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High Imports in Q1 2021 Leave Nigeria With N3.9trn Trade Deficit

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By Aduragbemi Omiyale

A significant increase in the value of imports in the first quarter of 2021 has left Nigeria with a trade deficit of N3.9 trillion.

A report released by the National Bureau of Statistics (NBS) revealed that in the period under review, the country recorded a total merchandise trade of N9.8 trillion, 6.99% higher than the value recorded in Q4 of 2020 and 14.13 per cent higher than the figures in the same period of 2020.

The agency stated that the export component of this trade was N2.9 trillion, representing 29.79 per cent of the total trade, while the import aspect took N6.9 trillion, representing 70.21 per cent.

“The higher level of imports over exports resulted in a trade deficit (in goods) of  N3.9 trillion,” the stats office said in its report.

It was further disclosed that crude oil export accounted for N1.9 trillion in Q1 of 2021, representing 66.38 per cent of the total export, while non–crude oil export accounted for 33.62 per cent of the total export.

According to the NBS, the value of total imports rose by 15.61 per cent in Q1 2021 compared to Q4 2020 and 54.30 per cent compared to Q1 2020.

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The value of imported agricultural products stood at 18.37 per cent higher than in Q4 2020 and 140.47 per cent higher year-on-year, while the value of raw material imports fell by 6.50 per cent in Q1 2021 compared to Q4 2020 but increased by 109.29 per cent compared to Q1, 2020.

Also, the value of solid minerals imports was 36.97 per cent higher in Q1 2021 than in Q4 2020 and 59.26 per cent more than its value in Q1 2020, while the value of energy goods imports was 34.39 per cent in Q1 2021, higher than in Q4 2020 and 1,346.72 per cent higher than the value recorded in Q1 2020.

In addition, the value of imported manufactured goods grew by 18.47 per cent in Q1 2021 against the value recorded in Q4 2020 and 69.70 per cent against its value in Q1 2020, while the value of other oil products imported in Q1 2021 was 19.02 per cent more than its value in Q4 2020 but 15.76 per cent less than the corresponding quarter of 2020.

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The major import trading partners of Nigeria in the period were China, accounting for 29.34 per cent, the Netherlands with 10.60 per cent, the United States with 8.88 per cent, India with 8.60 per cent and Belgium with 3.48 per cent.

On the exports side, the total value decreased by 8.99 per cent against the level recorded in Q4 2020 and 29.26 per cent compared to Q1,2020.

It was disclosed that the value of agricultural exports increased by 128.0 per cent in Q1 2021 compared to Q4 2020 and 0.1 per cent compared to Q1 2020, while the value of raw material goods exports in Q1 2021 was 9.0 per cent lower than the value in Q4 2020 and 6.7 per cent lower than the value recorded in Q1 2020, with the value of solid minerals exports increasing by 107.2 per cent in Q1 2021 against Q4 2020 and 481.7 per cent against the corresponding quarter in 2020.

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Also, the exports of energy goods increased in value by 16.3 per cent in Q1 2021 compared to Q4 2020 and 18.1 per cent compared to Q1 2020, while the value of manufactured goods exports rose by 94.0 per cent in Q1 2021 compared to Q4 2020 but decreased by 43.7 per cent compared to Q1 2020.

The agency further said the value of crude oil exports in Q1 2021 decreased by 23.5 per cent compared to Q4 2020 and 34.5 per cent compared to Q1 2020, while the export value of other oil products increased by 25.5 per cent in Q1 2021 compared to Q4 2020, and rose marginally 0.1 per cent compared to Q1 2020.

Business Post observed that the major export trading partners of the country in the first three months of the year were India at 16.79 per cent, Spain at 9.88 per cent, China at 6.54 per cent, The Netherlands at 5.50 per cent and France at 4.59 per cent.

Aduragbemi Omiyale is a journalist with Business Post Nigeria, who has passion for news writing. In her leisure time, she loves to read.

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Economy

SEC Introduces Regulatory Incubation Program for Fintechs

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By Modupe Gbadeyanka

A regulatory incubation (RI) program for financial technology (fintech) companies operating or seeking to operate in Nigeria has been introduced by the Securities and Exchange Commission (SEC).

A circular issued by SEC disclosed that this framework would be officially launched in the third quarter of 2021 and will operate by admitting identified Fintech business models and processes in cohorts for a one-year period.

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Participation in the RI program will encompass an Initial Assessment Phase and the Regulatory Incubation Phase.

