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Economy

Capital Market Without Participation of Youths Doomed to Fail—SEC

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Nigerian capital market

By Aduragbemi Omiyale

The Securities and Exchange Commission (SEC) has called for the strong participation of youths in the capital market, stressing that they play a vital role in the ecosystem.

The Director-General of SEC, Mr Lamido Yuguda, during a meeting with a team led by the British Deputy High Commissioner in Abuja last Friday, said efforts would be made to make the market attractive to the young ones.

According to him, the commission is implementing various initiatives to ensure that products and offerings in the market are accessible to both the young and old.

“When we assumed office, we were shocked to know that the average age of the Central Securities Clearing System account holder was over 50 years. The CSCS is a depository so if you are investing in equities you must have a CSCS account.

“The average age of that account holder was over 50, and that made us realise that the young people were not participating in this market and when young people are not participating in any market, that market is doomed to fail. And young people today prefer to do things on their phones, if you have to fill a stack of forms manually, young people won’t do it. We want to make investing in the capital market a fun experience.

“The capital market experience starts with a bank account and eventually the distribution has to hit a bank account as well. So, we decided to look at the whole process and find out what is turning young people off. We have started the process and seen how the tech companies are providing much-needed relief to the kind of bureaucracy that happens in the capital market,” he said.

Mr Yuguda disclosed that the SEC recently approved an e-offer for MTN and expressed the excitement of the agency that Nigerians especially those of the younger age bracket were able to participate in the offer.

“It was marvellously successful and we are very excited about it. A lot of young people who had never invested in the capital market took the MTN offer. That is one of the first steps in a lot of steps we are going to take to make investing in the capital market a much nicer experience for people both young and old. We know we can move quickly and faster once we strengthen our IT infrastructure to do a lot more,” he said.

“In this market what we have seen is that where people do have ready access to interesting products in the regulated market they then gravitate towards the parallel markets and the Ponzi schemes and really the task of the commission is to as much as possible move money to the regulated market away from the Ponzi schemes,” the SEC DG added.

He stated that with e-offers, a lot of Nigerians would be happy to invest in the capital market and that would dissuade people from patronising illegal schemes thereby leading to the development of the capital market and the Nigerian economy.

Mr Yuguda also stated that the commission, in its drive to attract more people to the market, is focusing on a proper identity management system which would also aid in the reduction of the issue of unclaimed dividends.

“One area we recognised we needed to attend to is the lack of proper identity management system in the market and this is an area the commission has really focused on.

“We have had over the past few decades a lot of unclaimed dividends in the market and we thought that identity management could help solve the problem.

“I believe if we are able to do this to a logical conclusion it could unlock a lot more investors because I think the fact that people have money in the capital market and have not been able to claim them, it is not only bad for the people who have this money but it is also a disincentive for those trying to come in because they do not want their money to be trapped,” he stated.

The DG commended the relationship between the agency and the UK government the commission and Nigeria, which he stated has contributed to the growth and development of the capital market.

In his remarks, the British Deputy High Commissioner, Mr Ben Llewellyn-Jones, canvassed the need for the SEC to create more alternative options for investments for all classes of people as one of the ways of pulling people away from unregulated space.

He said, “The more you can create alternative options the easier it is to pull people away from unregulated space and that is why the Sandbox is so attractive to us and why we encourage it. We come across these fintech players and they are formidably driven in their vision.

“But we get a sense they need to work with regulators to make it work and they recognise that it’s the right way to be attracted to investment and grow the way they want.

“They are formidably talented as well and it is really encouraging. We are very keen to work with you and your approach and that’s very heartening and the appetite for innovation is what has attracted us to that the most.”

Economy

SFS Capital Unveils App for Easy Mutual Fund Investment

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SFS Fund mutual fund investment

By Modupe Gbadeyanka

A mobile application to make mutual fund investment easier for investors has been introduced by a leading investment management firm in Nigeria, SFS Capital.

The interface known as SFS Fund Mobile App will enable individuals to start their mutual fund investment journey with ease. It can be downloaded for free download on Android and iOS and it has an easy-to-use dashboard that encourages transactions on the go.

The launch of the SFS Fund Mobile app was in commemoration of the National Financial Awareness Day on Sunday, August 14, a day dedicated to assisting individuals to develop financial principles and practices that can build a solid financial future.

The SFS Fund Mobile app offers a straightforward and responsive design, easy navigation and features to deliver secure and seamless transactions for existing and new users.

“SFS Capital is consistently moving the boundaries of what is possible in investment. SFS Fund Mobile App is a product of decade of learning to use financial technology to enhance investment factors and promote ease of investment”, Managing Director and CEO of SFS Capital, Patrick Ilodianya said.

