CAPITALDIGEST DAILY NEWS. 02 AUGUST 2021.

MONDAY 26/7/2021 – $1.46BN IOC CASH CALL OUTSTANDING AS FG PAYS N3.22BN The Federal Government has paid a total of $3.22bn as cash call arrears to international oil companies, leaving an outstanding balance of $1.46bn. It disclosed this in a document on Joint Venture repayment agreement status presented by the Nigerian National Petroleum Corporation to the Federation Accounts Allocation Committee in June 2021. In the document, which was sighted by our correspondent in Abuja on Sunday, the government explained that the $3.22bn was the latest update on its pre-2016 cash call arrears repayment as of May 31, 2021. It put the total negotiated debt at $4.69bn, total payment to date at $3.22bn, while outstanding balance was $1.46bn. The document outlined the IOCs that got the funds to include Shell Petroleum Development Company, Mobil Producing Nigeria, Chevron Nigeria Limited, Total Exploration and Production Nigeria, and Nigeria Agip Oil Company. Figures from the document showed that the government, through NNPC, had so far paid SPDC a total of $455.3m, leaving an outstanding of $917.2m; while it had completely cleared the $833.75m cash call arrears to MPN. CNL had received a total payment of $1.06bn, with an outstanding balance of $34.78m; while TEPNG got $395.39m, leaving its outstanding at $215.58m. The Federal Government had also settled the cash call arrears of NAOC up to the tune of $477.43m, while $297.23m was put as outstanding. In another document from the Federal Ministry of Finance, Budget and National Planning, the government explained that it carried out negotiations of billions of dollars in arrears of cash calls inherited when the current administration assumed office. It said the negotiations resulted in an agreement for a significant discount of about $1.7bn. It stated that the NNPC on behalf of the Federal Government commenced the payment of the arrears to the oil companies since 2017.     TUESDAY 27/7/2021 – EQUITIES MARKET REBOUNDS ON IMPROVED HALF-YEAR CORPORATE EARNINGS The equities market rebounded last week as investors reacted positively to the beginning of the half year earnings season. Although the market was opened for only three days following the public holiday declared on Tuesday and Wednesday to mark the Eid-el-Kabir celebration by Muslims, the Nigerian Exchange (NGX) All-Share Index (ASI) appreciated by 1.9 per cent compared with a decline of 0.12 per cent the previous week. Specifically, the NGX ASI closed higher at 38,667.90, while market capitalisation closed at N20.147 trillion. Market analysts attributed to positive performance to investors’ reactions to improved results for the half-year ended June 30, 2021. Unilever Nigeria Plc, Total Nigeria Plc and United Capital Plc reported their unaudited results, showing improvement in all performance indicators. Total Nigeria Plc recommended an interim dividend of N4.00 per share. According to analysts at Cordros Securities, this week, investors will be focused on the outcome of the Monetary Policy Committee (MPC) meeting to gain further clarity on the movement of yields in the fixed income market. “We also expect the NGX floor to be flooded with corporate earnings as more companies publish their unaudited H1-21 numbers, accompanied by dividend declarations. We believe this should provide respite for market performance. Overall, we advise investors to take positions in only fundamentally justified stocks as the weak macro story remains a significant headwind for corporate earnings for corporate earnings,” they said. Meanwhile, investors traded 896.174 million shares worth N5.235 billion in 11,714 deals last week, down from 1.008 billion shares valued at N10.923 billion that exchanged hands the previous week in 17,297 deals. The Financial Services Industry (measured by volume) led the activity chart with 718.570 million shares valued at N3.009 billion traded in 6,223 deals; thus contributing 80.18 per cent and 57.48 per cent to the total equity turnover volume and value respectively.   