The categories to be admitted into each cohort will be determined based on submissions received through the Fintech Assessment Form and communicated ahead of each take-off date.

SEC explained that the scheme was designed to address the needs of new business models and processes that require regulatory authorisation to continue carrying out full or ancillary technology-driven capital market activities.

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The RI Program has thus been conceived as an interim measure to aid the evolution of effective regulation which accommodates the innovation by fintechs without compromising market integrity and within limits that ensure investor protection.

It was disclosed that review of completed Fintech Assessment Forms will continue on an ongoing basis and those who consider that there is no specific regulation governing their business models or who require clarity on the appropriate regulatory regime for seeking the authorisation of the commission, are encouraged to complete the Fintech Assessment Form.

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Economy

NGX Suspends Trading on GTBank Shares Ahead of Delisting

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By Dipo Olowookere

In preparation for the eventual delisting of shares of Guaranty Trust Bank (GTBank) Plc from its trading platform, the Nigerian Exchange (NGX) Limited on Friday, June 18, 2021, placed the banking stock on a full suspension.

GTBank, a tier-one lender trading its equities on the exchange, intends to transform into a financial holding company (Holdco) so as to offer a wide range of services it is restricted to do.

Some years ago, the Central Bank of Nigeria (CBN) directed banks in the country to offload their subsidiaries not performing core lending services.

This was after many deposit money banks (DMBs) were delving into different business ventures, including insurance, stockbroking, asset management, amongst others.

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For the CBN, which regulates the banking industry in Nigeria, most of these banks were losing focus and were not supporting businesses that need funds to grow and then stimulate the economy in the process.

To address this issue, the apex bank asked banks to sell off their non-banking assets and this forced many of them to offload their companies not offering core banking services.

However, there was an opening for banks to still delve into other sectors within the financial and capital markets and this was by operating as a Holdco.

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A few of them towed this path, including FBN Holdings, Stanbic IBTC Holdings and FCMB Group.

Not wanting to be left out, GTBank is joining the party and to achieve this, it is delisting its banking arm, which is the popular GTBank from the stock exchange.

GTBank will now operate as a private company, while the new Holdco, Guaranty Trust Holding Company Plc, will now be a public company. The shares of this new firm will be listed on the NGX after the delisting of GTBank.

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Last Friday, the stock exchange informed the investing community of the latest development, announcing the suspension of trading on GTBank shares.

In the circular sighted by Business Post, the NGX explained that the rationale behind placing GTBank stocks on full suspension is to “prevent trading in the shares of the bank” in preparation of its “eventual delisting”

Before trading on its stocks was suspended on Friday, GTBank closed at N28.55 on Thursday after appreciating by 50 kobo or 1.78 per cent.

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Economy

DLM Capital Remains Best Structured Finance & Securitization Team in West Africa

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A prominent developmental investment bank, DLM Capital Group, has emerged winner at the Capital Finance International (CFI) 2021 awards as the best-structured finance and securitization team in West Africa.

This award has been won consecutively in three years and affirms the group’s strong performance as a leading investment institution and asset manager.

CFI awards seek to identify the contributions of individuals and organizations that contribute significantly to the advancement of economies and truly add value for all stakeholders.

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DLM Capital Group creates bespoke business solutions for alternative financing and harnessing funds for growth.

The group focuses on four key sectors — consumer credit, agriculture, microfinance, and education with a mandate to reduce poverty and improve living conditions for Africans while mobilizing resources for the continent’s economic and social development.

“In the past three years, our portfolio management team’s performance has remained consistent, and our clients have benefited immensely from exposure to our solutions, including the NMRC securitization deal and the DLM Primero BRT Securitization,” said Head of Corporate Communications and Marketing, DLM Capital Group, Ms Chinwendu Ohakpougwu.

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“We are positioned to provide services to an expansive client base of retail, high net-worth and institutional customers.

“DLM Capital Group remains committed to constantly providing financial solutions that will enable our clients to make a difference, and we are honoured to be recognized once again as a reflection of the quality of support offered to our clients,” she added.

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DLM has won recognition in West African capital markets, acting as a sole arranger to over 80 per cent of structured finance transactions in Nigeria — and all the securitization transactions. It provides deal structuring, advisory execution and capital raising services across the Nigerian capital market.

The institution recently launched an asset financing scheme and is preparing a venture into digital banking under its subsidiary, Sofri.

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