Paper Review - Friday, February 3, 2012
Yield on Nigeria’s Eurobond up on Western market crisis
Yields on Nigeria’s Eurobond traded at 5.90 percent on Monday and rose sharply by 25bps to 6.15 percent the following day, in reaction to market volatility predicated on renewed investor concerns about potential defaults by Portugal on its sovereign debt. Yields on Portuguese Government bonds climbed to higher levels. Analysts said the attractive yields in emerging market are compelling foreign investors to sell off bonds from frontier markets like Nigeria, to deepen their position in high yield emerging markets. As a result, the price of Nigeria ’s bond dips with yields on the upside. Charles Robertson, Global Chief Economist and Head of Macrostrategy, Renaissance Capital, said because investors get scared by events in Europe , some choose to sell risky bonds and buy safe bonds. According to him, ‘risky bonds are those issued by countries with sub-investment grade ratings, such as Nigeria. They buy safe bonds such as US treasury bonds or German bunds. This is why Nigerian yields rise when news out of Europe gets worse’. Concurring, Foluwa Oguntoyinbo, analyst with Afrinvest West Africa, informs that movements in Eurobond prices and yields are caused and affected by various factors, some based on the issuing country’s macroeconomic/socio-political environment and its domestic economy, and others on global events.
Private equity investment in Nigeria, S/Africa reaches $3bn
*Expected to overtake commodities as most favoured asset class
Excited by the continent’s emerging middle class, investors are looking to make significant leaps in capital commitment in Africa, with private equity expected to overtake commodities as the most favoured investment asset class, BusinessDay investigations reveal. An unprecedented $3 billion in funds was raised in private equity investment in the continent in 2011, with South Africa (SA) and Nigeria accounting for the bulk of the transactions, research firm Preqin said. A breakdown of each country’s share of the continent’s private equity investment for 2011 shows that SA accounted for $1.86 billion, while Nigeria followed closely with $1 billion, largely on account of the $750 million capital investment in Union Bank by a consortium led by African Capital Alliance (ACA), making it the largest private equity transaction in Africa in 2011. For investors and industry observers, increased disposable income has led to growth in the consumer sector and this, along with greater political stability, has helped to improve macroeconomic condition in Africa, something that can only raise the region’s profile as an attractive investment option.
“Institutional investors are recognising an Africa that is better-governed, less dependent on resource extraction, and increasingly dominated by middle-class expectations,” said Nazem Al Kudsi, CEO of Abu Dhabi-based Invest AD, which manages funds investing in Africa and the Middle East. “These frontier economies are rapidly becoming the BRICS (Brazil, Russia, India and China) of the future”.
FG lost N37.2bn to import waivers in 2011 – Customs
The Federal Government lost N37.2bn to waivers granted importers of raw materials in the 2011 fiscal year, the Nigeria Customs Service has said. Appearing before the Senate Committee on Finance on Thursday, the Deputy Comptroller-General of Customs in charge of Human Resource, Mr. Garuba Makarfi, said the service would also spend N500m for the fuelling of its generators this year. He alleged that although the waivers were granted for the importation of raw materials, the process was abused with people using the certificates to import vehicles into the country. Makarfi, however, noted that no waiver had been granted to any importer this year, as directed by the Presidency. “We lost seven per cent of our collection to the Export Expansion Grant, which is non-negotiable. This amounted to about N37.2bn. The grant was given to export-oriented companies and local manufacturers to export raw materials; but instead, these local manufacturers sold their certificates to dealers, who then used them to import cars into the country,” he said. The Chairman of the committee, Senator Bassey Otu, expressed displeasure over the losses, and assured that the Senate would ensure that waivers were only given to critical areas of the economy. “We frown seriously on waivers. We want waivers to go to areas that are extremely necessary,” Otu said. Makarfi said the total budget for the NCS in 2012 was N76.06bn out of which N20.2bn was for overheads and recurrent expenditures; N500m for fuelling generators; N40m for refreshment and meals; N150m for sea boat fuelling; N400m for welfare packages; N500m for motor vehicle fuelling; and N150m to fuel aircraft.
