Economy
Investors May Soon Dump Nigeria, SA, Egypt for Kenya, Ethiopia—Report
By Modupe Gbadeyanka
According to the newly released Africa Risk-Reward Index developed by Control Risks and Oxford Economics, Kenya and Ethiopia may soon outshine Africa’s economic giants; Nigeria, South Africa and Egypt, in the competition for investments.
It was only this month that Nigeria and South Africa exited recession, but rising security risks and political instability in Egypt, economic downturn and militancy in Nigeria and escalating political risks in South Africa led to doubts whether the balance between risks and opportunities in these markets is still favourable for businesses.
In the report made available to Business Post, Senior Analyst for Africa at Control Risks and lead-author of the report, Mr Paul Gabriel, commented that, “Experienced investors – not only in Africa, but around the world – know that risk and reward are close companions.
“While no serious investor should overlook the economic giants of the continent, real competitive edge can only be achieved when investors manage to stay ahead of the pack in knowing what’s next.
“The Africa Risk-Reward Index helps investors to identify some of the more hidden investment opportunities in times where the heavy-hitters are struggling.”
Key findings of the report showed that Nigeria and its energy sector are too big to lose their appeal because the country’s reward score is 6.0 (out of 10), ahead of South Africa and Egypt.
Nigeria’s charms, however, fade against a risk score of 7.3 (out of 10), as President Muhammadu Buhari’s government struggles through its first term.
A fall in oil prices and lower production due to insurgent attacks in the Niger Delta have slashed growth from 6.3 percent in 2014 to 2.7 percent in 2015 followed by a sharp contraction of 1.6 percent last year.
Economic indicators for this year are more favourable, but still the report forecasts a real GDP growth of only 1.1 percent in 2017.
On the part of South Africa, its risk score of 5.0 remains below the region’s average, but the reward score of 4.6 is also low.
Whilst the country enjoys a deserved reputation as Africa’s pre-eminent constitutional democracy, several of its key institutions have gradually weakened over the past decade.
Economic prospects are closely linked to the outcomes of the ANC’s national conference in December.
The forecasted real GDP growth of 0.5 percent for 2017 is below population growth and certainly insufficient to reduce South Africa’s staggering 27.7 percent unemployment rate.
The report also said Egypt will test the most ardent optimist. President Abdul Fatah al-Sisi’s political position is stable, despite a series of economic and security challenges, reflected in the country’s risk score of 6.0.
Socio-economic grievances, a government crackdown on opposition and Islamist groups and persistent militancy will continue to have an impact on the business environment. The tourism sector remains depressed.
The country’s reward score of 5.5 reflects the measures the government has taken since mid-2016 to address its fiscal problems.
Real GDP growth is expected to slow in 2017 (to 3.8 percent, from 4.3 percent in 2016) owing to a slowdown in government and private consumption.
Ethiopia outperforms every African peer with its high reward score of 8.0. Notably, it attracted $3.2 billion of foreign direct investment in 2016 – more even than Nigeria, and double the figure for Morocco.
The East African nation is one of Africa’s fastest growing economies and continues to offer strong prospects.
Growth averaged 10 percent from 2010 to 2015 and although 2016 growth was slower at 6.5 percent the expansion remains impressive.
However, the omnipresent role of government in the economy raises concerns relating to public sector efficiency and financial management.
External debt is expected to increase to 38.7 percent of GDP by the end of this year, leading to a risk score of 5.8.
Kenya has achieved a period of strong GDP growth amid relative political stability: real GDP growth averaged at 6.0 percent in 2010-16. The 2017 growth forecast is at 5.4 percent. The country’s reward score is 6.7.
A well-educated workforce and an innovative service sector, the government’s continued investments in upgrading critical national infrastructure, and deepening integration with its neighbours through the East African Community (EAC) all allow the country to act as a gateway into the larger East Africa region.
Current fiscal concerns and a political system that remains closely tied to ethnic affiliation contribute to a risk score of 5.6 and reflects considerable room for improvements.
By Adedapo Adesanya
The federal government is offering two new savings bonds with interest rates between 17 and 18 per cent through the Debt Management Office (DMO).
In a statement by the agency, the country said retail investors can purchase the two-year bond maturing in January 2027 at 17.23 per cent interest, while the three-year paper maturing in January 2028 at a coupon rate of 18.23 per cent.
Bonds are very safe financial instrument that serve as investments because they are backed by the federal government, which promises to pay back the money.
