Indeed, a breakdown of market activities last month, showed that the NSE composite All-Share Index, which started the month of October on a downtrend, surprisingly, reversed up at midmonth, as Q3 corporate earnings trickled in.

But the scorecards, which came, mostly below market forecast, coupled with the continued hike in interest rate in the developed economies, as well as the lingering political uncertainties in Nigeria, heightened the weak economic fundamentals and negative sentiments, even as investors adopt a wait and see strategy.

The Board of Directors of the African Development Bank Group has approved a Naira investment equivalent to US$ 10 million in Chapel Hill Denham Nigeria Infrastructure Debt Fund (NIDF).

This investment aims to meet the country’s infrastructure investment needs, including in the power and energy infrastructure sectors. NIDF is the first and the only listed local currency infrastructure debt fund in Africa.

The transaction is financed through the Bank’s ordinary capital resources allocated for private sector operations financing. It is expected to deliver significant development outcomes – private sector development through support to industrialization and diversification from conventional oil and gas. It will also help to strengthen capital markets harness domestic financial resources to fund critical infrastructure and human development by providing and improving access to basic services.

The Bank Group’s investment in NIDF will significantly boost the country’s infrastructure stock, including increased clean gas distribution and power generation (including through renewable energy) capacities. NIDF will also target investments in other key infrastructure sub-sectors such as transportation and logistics. The fund will meaningfully contribute to inclusive growth by supporting infrastructure development in Nigeria, which faces significant infrastructure deficits. Consequently, the funding will help improve the quality of life and the business environment.  

The Project is aligned with the African Development Bank’s New Deal on Energy for Africaand High 5 priorities, particularly “Light Up and Power Africa”, “Industrialize Africa” and “Improve the Quality of Life for the People of Africa”. The project is also aligned with the Bank’s Climate Change Action Plan, which focuses on supporting infrastructure development and prioritizes the power sector and private sector development. The private Sector Operations strategy emphasizes the provision of equity capital to catalyze and crowd-in financing from external parties, which the Fund will achieve by tapping into financing from local institutional investors such as pension funds, insurance companies and asset managers.

Presenting the project to the Board, the Bank’s Vice President for Power, Energy, Climate Change and Green Growth, Amadou Hott, underscored the importance of the crowding-in effect to fill the infrastructure-financing gap in Nigeria in order to achieve universal energy access. “The Bank’s investment in NIDF will have a demonstration crowding-in other Nigerian institutional investors. This will enable the Bank to fill critical gaps in infrastructure financing, especially in the energy sector,” he said.

The Bank’s investment in the NIDF will catalyze private sector investments and is expected to unlock up to NGN134 billion from the private sector, especially from Pension fund administrators who have already invested NGN15.4 billion in NIDF.  This is the first unit trust investment by the Bank, with expectations to replicate similar investments across the African continent.

NIDF provides long-term financing for infrastructure projects in Nigeria that is denominated in the local currency (Naira). It plays a critical role in correcting the current tenor and currency mismatch that is prevalent in infrastructure financing in Nigeria. The Director of the Energy Financial Solutions Department, Wale Shonibare addressed this in his presentation saying:  “NIDF is addressing the issues of currency and tenor mismatch in infrastructure projects in Nigeria by providing loans that are denominated in the local currency, Naira, with proceeds in Naira, and also closely matching the loan tenor to the life of the asset.”

Established in June 2017, the NIDF is structured as a permanent capital vehicle. Its units are listed on the FMDQ OTC Exchange, Nigeria, and regulated by the Securities & Exchange Commission. The Fund has registered a programme for issuance of up to two billion Units with par value of NGN200 billion. Since its inception, it has raised an aggregate capital of more than NGN19.15 billion and currently has a portfolio of eight infrastructure loans.

