday, August 17.
The price of FrieslandCampina went down by N9.85 to N160.00 per unit from N169.85 per unit, and CSCS Plc depreciated by 96 Kobo to N98.50 per share versus N99.46 per share.
As a result, the market capitalisation further lost N23.90 billion to end at N2.656 trillion, in contrast to the preceding session’s N2.68 trillion, and the NASD Security Index (NSI) dropped 39.81 points to close at 4,426.02 points from 4,465.83 points.
During the trading session, the share price of Industrial and General Insurance (IGI) Plc was up by 1 Kobo to 55 Kobo per unit from 54 Kobo per unit.
Yesterday, the volume of securities transacted by market participants decreased by 79.3 per cent to 652,081 units from 3.2 million units, the value of securities slid by 78.2 per cent to N10.7 million from N375.7 million, and the number of deals went south by 54.4 per cent to 21 deals from 46 deals.
Great Nigeria Insurance (GNI) Plc remained the most traded stock by value on a year-to-date basis, with 3.4 billion units worth N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units valued at N6.5 billion, and CSCS Plc with 79.6 million units transacted for N5.8 billion.
GNI Plc also ended the session as the most traded stock by volume on a year-to-date basis, with 3.4 billion units exchanged for N8.4 billion, followed by Infracredit Plc with 2.3 billion units traded for N6.5 billion, and Resourcery Plc with 1.1 billion units sold for N415.7 million.