According to the DMO, people can buy these bonds starting January 13, 2025, until January 17, 2025, with allotment expected on January 22, 2025, and the interest to be paid to investors every three months – in April, July, October, and January.
These bonds have some special features. They are tax-free under both company and personal tax laws.
Big investors like pension funds and trustees are allowed to buy them and each bond costs N1,000 each.
However, interested investor can only buy at least N5,000 worth, and can’t buy more than N50 million.
This comes after the Ms Patience Oniha-led debt office said the Nigerian government was offering three bonds worth N150 billion in September 2024.
By Aduragbemi Omiyale
The House of Representatives has said it would make efforts to pass the controversial tax reform bills forwarded to the National Assembly by President Bola Tinubu last year.
Mr Tinubu, in a bid to improve revenue of the government, asked the parliament to pass the bills, but this has been resisted mostly by northern lawmakers and others.
At the resumption of plenary session on Tuesday in Abuja, the Speaker of the House of Representatives, Mr Abbas Tajudeen, assured that the green chamber of the legislative arm of government would prioritise the tax reform bills.
“The legislative agenda of the House for 2025 prioritises the passage of the Appropriation Bill and the Tax Reform Bills, both of which are pivotal to economic recovery and fiscal stability.
“These reforms are essential for broadening the tax base, improving compliance and reducing dependency on external borrowing.
“The House will ensure that these reforms are equitable and considerate of the needs of all Nigerians, particularly the most vulnerable,” Mr Abbas said through the Deputy Speaker, Mr Ben Kalu, who presided over the session.
He also expressed grief over the loss of lives in stampedes in Ibadan, Abuja and Anambra State last month due to hardship in the country.
Several Nigerians died in the stampedes while trying to receive palliatives given to alleviate their sufferings.
“Tragic events, such as the stampedes in Ibadan, Abuja and Okija, during the distribution of palliative aid, underline the urgent need for improved planning and safety protocols in humanitarian efforts. On behalf of the House, I extend our deepest sympathies to the families and communities affected.
“These incidents serve as a stark reminder of the socio-economic hardships facing our citizens and the imperative for policies that tackle hunger and poverty at their roots.
“Turning to the economy, 2024 presented both difficulties and opportunities. While inflation remains a pressing concern, progress in GDP growth and the positive trajectory of economic reforms provide hope for a more stable and prosperous 2025,” the Speaker said.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange recorded a 0.69 per cent appreciation on Monday, January 13, as investors showed renewed interests in unlisted securities.
During the trading session, the NASD Unlisted Security Index (NSI) increased by 21.07 points to wrap the session at 3,095.00 points compared with the 3,073.93 points recorded in the previous session.
In the same vein, the value of the local alternative stock exchange went up by N7.22 billion to close at N1.061 trillion compared with last Friday’s N1.051 trillion.
Yesterday, FrieslandCampina Wamco Nigeria Plc recorded a growth of N3.78 to close at N42.00 per share versus N38.22 per share, Mixta Real Estate Plc improved by 20 Kobo to end at N2.35 per unit versus the preceding closing rate of N2.15 per unit, and Industrial and General Insurance (IGI) Plc gained 1 Kobo to finish at 25 Kobo per share compared with the previous session’s 24 Kobo per share.
Conversely, Geo-Fluids Plc lost 29 Kobo to quote at N4.56 per unit compared with the preceding day’s N4.85 per unit, and Afriland Properties Plc slid by 75 kobo to end the session at N15.50 per share versus the preceding closing rate of N16.25 per share.
During the session, the volume of securities traded decreased by 27.2 per cent to 3.1 million units from 4.3 million units, the value of securities slumped by 81.5 per cent to N3.2 million from N17.2 million, and the number of deals expanded by 57.9 per cent to 30 deals from 19 deals.
At the close of trades, FrieslandCampina Wamco Nigeria Plc remained the most active stock by value (year-to-date) with 1.9 million units worth N74.2 million, followed by 11 Plc with 12,963 units valued at N3.2 million, and IGI Plc with 10.7 million units sold for N2.1 million.
Also, IGI Plc remained the most traded stock by volume (year-to-date) with 10.6 million units sold for N2.1 million, trailed by FrieslandCampina Wamco Nigeria Plc with 1.9 million units valued at N74.2 million, and Acorn Petroleum Plc with 1.2 million units worth N1.9 million.
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