US-based index provider, Morgan Stanley Capital International has deleted First Bank Nigeria Holdings, and Ecobank from its main frontier markets index, with effect 26 November. The exit of ETI and FBN Holdings follows changes in the constituents of the frontier Index as announced by MSCI, a leading provider of research-based indexes and analytics. The exiting stocks have far underperformed the NSE benchmark index (-16.68 percent) year-to-date. ETI at ₦7 per share has lost 50 percent of its year open value while FBN Holdings at ₦5.45 per share has decreased this year by 31.3percent. MSCI Frontier Markets Indexes will witness four additions to and eight deletions from the Index. The three largest additions to the MSCI Frontier Markets Index measured by full company market capitalisation will be Nova Ljubljanska Banka (Slovenia), Ho Chi Minh City Dev Bank (Vietnam) and Commercial Bank Ceylon (Sri Lanka). There will be 13 additions to and 17 deletions from the MSCI Frontier Markets Small Cap Index. With over 45 years of expertise in research, data and technology, MSCI powers better investment decisions by enabling clients to understand and analyze key drivers of risk and return and confidently build more effective portfolios.
The Chinese government said it would not provide funds for the Mambilla Power project until Nigeria settles a $5.8 billion legal dispute. In an 18 September letter to the minister of power, Sale Mamman, the project manager for the Chinese partners, He Yongjun, said that the China Exim Bank, which is expected to provide 85 percent of the joint funding, will not finance the project until the legal issues are resolved. According to China’s financing policy, the Export-Import Bank of China cannot provide loans to a project with legal disputes, which is the main reason the project has not entered into substantive financing negotiations so far. The China Gezhouba Group Corporation of China and China Geo-Engineering Group Corporation, in 2006, had won the bid for a joint venture to execute the hydropower project with a proposed capacity of 3,050 megawatts — the single biggest power plant in Nigeria. Meanwhile, in 2003, the ministry of power had awarded the build, operate and transfer contract of the project to Sunrise Power and Transmission Company, a local content partner. In November 2017, the ministry signed another engineering, procurement and construction contract with Sinohhydro Corporation of China, CGGCC and CGGC to form a joint venture for the execution of the PROJECT — excluding SPTCL. As a result, SPTCL dragged the federal government and its Chinese partners before the International Chamber of Commerce in Paris, France, over an alleged breach of contract. Leno Adesanya, chief executive officer of SPTCL, claimed the company had spent millions of dollars with financial and legal consultants to raise about $6 billion for the execution of the project, yet the company has suffered a lot over the years “through improper administrative interruptions and interventions”.
Dangote Industries has signed an agreement with the Togolese government to set up a cement and fertiliser factory in the country. This will further position the company to become the main supplier of fertiliser in West Africa. The company controlled by Nigerian billionaire, Aliko Dangote, will mine an estimated 2 billion tons of phosphate in nearby Togo for processing as much as 1 million tons of fertiliser a year at a new complex in Lagos, according to a joint statement by the company and the Togolese presidency. Phosphate reserves in Togo will be made into phosphate fertilisers, making the Dangote Group the largest ammonia producer in Africa. Under the agreement, Togo will provide access to phosphate resources and the Dangote Group will provide access to ammonia, and to the Nigerian market. The fertiliser project is estimated to cost $2 billion and mining development work will start before the end of 2019. Dangote is also planning to build a cement plant with an annual capacity of 1.5 million tons in the Togolese capital, Lome. The $60 million facility is scheduled to start operating by the end of next year, using clinker from Togo and Nigeria. The cement factory, with an annual capacity of 1.5 million tonnes, will use clinker from Togo and Nigeria and will meet both local and neighbouring countries’ demand. The construction of the cement plant in Lome is scheduled to start in the first quarter of 2020 and its commissioning scheduled to take place before the end of 2020. The investment is estimated at $60 million and is expected to create 500 direct jobs.
The Beninese President, Patrice Talon, has said that Francophone countries in West Africa want more control over the management of their currency and plan to move some reserves from France. The eight members of the West African Monetary Union “unanimously agree” on ending a decades-old model whereby their foreign-exchange accumulation is kept at the French Treasury, Talon told Radio France Internationale. Their currency, the CFA Franc, is pegged to the Euro, and its convertibility is guaranteed by the former colonial ruler. Established after World War II, the CFA Franc’s use frequently triggers debate about the region’s continued economic dependence on France and the view that the currency is artificially strong and curbs the region’s competitiveness. Its supporters cite the region’s low inflation and the currency’s stability relative to other African countries as reasons for its continued use. Talon did not give a date but said “everyone is already there,” in response to a reference to French Finance Minister Bruno Le Maire’s openness to a reform of the currency. “Psychologically, with regards to the vision of sovereignty and managing your own money, it’s not good that this model continues, ” he said. The regional central bank will manage the reserves and distribute them to partners around the world, including Japan, Europe, China and North America, said Talon. Ivory Coast, with an economy of about $40 billion, is the biggest among the users of the CFA Franc in West Africa. Six other countries in Central Africa use the same model.