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Economy

UAC Nigeria Gets N3.6bn Shares of UPDC REIT

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UAC Nigeria UACN

By Dipo Olowookere

One of the shareholders of UACN Property Development Company (UPDC), UAC Nigeria, has been allocated 649 million units of UPDC Real Estate Investment Trust (REIT) stocks worth N3.6 billion.

Recall that in 2020, UPDC, as part of the process its restructuring process, unbundled its holdings in UPDC REIT and made allocations to all its shareholders, including its parent company, UAC Nigeria Plc.

UPDC had explained that the initiative was to maximise returns to its shareholders by providing direct access to the steady and regular dividend distributions of UPDC REIT.

This deal and a few others had an impact in UAC Nigeria in the 2020 financial year.

Also, recall that last year, UAC Nigeria struck a deal with Custodian Investment Plc for the transfer of 51 per cent stake in UPDC, reducing its stake to 42.85 per cent. UAC Nigeria received N6.6 billion in cash proceeds from the transactions.

“In December 2020, UAC received 649 million units of UPDC REIT, valued at N3.6 billion as part of the partial exit from UPDC.

“This is in addition to the N6.6 billion received in H2 2020 for the sale of a 51 per cent stake in UPDC,” the Group Managing Director of UAC Nigeria, Mr Fola Aiyesimoju, stated.”

“We benefited from N1.2 billion in non-recurring gains from investments in associates, MDS Logistics Limited and UPDC,” Mr Aiyesimoju added.

Last year, the revenue generated by UAC Nigeria increased 3.0 per cent to N81.6 billion from N79.2 billion supported by sales growth in the Animal Feeds & Other Edibles segment (4.6 per cent), the Packaged Food & Beverages segment (1.8 per cent) and the Quick Service Restaurant Segment (1.9 per cent).

These segments were deemed essential services during the period of stringent restrictions to the movement of people and goods to curtail the spread of COVID-19.

However, the gross profit dropped 5.5 per cent to N15.7 billion from N16.6 billion due to limited sales during the strictest phase of the lockdown in April and May, higher input costs, and distribution expenses.

At the end of the year, the profit after tax from continuing operations decreased to N3.8 billion, from N5.3 billion a year earlier, while the total profit closed at N4.3 billion in contrast to the N9.3 billion loss reported in FY 2019, with the earnings per share (EPS) at N1.06 in 2020 versus the negative N1.83 in 2019.

In his reaction to the performance of the company last year, Mr Aiyesimoju said, “FY 2020 was challenging, with operational disruptions related to COVID-19 and #EndSARS protests.”

He noted that the team “focused on executing our strategy, implementing initiatives relating to UPDC, significantly reducing leverage and increasing cash, strengthening management, and driving profitability.”

“Operating performance for the year was negatively impacted by the aforementioned disruptions as well as input cost escalation. Our efforts resulted in net income of N4.3 billion in 2020.

“In the fourth quarter, our businesses rebounded and profit after tax increased 136 per cent to N2.4 billion (N1.4 billion, adjusting for non-recurring items) from N1.0 billion in 2019, supported by cost management initiatives that reduced operating expenses by N1.4 billion (30 per cent),” he added.

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan. Mr Olowookere can be reached via dipo.olowookere@businesspost.ng

Economy

House of Reps Tells CBN to Suspend New Cash Withdrawal Limits

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House of Reps Tells CBN to Suspend New Cash Withdrawal Limits

By Modupe Gbadeyanka

The Governor of the Central Bank of Nigeria (CBN), Mr Godwin Emefiele, has been told to immediately suspend the new limits placed on the withdrawal of cash from over-the-counter (OTC), Automated Teller Machines (ATMs) and Point of Sales (POS).

On Tuesday, the central bank said from January 9, 2023, any cash withdrawal above N100,000 for individuals would attract a 5 per cent processing fee and a 10 per cent processing fee for withdrawals of more than N500,000 for corporate organisations.

This policy is already generating mixed reactions, with POS operators saying it would push them into the unemployment market because of the loss of jobs and the Nigeria Employers’ Consultative Association (NECA) saying stakeholders were not “extensively consulted” by the CBN before its announcement.

At the plenary on Thursday, a lawmaker, Mr Aliyu Magaji, who moved a motion of urgent public importance, warned that the new policy could spell doom for the economy as several people would lose their jobs, while traders, artisans and rural dwellers would suffer because of the cash limits.

His colleagues agreed with him and criticised the apex bank for the policy.

Though the Minority Leader, Mr Ndudi Elumelu, pointed out that the new cash withdrawal limits would check crimes as funds would now be tracked through the banking system, he emphasised that the timing was wrong.

The other legislators echoed this opinion and added that it would have serious consequences and adverse effects on businesses and Nigerians who have no access to the banking system.

As a result, they asked Mr Emefiele to roll back the policy, summoning him to appear before them on Thursday, December 15, 2022, to explain the policy and why it should not be rejected.

Incidentally, the day he is to appear next week is the same day the CBN plans to officially introduce the newly redesigned N200, N500, and N1,000 banknotes into circulation.

The Naira was redesigned by the apex bank to control the volume of cash in the financial system after it was discovered that more than 80 per cent of cash in circulation was not in the banks’ vaults.

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Economy

New Cash Withdrawal Policy Was Without Extensive Consultation—NECA

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Nigeria Employers’ Consultative Association NECA

By Modupe Gbadeyanka

The Nigeria Employers’ Consultative Association (NECA) has accused the Central Bank of Nigeria (CBN) of not consulting with stakeholders extensively before coming up with the new cash withdrawal policy expected to take effect from January 9, 2023.