Since the inception of the SFS Fixed Income Fund (SFS Fund) in 2014, SFS Capital has consistently paid out dividends to investors on a quarterly basis and maintains “AA+” rating which is the 2nd highest possible rating for a Mutual Fund and has a competitive return on investment with no pre-termination charge.

“The SFS Fund Mobile App is designed for individuals seeking a trustworthy, secure and easy platform for high yield investments. Interested Mutual Fund investors can download the app and easily begin their investment journey from anywhere”, Executive Director SFS Capital, Dimeji Sonowo said.

A statement from the firm explained that through the app, users can start their investment journey with N5,000 and start earning interest immediately.

It was also stated that for transparency, the interest rates are updated daily and visible on the dashboard each time the app is accessed.

The SFS Fund Mobile App is easy to navigate, with a feature to enable users to automate their investments added to it. This can be daily, weekly, or monthly.

The company, which is under the regulation of the Securities and Exchange Commission (SEC), also stated that users who refer others with a unique referral code get N1,000 once the referred party signs up and makes an investment.

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Economy

Exxon Mobil Extends OMLs 133, 138 Deals in Nigeria for 20 Years

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OML 46

By Adedapo Adesanya

US energy giant, Exxon Mobil Corporation, has renewed two deepwater leases in Nigeria for 20 years. The Oil Mining Leases (OMLs) were among the first permits granted under the Petroleum Industry Act (PIA) signed recently by President Muhammadu Buhari.

It also renewed production-sharing contracts (PSCs) with the state-owned Nigerian National Petroleum Company (NNPC) Limited, it said on its Twitter account.

“We are pleased to announce the renewals of our OMLs 133 (Erha) and 138 (Usan) deepwater leases for a further 20–year period. This includes extensions of Production Sharing Contracts with our partner NNPC Limited,” it announced in a recent post on Twitter.

The permits for Oil Mining Leases 133 and 138 were due to expire in 2026 and 2027 but were renewed early under sweeping legislation passed last year known as the Petroleum Industry Act.

The licenses contain deep-water fields from which the Nigerian government is eager to extract more oil and gas.

“These extensions enable us and our partners to unlock the potential value in these OMLs and to bring forward additional investment,” Exxon said.

Three other deep-water leases were renewed at the same ceremony in “a major step” toward boosting production, the NNPC said on its Twitter account. Output in Africa’s largest crude producer has been declining consistently over the past 18 months, with the government blaming rampant theft from the onshore pipelines that crisscross the Niger Delta.

Other companies with interests in the five extended licenses and production-sharing contracts include Chevron Corporation, Equinor ASA, Total Energies SE, Shell Plc, and Cnooc Ltd.

As the country faces challenges of declining oil production from mature fields, coupled with the reduced capital expenditure climate brought about by the COVID-19 pandemic, the PIA aims to enhance the sector’s attractiveness for foreign investment, ensuring a market-driven regulatory environment that will accelerate the country’s industry developments.

PIA comprises a complete overhaul of the administrative, regulatory and fiscal regime in Nigeria’s energy sector, restructuring key petroleum institutions in order to streamline processes and drive the country’s oil and gas industry expansion.

Notable regulatory reforms implemented through the PIA include the creation of a new upstream regulator which replaced the Department of Petroleum Resources; the creation of a new Nigerian midstream and downstream petroleum regulatory authority; and the replacement of the NNPC by the NNPC Limited which will operate on a commercial basis without government funding.

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Economy

Russia Scrambles for Higher Performance Marks in Africa

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Russia-Africa relations

By Kestér Kenn Klomegâh

Squeezed between Western and European sanctions due to its “special military operation” in Ukraine since late February and its dilapidating effects on Africa’s economy on one side and its decades-old desire to regain a part of the Soviet-era influence despite the weak economic presence and negative perceptions at the core among the public especially the youth and middle class, Russia is gearing up for the next traditional African leaders summit.

With preparations underway, Russia would have to begin preparing for and play different attractive rhythms at the second African leader’s summit in 2023 in St. Petersburg, Russia. Reports monitored by the author indicate that the modest economic gains are gradually eroding due to Covid-19 these past two years and the situation is turning complicated currently due to the Russia-Ukraine crisis.

The Russia-Ukraine crisis has had a strong immeasurable negative impact, generating social discontent across a large spectrum of the population in Africa. Therefore, African leaders would indiscriminately have to cooperate with any foreign investors willing to invest and support their development process. Across Africa, more than 282 million people are food insecure – and that number is rising, according to estimates by the World Bank.