The NIDF is sponsored by Chapel Hill Denham, an independent investment bank in Nigeria and managed by Chapel Hill Denham Management Limited. More information on NIDF is available athttps://www.chapelhilldenham.com/nidf/

This figure is higher than N418.831 billion it closed on December 29, 2017. Nigeria’s 74 registered mutual funds have total net asset value of N551.7 billion by the close of business on April 20, 2018, there are 75 mutual funds currently under the regulation of the Securities and Exchange Commission.

A mutual fund is an investment vehicle made up of a pool of money collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and other assets.

The Managing Director of InvestData Consulting Limited, Ambrose Omordion, explained that mutual funds provide an opportunity for people who do not have the time to invest in the money and capital market or those that do not know much about the business of buying and selling securities to invest and make money.

A breakdown of fund activities obtained from the Commission, showed that in the first six months of the year, the fixed income fund led the mutual funds’ performance with a gain of 77.57 per cent, ethical funds gained 45.10, while money market funds appreciated by 13.14 per cent.

The equity based funds during the period rose by 5.99 per cent, mixed funds up by 4.73 per cent, while real estate funds appreciated by 1.18 per cent, in the first half of the year.

Less than four per cent of the Nigerian population are investors in the nation’s capital market, and only about six per cent of the domestic investors participate in mutual funds, otherwise known as collective investment schemes (CIS).

For the first half year, the Nigerian Stock Exchange-All Share Index (NSE-ASI) recorded a positive gain of 0.09 per cent, which explains the performance of the equity-based funds.

Nigeria’s equity market witnessed some calmness and subdued volatility in the first 180 days. Inflation in Nigeria moderated while the dollar exchange rate stabilized around the N360 range within the period even as yields continued to fall along all maturities. All these had effect on the equity market, which had a multiplier effect on the equity mutual funds.

Financial analysts noted that fixed income funds which is typically, investment in government securities, Treasury bills, corporate bonds, among others recorded a massive increase, reflecting the huge appetite demonstrated towards such instruments by the investing public.

But analysts argued that the implementation of new Multi-Fund Structure for Pension Fund Administrators (PFAs) by PENCOM is a good development as it will free pension fund managers to invest in variable income securities like equities, ETFs and mutual funds, which will in turn increase market activities, and add to the vibrancy of the market.

For fixed income funds, they said the Central Bank of Nigeria (CBN) would likely become more aggressive with OMO sales to keep naira assets more attractive and maintain FX stability.

“The encouraged investors to consider the CIS a best option for their alternative investments; affirming that awareness needs to be intensified in the industry to enable Nigeria’s see the advantages and benefits in the CIS.”

He explained that by investing in mutual funds you have an opportunity of investing in a portfolio of heterogeneous instruments rather than having your money in one asset class.

A senior broker with Calyxt Securities Limited, Tunde Oyediran said that the Nigerian mutual funds market remains underdeveloped, saying that a well-developed mutual fund market has the potential to offer enormous benefits to the Nigerian economy and the public.

According to him, the unit trust scheme can help deepen the Nigerian capital market, extend capital market activities to the grassroots, facilitate pooling of funds for investment purposes, encourage small private enterprises approach capital markets for long-term funds, generate profit/income capital appreciation for investors, and provide retail investors with access to professional management of the funds.

The managing director of HighCap Securities Limited, David Adonri said that mutual funds are a veritable investment vehicle that accommodates a wide variety of investors no matter one’s investment style and financial goals, saying that “they can offer the advantages or diversification and professional management.”

South Africa’s President Cyril Ramaphosa said at a joint news conference with Xi on Tuesday that China had committed to invest $14.7 billion in the South African economy, but neither leader mentioned the $10 billion complex.

Ramaphosa is on a mission to kick-start economic growth after a decade of stagnation and is targeting $100 billion in new investment over five years.

The complex, which is still in the planning stage and envisages building a stainless steel plant, a ferrochrome plant and a silicomanganese plant, is a much-needed vote of confidence in the sputtering South African economy.

Trade and Industry Minister Rob Davies said on Tuesday that China was considering a metallurgical project in a special economic zone (SEZ), but he did not reveal the scale of the project or timeframe.