http://www.punchng.com/business/business-economy/fg-lost-n37-2bn-to-import-waivers-in-2011-customs/
Fed Govt targets 2.1m tons of rice
Nigeria will produce over 2.1 million metric tons of rice before the end year, Minister of Agriculture and Rural Development, Dr Akinwumi Adesina has said. He disclosed this yesterday when he appeared before the House of Representatives Committee on Rural Development to defend the Ministry’s budget estimates for 2012.
Adesina said that in addition to the assemblage of experts in the field, Nigeria is partnering with a Chinese farming conglomerate to meet the rice target. According to the Minister, a pilot programme to test-run the exercise had already commenced with the engagement of about 50,000 Nigerian youths from Taraba State using 30,000 hectares of land. He also said that N2.2billion has been earmarked for the development of rural roads and other infrastructure across the nation.
Jonathan offers licences to investors to set up refineries
PRESIDENT Goodluck Jonathan has offered licences to investors willing to set up petroleum refineries in the country as part of the overall effort to raise the nation’s petroleum refining capacity and reduce the importation of refined products. The president gave the assurance while speaking to a delegation of investors from Brazil, led by Mr Reuben Voigt, chairman of the Voigt Group, at State House, Abuja, on Thursday. He told them that Nigeria had four refineries but their combined capacity did not meet the country’s needs, “so we are willing to approve applications for refining licences.” Jonathan observed that Nigeria was still a green area in terms of investments and government had opened up sectors of the economy, which were previously restricted to private sector investment. He directed the Coordinating Minister of the Economy and Minister of Finance, Dr Ngozi Okonjo-Iweala, to hold discussions with the Voigt Group to explore areas of mutual cooperation. In his remarks earlier, Mr Voigt said his organisation would donate 120,000 housing units to Nigeria over three years, adding that the Voigt Group was interested in investing in construction, housing, power plants, petroleum refining and oil spillage clearing.
Nigeria to sign pact on LNG project
An agreement to build a $8 billion liquefied natural gas project in southeast Nigeria is expected to be signed next quarter, said Austen Oniwon, group managing director of the Nigerian National Petroleum Corporation (NNPC). Gas supply agreements are being resolved and a tender process is going on, Oniwon said yesterday in Abuja. "Before the third quarter, we will take the final investment decision on Brass LNG," he said. The plant will be built at Brass in Bayelsa state. NNPC has a 30 per cent stake in Brass LNG, while Total SA (FP), Eni SpA (ENI) and ConocoPhillips (COP) Co. each hold 17 per cent. LNG Japan and Itochu Corp. hold 4 per cent and 3 per cent respectively, and a joint venture between Sahara Group and Sempra Energy has 2 per cent. Nigeria is Africa’s top oil producer and the fifth-biggest source of US oil imports. The West African nation, holder of Africa’s largest gas reserves of more than 187 trillion cubic feet, flares most of the fuel it produces along with oil because it lacks the infrastructure to process it.
Nigeria’s first comprehensive Cancer Centre to cost N10bn
Some concerned Nigerians have undertaken to establish the first comprehensive cancer prevention, treatment, research and training institute in the country. The project, which will be located in Port Harcourt, Rivers State, is expected to cost N10billion (about $63 million) and is scheduled to be launched on March 31, 2012 with a presidential banquet. It is planned that the first phase would be completed within one year, with the project admitting the first set of cancer patients in February 2013. According to reports, about 100,000 Nigerians are affected with cancer out of which 80,000 die annually. The cancer scourge is also the world’s most expensive illness, with a global economic toll of about $895 billion in 2008, equivalent to 1.5 percent of global gross domestic product (GDP).