Throughout Africa, the vulnerable groups of the population are displaying discontent and dissatisfaction due to unbearable rising prices for commodities and consumables. This latest food crisis, which did not originate in the continent, is reaching alarming dimensions, especially in Africa. In fact, African leaders are confronted with these hurdles and emerging challenges. They are feverishly looking for both short-term solutions to calm down existing tensions among the people, and also long-term strategies to push sustainable development and make pace for growth.

The United States perceives most of the challenges and opportunities with a difference in Africa. It is constantly investing and its private investors are active exploring the continent. The United States is well-connected with its public outreach diplomacy. American institutions and organizations are linking up with the youth, women and civil society.

After a peak in 2014, foreign direct investment (FDI) in Africa from the United States dropped to $47.5 billion in 2020. During the pandemic, it provided more than 50 million doses to 43 African countries. It has further given more than $1.9 billion in Covid-related assistance, for urgent needs like emergency food and other humanitarian support.

President Joe Biden has launched the Emergency Plan for Adaptation and Resilience. The year, the Congress allocated $3 billion every year by 2024 to finance climate adaptation projects, the largest commitment ever made by the United States to reduce the impact of climate change on those most endangered by it.

Through the Power Africa programme, the U.S. has connected more than 25 million homes and businesses across the continent to electricity, 80 per cent of which is based on renewables. Development Finance Corporation supports renewable energy across Africa, including a solar project in Nigeria, and wind farms in Senegal and Kenya. Nigeria marked a new chapter with the signing of a $2.1 billion development assistance agreement that supports collaboration in the fundamentals: health, education, agriculture, and good governance.

And then four U.S. companies are collaborating with the Senegalese Government on infrastructure projects; that’s the Institut Pasteur de Dakar, which is working toward COVID vaccine production with American support and investment; and pushing innovation, technology and entrepreneurship with women and youth groups in Africa.  The popular partnership between the United States and Africa is YALI – the Young African Leaders Initiative.

The Prosper Africa initiative aims to increase two-way trade and investment. The Africa Growth and Opportunity Act – known as AGOA – provides duty-free access to American markets, and most African countries have taken full advantage of it. U.S. investors are seriously leveraging the African Continental Free Trade Area (AfCFTA). Similarly, China, Japan and South Korea have started localizing the production of automobiles and tech gadgets.

Despite some criticism, international development institutions and organizations are ready and offering support. In addition, external countries are stepping up efforts in that direction. The World Bank stands ready. Its latest three-year, $93 billion global programme – about 2/3 of which will support Africa’s development agenda – is delivered through the International Development Association (IDA). The IDA is the world’s largest source of concessional funds, including grants for low-income countries, helping them seize opportunities to reduce poverty and stimulate inclusive growth.

This latest IDA replenishment will support Africa to increase even more in the years ahead. Africa has become the prime region benefiting from IDA resources – growing more than tenfold from its annual program of about $3 billion in 2000 to well over $30 billion currently. This support, plus our growing on-the-ground presence across Africa, is enabling to work hand-in-hand with governments, the private sector, and civil society to implement the continent’s ambitious development agenda.

While in Dakar, capital of Senegal, meeting more than a dozen Heads of State from across Africa, Axel van Trotsenburg, World Bank Vice President for Latin America and the Caribbean, said: “African leaders have, through the African Union process, articulated clear goals – from digitalization to electricity to education – and we are committed to helping Africa translate these ambitions into strong programmes that can, within a short period of time, improve people’s lives and transform the continent.”

Foreign countries including the United States, European Union, and Asian states such as China, and the Gulf and Arab states are, indeed, at the forefront in Africa. They offer all kinds of support for investments and credit lines for infrastructure projects and development programmes, while Russia seems ultra-hesitant to do. In March during the heat of the Russia-Ukraine crisis, the United States and European Union supported Africa through the African Development Bank (AfDB), when the bank sought funds of more than $50 billion for curated bankable projects in key priority sectors identified in the Africa Investment Forum’s 2020 Unified Response to Covid-19 initiative.

According to the China-Africa Economic and Trade Relationship Annual Report (2021), while Covid-19 has shaken the global economy, Chinese investment in Africa has been climbing. The report says China invested US$2.96 billion in Africa in 2020, up 9.5% from 2019.  The turnover of Chinese enterprises’ contracted projects in Africa amounted to $383.3 billion in 2020, which is a 16.7% drop from 2019.

In a media release, the U.S. Government’s lead development agency, the United States Agency for International Development (USAID), has renewed its partnership with many African countries. Quite recently, it offered to fund various projects, including investment in health and education, women and youth, and infrastructures in a number of African countries. For instance, in April this year, it gave assistance funding of $1.5 billion to promote a more peaceful, prosperous and healthy Mozambique.