The executive involved in the project, who did not wish to be named because he was not authorised to speak to the media, said memoranda on the complex were signed before Xi and Ramaphosa gave news conference on Tuesday.

Richard Zitha, a project executive at the Musina-Makhado SEZ where the complex will be based, said the project was being led by Chinese state-owned companies, but he declined to name them.

He said the Chinese investors would look for Black Economic Empowerment partners to comply with South African rules designed to address racial disparities more than two decades after the end of apartheid.

The investors were open to investors from other countries joining at a later stage, he said.

“The investors have been in South Africa for around a week and have visited mines to look for inputs for the project,” Zitha said.

The Musina-Makhado SEZ is in Limpopo province close to South Africa’s borders with Mozambique, Zimbabwe and Botswana.

The SEZ plans to house plants with a capacity of 3 million tonnes per annum of stainless steel, 3 million tonnes per annum of ferrochrome and 500,000 tonnes per annum of silicomanganese. Those capacity targets are subject to change and will be finalised by the end of the year, the executive said.

A coal-fired power plant, coking plant and coal washery will be built alongside the metallurgical plants, a presentation prepared for investors showed.

Some of the steel output for the complex has been earmarked for export to China, while other products would be sold to countries in southern Africa, the executive said.

South Africa is already a major exporter of metal alloys to China.

Investors are hoping to receive the necessary environmental approvals by the end of March and would then start construction, Zitha said.

Great Dyke Investments (GDI) Ltd. said on Thursday it would invest about 400 million dollars to build a precious metals mine and smelter in Zimbabwe as the country opens up to international business.

The joint venture between Russia’s JSC Afromet and Zimbabwe’s Pen East Ltd., expects to produce up to 855,000 ounces (27 tonnes) of platinum group metals and gold per year from the Darwendale PGM project.

Its deposit, which has total resources of around 1,300 tonnes of platinum group metals (PGMs), is part of the Great Dyke in Zimbabwe and is the world’s biggest PGM asset, the companies said in a statement.

Zimbabwe is the third largest platinum producer at 445,000 ounces last year, behind South Africa and Russia, according to the World Platinum Investment Council.

GDI’s chief executive Igor Higer expects the project will double the production of PGMs in Zimbabwe. He is one of several investors who have spent more than 100 million dollars, which entitles them to special terms.

The mine life after project ramp-up to full capacity is estimated at 35 years.

“According to our estimates the investment in the first phase, the project construction is $400 million,” said Hepsina Rukato, chairman of the GDI board of directors.

The companies said that the initial infrastructure of roads, storage and residential facilities has been built.

The project is expected to create around 8,000 highly skilled jobs at full capacity.

PricewaterhouseCoopers and SFA Oxford provide analytical support to the project. Cresco Project Finance and EY have been engaged as financial advisers.

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Equity transactions on the stock market closed on a downturn yesterday, following price losses suffered by major highly capitalised stocks, especially Dangote Cement, and Total, as investors’ wealth depreciated significantly by 1.53 per cent.

Yesterday, the All-share index, which measures the performance of listed firms dropped by 657.07 points 1.51 per cent, the biggest loss in the month so far to 42,952.70 points, from 43,609.77 recorded on Tuesday.

Similarly, market capitalisation of listed equities declined by N236billion or 1.53 per cent from N15.666trillion to N15.430trillion.The drop in indices may, however, be attributed to profit taking by investors to recoup the investment from price appreciation of the previous week.Precisely, analysts from Codros Capital, said: “The drop is due to investors booking profit on previous gains in major stocks. Despite loss in today’s session, we believe legroom for gains still exist; more so, as investors position ahead of Q4 2017 corporate earnings releases.”

About 23 stocks constituted the losers chart at the end of yesterday’s trading. Dangote Cement emerged the day’s highest price loser with 9.90 kobo to close at N265.00 per share.Total followed with 9.80 kobo to close at N240.20 per share. Nestle lost 5.00 kobo to close at N1375 per share. Nigerian Breweries dropped 1.30 kobo to close at N125.60 per share. Guaranty Trust Bank shed 0.90 kobo to close at N47.60 per share.