In the new directive, the CBN said the maximum cash that can be withdrawn from banks is N100,000 per week for individuals and N500,000 for corporate organisations. Also, customers would not be able to withdraw more than N100,000 from the Point of Sale (PoS) machines and Automated Teller Machines (ATMs) and N20,000 per day. It further said the highest Naira note to be loaded in ATMs is N200.

However, withdrawals above the cash limits via over-the-counter, according to the directive of the apex bank, would attract 5 per cent for individuals and 10 per cent for companies.

Commenting on the new development, the Director-General of NECA, Mr Wale-Smatt Oyerinde, emphasised that the livelihood of many individuals and enterprise sustainability would be impacted.

“As usual with the CBN, the bank announced a new naira withdrawal policy without extensive consultation with organized businesses and those that will be directly impacted by the policy.

“This new policy is diversionary and a mere distraction from the critical issues that are affecting the nation,” Mr Oyerinde stated.

Speaking further, he said, “While it is desirable to get all bankable individuals and businesses into the banking system and promote the cashless policy of the CBN, the timing without adequate preparation and sensitization of the critical mass that drives the economy (the SMEs and MSMEs) could prove counter-productive and further drive many below the poverty line.

“This is another classical example of the inconsistencies and misalignments between the fiscal and monetary policies of the government.

“It is absurd to blatantly set traps of processing fees for individuals and businesses who desire to withdraw their hard-earned money from the bank for legitimate and genuine business transactions.

“It is also important to note that the banking infrastructure and mobile/digital facility to drive the cashless policy are not sufficiently developed. This is not only draconian but also inhuman.

“We urge the CBN and, indeed, the federal government to replicate the energy and promptness used in implementing this policy to address the issues of dwindling value of the Naira, rising inflation, oil theft, ballooning foreign debt, and get millions out of poverty realm.”

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Economy

SEC Plans to Boost Value of Shariah-Compliant Products to N5trn by 2025

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non-interest capital market Shariah-compliant products

By Aduragbemi Omiyale

The Securities and Exchange Commission (SEC) has said it plans to expand the size of the Shariah-compliant products in the non-interest capital market in Nigeria to at least N5 trillion by 2025.

The Director-General of SEC, Mr Lamido Yuguda, said the revised edition of the Capital Market Master Plan (2021 – 2025), which was launched recently, has mapped out ways to achieve this goal.

Speaking at the opening of a three-day capacity-building workshop for local Shariah talent for non-interest capital market held at the SEC head office in Abuja on Wednesday, Mr Yuguda said this could be achieved through the listing of at least 50 Shariah-compliant products.

The DG, who was represented by the SEC’s Executive Commissioner Operations, Mr Dayo Obisan, said that the Non-Interest Capital Market (NICM) also plans to ensure 100 retail Shariah-compliant products and attract about 1 million direct investors in the ecosystem.

Mr Yuguda noted that with these new responsibilities, promoting capacity-building programmes, such as the workshop, on Shariah-compliant processes and products (Regulators and Operators) has become necessary for the NCIM.

He said the commission, in recognising the potential of the non-interest capital market for economic growth, dedicated a component in its 10-year policy to the speedy development of the market in the financial system.

Specifically, Mr Yuguda said the plan provides clear strategic objectives for the development of the market, one of which is the “encouragement of the development of stakeholders for the market” and today’s workshop is evidence of the realization of this particular objective.

The stride and significant achievements recorded by the policy, he said, are evidenced by the last ranking of Nigerian Islamic Finance in 13th place on the global Islamic Finance Development Indicator 2021, with the assets under management valued at N2.30 billion, which is higher than countries like Bangladesh and Turkey.

“As you may be aware, the major difference between conventional finance and non-interest finance is the application of Shariah principles. This simply means that a non-interest financial market cannot exist without experts in Islamic commercial jurisprudence (FiqhulMu’amalat Al-Maliyya).

“Therefore, this Workshop will help in fast-tracking the development of experts for the Market. We believe that it would be a magic lamp for developing our local Sharia talent, not only for the Nigerian capital market but for the Nigerian financial system in general.

“The level of activities in the non-interest capital market that we are currently experiencing in Nigeria affirms the overwhelming acceptance of NICM products by the country’s populace. This shows a strong appetite for other alternative forms of investments.

“Recently, the market witnessed the entrance of institutions offering non-interest capital market services/products and the oversubscription of the FGN and corporate Sukuk, further buttresses the need for this workshop to encourage the development of Shariah experts for the market.”

The DG said the workshop is aimed at exposing participants who have the potential to provide Shariah advisory services for the Islamic finance industry, particularly the non-interest capital market’s operations as it relates to Shariah principles and rulings. It is also planned to be in two levels, Level 1 and 2.

He stated that Level 1, is focused on the basic areas of financial market structure and operations of the capital market, Shariah principles and contracts relating to non-interest capital markets, as well as Shariah issues relating to the operations and businesses of the market, among others while level-2 which will address the operation of the Sukuk and equity markets.

The SEC boss said NICM has so much potential in the country by attracting an untapped investor base who appears indifferent to conventional instruments to participate in the capital market as well as the existing investors to diversify to ethical and socially responsible investments.

“We believe that developing Shariah talent through a Workshop like this is another opportunity of creating awareness for the non-interest capital market products and services, which in turn will facilitate the financial inclusion drive in the Nigerian Financial System.

“I am happy to note that the commission recently exposed registration rules to set a minimum standard for corporate or individuals seeking to provide Shariah advisory services for non-interest capital market activities. This is to encourage further and attract the attention of qualified persons and entities to engage in the Shariah advisory function for the non-interest capital market.”

Mr Yuguda expressed the confidence that the participants will benefit from the vast knowledge and experience of the facilitators, which will bring about a much-needed impact on the participants and the market in general.

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