WEDNESDAY 28/7/2021 – NAIRA SLIDES TO 505/$ AS CBN STOPS FOREX SALE TO BDCS The naira fell slightly to the dollar at the parallel market few hours after the Central Bank of Nigeria on Tuesday announced the discontinuity of forex supplies to the Bureau de Change Operators in the country. The CBN Governor, Godwin Emefiele, announced the end of forex sales and new licence approval after the Monetary Policy Committee two-day meeting in Abuja on Tuesday. He expressed the MPC’s disappointment over their continuous abuse of the privilege. At the end of the meeting, the MPC retained the lending rates and other parameters. Reading the MPC’s decision, Emefiele said, “Based on the above considerations, the MPC made the decision to hold all policy parameters constant; believing that a hold stance will enable the continued permeation of current policy measures in supporting the recorded growth recovery and macro-economic stability. “The committee thus decided by a unanimous vote to retain the Monetary Policy Rate at 11.5 per cent; retain the asymmetric corridor of +100/-700 basis points around the MPR; retain the CRR at 27.5 per cent; and retain the Liquidity Ratio at 30 per cent.” Speaking on the decision to stop forex to the BDCs, Emefiele said the MPC noted with disappointment and great concerns that the BDCs had defeated their purpose of existence to provide forex to retail user, but instead, they had become wholesale and illegal dealers.     THURSDAY 29/7/2021 – ‘FUNDING CHALLENGES UNDERMINE SMES’ GROWTH IN AFRICA’ Analysts who spoke at a recent webinar organised by the American Business Council in Nigeria, in collaboration with US Chamber of Commerce, Amcham Ghana and Amcham South Africa on the US-Africa relations, have identified lack of adequate funding as a major challenge to the growth of Small and Medium Enterprises (SMEs) in Africa. The analysts were of the view that SMEs across Africa are faced with serious funding challenges, despite their importance to national development. Citing the case of Nigeria, the analysts said: “Despite the significant contribution of SMEs to the Nigerian economy, challenges still persist that hinder the growth and development of the sector. In Nigeria, SMEs contribute 48 per cent of national GDP, and account for 96 per cent of businesses and 84 per cent of employment.” They explained that the Organised Private Sector (OPS) had raised concerns about the inability of manufacturers and small businesses to access the various interventions amounting to N1 trillion from the Central Bank of Nigeria (CBN). The Deputy Assistant Secretary of State for African Affairs, Akunna Cook shared that the United Stares of America is very keen to strengthen the Micro, Small and Medium Enterprises (MSMEs) space in Nigeria by encouraging US MSMEs to invest in Nigeria. A 2018 survey carried out by the National Bureau of Statistics (NBS) in collaboration with the Small and Medium Enterprise Development Agency in Nigeria (SMEDAN), revealed that there were 41.5 million MSMEs in Nigeria. According to a recent PwC survey, a funding gap of about N617 billion for small businesses exists in the country, necessitating the need for development finance institutions (DFIs) and other stakeholders to reduce access barriers against businesses in the country.     FRIDAY 30/7/2021 – BANKS’ CEOS SUMMON EMERGENCY MEETING OVER BDCS’ FOREX BAN Bank Chief Executive Officers on Thursday, held an emergency meeting on how to ensure compliance with the new forex directive of the Central Bank of Nigeria. After the meeting, they spoke during a webinar organised to give an update on the banks’ preparedness to be the main channel of forex distribution, following the recent discontinuity of forex supply to the BDC operators by the CBN. The executives assured the public that banks would make forex available to customers in accordance with the CBN’s directives. After the last Monetary Policy Committee meeting, the Central Bank Governor, Godwin Emefiele, had ordered all Deposit Money Banks to set up teller points at designated branches across the country to fulfil legitimate FX request for personal travel allowance, business travel allowance, tuition fees, medical payments and SMEs transactions, among others. Speaking at the webinar, the Group Managing Director/Chief Executive Officer, Access Bank Plc, Herbert Wigwe, said, “The banking industry as a whole was willing and ready to carry out this function. The banks have very strict compliance measures, in terms of verification and making sure that people who do apply are eligible. “All Nigerian banks will be able to meet these requirements. If you look at all the branches nationwide, you will know that the banks have more than enough capacity to do this.”