However, 26 stocks appreciated in price, as Flour Mills topped the gainers’ chart with 1.40 kobo to close at N36.00 per share while GlaxoSmithKline followed with 1.00 kobo to close at N22.00 per share.Eternal Oil gained 0.59 kobo to close at N6.40 per share. Unilever appreciated by 0.50 kobo to close at N60.10 per share. Cadbury also added 0.40 kobo to close at N16.00 per share.

Zenith Bank dominated in volume terms with 64 million shares worth N2billion. Japaul Oil followed with 17 million units valued at N14million. Sterling Bank accounted for 16 million units worth N30million.

Fidelity Bank exchanged 16 million units worth N50million. Transnational Corporation traded 14 million units valued at N28million.On the whole, investors exchanged 270 million shares worth N5billion in 4,799 deals, down from 445 million shares valued at N1.9billion that changed hands in 5,078 on Tuesday.

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Investment inflow into the country, which doubled to $4.2 billion in third quarter of 2017 from the previous quarter’s level, is expected to continue in 2018. This is because Nigeria’s business environment remains more attractive and competitive to investors amid expectations of meaningful structural reforms, analysts at Codros Capital Limited have said.

Reviewing the 2017 economic performance and predicting the outlook of Nigeria’s macro economic environment for 2018, the Head, Research and Strategy of Codros capital, Christian Orajekwe, explained that there are strong indications that portfolio inflow into the country would increase tremendously in 2018, as investors are expected to actively involve in frontier market activities this year.

“Unless the growth expectations are being visited by some shocks and unless in a very adverse economic condition, I do not think we will experience any bubble,” he said.

Specifically, Orajekwe maintained that with oil price trading at levels not seen in over two and half years in the international market and the resurging reserves profile, there is positive outlook for Nigerian economy in 2018.
 
Also, sustained management of the foreign exchange market, which has reduced the countries over dependence on import and the accrued bills, is a boost to the nation’s economic growth.
 
The National Bureau of Statistics (NBS) in August 2017, released the capital importation report, stating that investment inflows into the country rose by 95.02 per cent from $884.1 million in the first quarter of 2017 to $1.79 billion in the second quarter.
 
The report, which was made available to newsmen, attributed the main driver of the quarterly growth in capital importation in the second quarter to 146.7 per cent increase in portfolio investments.This, according to the report, was followed by other investments, which grew by 95.02 per cent, and then Foreign Direct Investment, which increased by 29.8 per cent over the previous quarter. Similarly, investment inflow into the country also doubled to $4.2 billion in third quarter of 2017 from the previous quarter level.
 
Orajekwe however, listed instability in polity as one of the downside risks to portfolio flows into the country for 2018.“Downside risks to port folio flows, one of the reason why investors are expected to strongly bet on Nigeria assets in 2018 is because of the growth expectations. so in the events where the actual numbers begin to lag expectations, I think foreign investors reaction to this will be negative. 

“Corporate earnings is also very important, last year, the size of corporate earnings growth was major drivers of the inflow that we saw in our market so where corporate earnings begin to show adverse conditions with the economy, we think investors will react negatively,” he added.

He urged investors to ensure that they pick stocks of firms with good fundamentals, meet up with post listing requirements and consistent in filing their financials to the Nigerian Stock Exchange.“We do not expect our clients to invest in stocks without strong fundamentals and companies that have not reported their accounts for a long time and companies that are not open to analysts to discuss their numbers.So what we have seen so far is investors investing across board and in the event of shocks, those that are not fundamentally backed are the ones that will be most hit.”
 
Speaking further on the factor that could alter expected growth this year, the Head, Investment Banking of the firm, Femi Ademola, said stability in forex is imperative, noting that improved forex lured most of investors into the Nigerian market in 2017.“We think investors will focus more strongly on this, via avis government ability to earn dollars, if we continue to earn good dollars with transparency in our reform policies, investors will bring in more flows.