The economic significance of the Eurasian Union for Africa’s development here need not be over-discussed. Members of the European Union such as Britain, France, Germany and The Netherlands are playing visible roles in Africa. The European Union, as a substantial economic power bloc, has long-term working relations with African Union.

With its new Global Gateway Strategy, the EU is demonstrating the readiness to support massive infrastructural investment in Africa.  It also seeks to unlock new business and investment opportunities, including in the areas of manufacturing and agro-processing as well as regional and continental value chain development. A document entitled “Toward a Comprehensive Strategy with Africa” sets forth the template of what the EU plans to do with Africa.

Valdis Dombrovskis, Executive Vice-President and Commissioner at the EU Secretariat pointed out that “In this new approach towards Africa, we can build a modern, sustainable and mutually rewarding partnership of equals. Of course, there will be challenges along the way but the EU stands ready to help. We want to share the lessons from our own process of economic integration, and with our new Global Gateway Strategy. We have demonstrated that we are ready to support massive infrastructural investment in Africa.”

That said, African leaders are exploring available possibilities and windows that have been opened after the last EU-Africa summit. The European Union has unveiled a €300 billion ($340 billion) alternative to China’s Belt and Road initiative – and investment programme the bloc claims will create links, no dependencies.

There is a great rivalry and keen competition among key global players now. And Africa is now seen from different perspectives, but more importantly, it has been described as the last investment frontier due to the current transformations taking place there. During the 35th Assembly of the Heads of State and Government of the AU in Addis Ababa in February, António Guterres argued that Africa was “a source of hope” for the world.

In November 2021, a report prepared by 25 Russian policy experts, titled ‘Situation Analytical Report’ explicitly noted that many external countries are using diplomacy in all ways to support their efforts in Africa. It criticized the inconsistency of Russia’s current policy towards Africa. The intensification of political contacts is only with a focus on making them demonstrative. Russia’s foreign policy strategy regarding Africa needs to spell out and incorporate the development needs of African countries.

While the number of high-level meetings has increased, the share of substantive issues on the agenda remains small. There are few definitive results from such high-level meetings. Many bilateral agreements largely remain not implemented, and many pledges are undelivered. It pointed to a lack of coordination among various state and para-state institutions working with Africa. According to the report, Russia has to intensify and redefine its parameters as it has now transcended to the fifth stage in its relationship with Africa.

That report was also critical of public speaking. The report lists insufficient and disorganized Russian-African lobbying, combined with the lack of “information hygiene” at all levels of public speaking among the main flaws of Russia’s current Africa policy. In several ways, ideas and intentions are often passed for results, and worse Russia’s possibilities are overestimated both publicly and in closed negotiations.

Several reports monitored by this author shows clearly that there has been little approach, in terms of government and institutional public relations, to Russia’s foreign policy in Africa. Understandably, after thirty years most of its institutions connecting Africa are still in transitional mode from the Soviet era. This author has written a lot about this, emphasizing the seriousness of using media networks – a calculated attempt to build an atmosphere of trust and confidence. Quite obviously, Russians have to devote a great deal of thought to creating a strategic communication group that could highlight its diverse performance and practical genuine interests in Africa.

Opening a new stage of relations becomes important, especially when analyzing the contradictions and confrontations posed by the Russia-Ukraine crisis and its multiple effects on future relations. Without doubts, African leaders complained bitterly that they have become direct victims of the Russia-Ukraine crisis. Overall Russia’s investment in economic sectors is still staggering there in the continent and comparatively, the fact still remains that the United States, the European Union and a number of Asian and the Gulf States are investing heavily in Africa.

Russia’s Foreign Minister Sergey Lavrov and his Deputy Mikhail Bogdanov, most often show their crosshair of consistent criticism for Western and European dominance and investment in Africa. It lacks strategies for implementing those oftentimes forward-looking policies for Africa. The passion for repeating the same things in different ways in speeches. In a general sense, their repetitive theme of Soviet-era support for political liberation and now efforts to help Africa fight neocolonialism are highly appreciated but Russia has to, in practical terms, show its latest policy achievements in various sectors for the past two decades.

On another side note, Russia most probably needs to design the template of its communication strategy ahead of the 2023 summit, which has to largely win the hearts of African leaders to the emerging New World Order. As already promised, the Minister of Foreign Affairs of the Russian Federation, Sergey Lavrov, indicated in a mid-June message that “in these difficult and crucial times the strategic partnership with Africa has become a priority of Russia’s foreign policy. The signed agreements and the results will be consolidated at the forthcoming second Russia-Africa summit.”

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