A growing number of Nigerian patients travel abroad (especially to India) for cancer treatment every year, expending scarce foreign exchange and suffering removal from native land and loved ones. Also, the many more Nigerians who suffer from cancer and cannot afford the cost of foreign travel and treatment, can have hope of quality treatment locally when the said facility takes off. The promoters of the initiative, O. B. Lulu-Briggs and wife, Seinye, will mobilise the support of other partners and sponsors within and outside Nigeria, BusinessDay learnt. Known as the Port Harcourt Cancer (Comprehensive Care) Centre or PHCC, the centre is to be situated on 50 hectares of land, close to the University of Port Harcourt Teaching Hospital (UPTH).
2012 budget: Borno gov signs N149bn appropriation bill into law
Governor Kashim Shettima of Borno State has signed into law N149 billion 2012 appropriation bill tagged: “Budget of Infrastructural Development and Economic Transformation” presented to the state House of Assembly on December 29, 2011. Signing the budget into law on Thursday, at the Council Chamber of the Government House Maiduguri, the governor said, very soon, contracts for massive construction of road networks would be awarded by the state government in order to alleviate the suffering of the people. The governor stated that contracts for the construction of Miringa-Garubula-Gunda road, Chibok-Damboa-Mbalala road and Damasak-Mallam Fatori road among others, will be awarded by the state executive council next week. Shettima further said that, as responsible and responsive government, his administration was ready to deliver the dividends of democracy to the people of the state as he promised during his electioneering campaign, adding that citizens of Borno had no business being poor because the state was endowed with both human and material resources.
Research: Nigeria Among 5 Most Active Countries on Twitter
With 1,646,212, volumes of geo-located Tweets in the last three months of 2011, Nigeria is one of the five most active countries on online interactions in Africa; a research study has revealed.
According to ‘How Africa Tweets’, a new research launched in Nairobi recently, the high number of young people Tweeting from mobile devices are driving the growth of Twitter in Africa. Reacting to the development, the Managing Director of Mate Network Limited, a business solution consulting firm, Mr. Anyi Onuga, advocated for the need for consumers in Nigeria and shop owners to buy into online transactions to save cost and time. Onuga, who pointed out that the country’s positive respond to social media would ease online transactions, added that online transactions would further help consumers to suppress the ripples effect of the high cost of petroleum. “Though it is cheering news that Nigeria is among the leading countries on the social media, it will not bring the expected economic activity if online transactions are not encouraged. CBN is implementing cashless society in Nigeria this year, Lagos is a pilot and it has kicked off there in January 2012. “Considering the fact that more organisations are tilting to cashless transactions – POS, online, E-Pay solutions, it will do us a lot of good to turn the opportunity we have as a result of our presence on various social networks to business,” he said.
Facebook to cash in on its massive followership
…Files $5 billion IPO
Facebook, an internet-driven social networking platform which connects people with friends and interest groups from around the world, submited paperwork to regulators on Wednesday morning for a $5 billion initial public offering and has selected Morgan Stanley and four other bookrunners to handle the mega-IPO, sources close to the deal told IFR. The company founded by Mark Zuckerberg in a Harvard dorm room in 2004 picked Morgan Stanley to take the coveted “lead left” role in what is expected to be the largest IPO ever to emerge from Silicon Valley. The $5 billion is a preliminary target and could be ramped up in coming months in response to investor demand, IFR added. The other four bookrunners chosen were Goldman Sachs, Bank of America Merrill Lynch, Barclays Capital and JP Morgan, although the underwriting syndicate could be expanded later, IFR cited the sources as saying. Facebook declined to comment on the report by IFR, a unit of Thomson Reuters. “Lead left” refers to where the top underwriter’s name will appear on the IPO prospectus. The preliminary IPO filing sets the stage for a May market of the world’s largest social network, IFR reported, a coming-out party that will dwarf almost any before that, including Google Inc’s $2 billion IPO.
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