“But when there is adverse dollar condition so that the apex bank will begin to introduce some policies that investors are not very comfortable with, perhaps even where the Import and export window is still relevant, I think investors will go away from Nigerian market,” he said.

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Flour Mills Nigeria Plc has posted revenue of N427.5 billion and Profit After Tax of N13.27 billion for the nine months period ended December 2017. Specifically, the company’s nine months performance showed group’s revenue of N427.5 billion, up from N389.9 billion in 2016, representing a 10 per cent year-on-year increase.
 
The firm also reported a profit after tax of N13.27 billion for the nine months ended December 2017, compared to N7.39 billion in 2016, representing a year-on-year increase of 80 per cent.
 
The group in a financial statement made available to the Nigerian Stock Exchange also recorded profit before tax of N19.50 billion, in contrast to N10.3 billion in 2016, accounting for a year-on-year growth of 89 per cent.The company’s earnings per share stood at 456 kobo, up from 250 kobo, in 2016, showing an increase of 82 per cent year-on-year growth.

According to the group’s management, the food business was responsible for an increase of N44.7 billion of the Group’s turnover, coming from its flour, pasta and noodles products’ portfolio.It noted that the packaging business of the group contributed N1 billion to the group’s profit, an increase of 150 per cent.
 
The management noted that with a view to significantly improve on working capital, while reducing debts, the company recently proceeded with its rights issue programme, adding that it is expected that the programme will strategically position the company for sustainable growth.
 
The Group Managing Director of the company, Paul Gbededo, stated: “We are delighted to report another quarter of solid performance, despite harsh operational environments, which have been compounded further by traffic congestions in Apapa.
 
“Our food business has continued to show impressive results, in line with our strategy to lead the market in all major categories. We shall continue to drive efficiency and grow our footprints in the Agro-allied segments also in achieving our core focus of feeding the nation, everyday”.
 
The Chief Finance Officer (CFO), Jacques Vauthier, in his comment, said that the management of the company was confident that this sector will record even stronger performance as the year progresses. “To this end, we are enhancing our marketing activities to push the brand’s presence into newer outlets while strengthening present market share,” he added.

Flour Mills posted 44.89 per cent in profit after tax for the half year ended September 30, 2017.The group in a filing with the Nigerian Stock Exchange (NSE) said its profit after tax stood at N9.36 billion, compared to N6.46 billion for the same period in 2016.

Profit before tax was N13.48 billion as against N8.80 billion for the same period in 2016.Revenue was N298.44 billion for the six months ended 30th September 2017, an increase of 17 per cent when compared with N255.30 billion of the same period last year.

Gbededo added: “Our half year results show continued growth through most segments of our businesses, especially in the food business, delivering strong top and bottom line financials in line with our objectives.
 
“The Group recorded growth from volume and product mix. This growth was despite what continued to be a challenging business environment.“Overall, the business shows an impressive performance in the first half of the year. We are positive that we are on track to meet our growth targets for the remaining part of 2017/18 financial year. The food business value chain was responsible for an increase of N40 billion of the Group’s turnover.

]]> https://bartonheyman.com/africa-update-cdc-seeks-new-investments-in-senegal-and-cote-divoire/ Thu, 19 Oct 2017 10:11:20 +0000 http://bartonheyman.com/?p=4039 […]]]>

The investment is expected to create 1,000 new jobs at Denso’s facility in Tennessee, according to the company.

“This is an investment in the future of Denso, and also the future of transportation. We are seeing dramatic shifts in the role of transportation in society, and this investment will help position us to meet those changing demands,” said Kenichiro Ito, chairman of Denso North America and chief executive of Denso International America.

Denso’s move comes amid a growing trend by global automakers to shift to electric vehicles and new connected technologies for automobiles.

Denso last month announced a partnership with fellow Japanese group Mazda to develop electric vehicles.

At the 2016 Consumers Electronics Show, Denso unveiled its system of vehicle to vehicle (V2V) communication designed for accident avoidance and reducing congestion.