Daily Watch – Stocks bled 40% value in 2016, Telcos lose interest in base stations

3rd February 2017

  • The CBN raised ₦177.22 billion via the sale on Wednesday of a one-year treasury bill but had to offer a yield well in excess of its benchmark interest rate to lure investors in the face of galloping inflation. The one-year bill yielded 18.54 percent, in line with December’s 18.55 percent annual inflation rate but far higher than the central bank’s benchmark interest rate of 14 percent. The auction on Wednesday was the third this year at which the central bank has offered the one-year bill at a yield of above 18 percent. The central bank had previously sold short-term debt at yields below inflation for months. The sale drew subscriptions of almost four times the amount initially targeted and the issue amount was increased. December’s inflation reading marked the 11th monthly rise in a row and was more than an 11-year high. The bank raised a total of ₦302.4 billion at Wednesday’s auction, more than the ₦242 billion planned due to strong demand for the one-year debt. It sold a six-month bill at 17.24 percent to raise ₦80 billion and a three-month note at 13.79 percent to fetch ₦45.18 billion.
  • Share dealing on Nigeria’s bourse dropped 40 percent to ₦1.15 trillion ($3.8 billion) in 2016, the stock exchange said on Thursday, as foreign investors unnerved by the country’s illiquid currency markets sold equities. The NSE fell 6.2 percent last year. In dollar terms, stocks shed 40 percent in 2016 as the naira fell by a third in the official market against the dollar due to central bank currency reforms. In 2017, stocks have so far fallen a further 3.6 percent. On the black market meanwhile, the naira is almost 40 percent cheaper than the official rate, due to dollar shortages caused by low oil prices. The stock exchange said foreign investors traded shares valued at ₦517.55 billion in 2016, down from ₦1.03 trillion a year earlier, with more than half of the transactions deals to sell shares. It said domestic transactions accounted for 55 percent of total share dealing in 2016, compared with the last four years when foreign players dominated the stock market. The NBS on Wednesday said total capital imports into Nigeria in 2016 fell to a nine-year low.
  • Lagos has paid ₦597 million as accrued pension rights to 148 retirees from the Mainstream Civil Service, Local Governments and State Universal Basic Education Board, Teachers Establishments and Pensions Office and other parastatals in January 2017. Specifically, the Akinwunmi Ambode administration has been able to pay the total sum of ₦24.426 billion as accrued pension rights to 5,668 retirees under the Contributory Pension Scheme since August 2015. Speaking at the presentation of Retirement Benefit Bond Certificates to the 35th batch of contributory pension scheme retirees – the first this year – the Director-General, Folashade Onanuga reiterated the Governor’s desire to see retirees enjoy their lives out of office without stress.
  • Telcos have significantly reduced their efforts at expanding network coverage to underserved communities in the country as well as adding capacity, thereby frustrating the FG’s plans to extend telecommunications services to an additional 40 million Nigerians. According to Nigeria CommunicationsWeek, only a small number of base transceiver stations have been built by both telcos and tower operators for network coverage and capacity within the last one year. The technology blog quotes an unnamed staffer of one of the tower operators as saying that except for a few internet service providers playing in the 4G LTE services space that have requested for towers in certain commercial viable locations; GSM operators no longer bother about extending coverage to underserved areas. The number of BTS in the country has remained around 26,000 but experts say the country needs over 180,000 BTS to effectively cover the country with improved quality of service.
  • BUA Rice, a subsidiary of the BUA Group of Companies, has signed a partnership agreement with the Kano and Jigawa Rice Farmers Association to develop an efficient outgrowers’ scheme. The company said the objective of the deal was to gradually put an end to the Nigerian consumer’s insatiable desire for imported rice by growing rice which will favourably compare with the imported ones in terms of quality, taste and affordability. According to BUA, when fully operational, the scheme will involve the supply of improved seeds, technical expertise, as well as the company’s milling and processing infrastructure in a programme, which is expected to drive BUA’s processing capacity from 200,000 tonnes to one million tonnes by 2021.