CAPITALDIGEST DAILY NEWS 22 AUGUST 2021

MONDAY 16/8/2021 – NIGERIA’S DAILY CONSUMPTION OF PETROL DROPS TO 56M LITRES Despite ongoing efforts by the Federal Government to ensure continuous increase in Premium Motor Spirit, PMS, also known as petrol daily supply, Nigeria witnessed a slight declined in distribution of the product to 56 million litres per day in the month of April. The supply drop stood at 3 per cent when compared to 57.49 million litres per day recorded in the previous month of March 2021. This also coming even as the Nigerian National Petroleum Corporation, NNPC, announced a trading surplus of N43.57bn in April 2021 representing a 23.64 per cent increase over the N35.24bn surplus recorded in the previous month of March 2021. Trading surplus or trading deficit is derived after deduction of the expenditure profile from the revenue for the period under review. According to the corporation’s monthly Financial and Operation Report (MFOR) for the month of April sighted by our correspondent, the rise in trading surplus was attributed to the activities of the Corporation’s Upstream subsidiary, the Nigerian Petroleum Development Company (NPDC), such as crude oil lifting from Oil Mining Lease, OML, 119 (Okono Okpoho) and OMLs 60, 61, 62, 63 (Nigerian Agip Oil Company), as well as an increase in gas sales. The report further stated that, “The NNPC Group operating revenue in April 2021, as compared to March 2021, increased by 17.73 per cent or N80.67bn to stand at N535.61billion. “In order to ensure uninterrupted supply and effective distribution of fuel across the country, a total of 1.67billion litres of petrol translating to 55.79mn litres/day were supplied in the month under review in the downstream sector. The Corporation has continued to diligently monitor the daily stock of petrol to achieve smooth distribution of petroleum products and zero fuel queue across the Nation. “Also, in the Gas sector, a total of 209.27 billion cubic feet (bcf) of natural gas was produced in the month under review, translating to an average daily production of 6,975.72million standard cubic feet per day (mmscfd). “For the period of April 2020 to April 2021, a total of 2,902.52bcf of gas was produced, representing an average daily production of 7,369.76mmscfd during the period.” “Similarly, expenditure for the month increased by 17.24 per cent or N72.34billion to stand at N492.05billion, while expenditure as a proportion of revenue stood at 0.92, same as last month. “The positive outlook was further consolidated by the robust gains of two other subsidiaries namely: Duke Oil and the National Engineering and Technical Company Limited (NETCO),” the report added. TUESDAY 17/8/2021 – NIGERIA RECORDED $85.21BN NET FOREIGN LIABILITIES – IMF Nigeria’s foreign liabilities stood at $187.36bn while the country’s foreign assets amounted to $102.15bn as of December 2020, the International Monetary Fund has said. From 2016, Nigeria’s foreign liabilities jumped by 42.41 per cent from $131.56bn, while foreign assets rose by 13.67 per cent from $89.87bn. Foreign assets are the investment securities owned by the Nigerian government, companies, or Nigerians in foreign countries while foreign liabilities are assets owned by foreign governments, corporations and individuals in Nigeria. This places Nigeria’s Net International Investment Position, which is foreign assets less liabilities at -$85.21bn as of December 2020. Corporate Finance Institute, a Canadian finance repository, says that a positive NIIP makes a country a net creditor while a negative NIIP implies that the country is a net debtor. CFI also said the NIIP was a measure of a country’s financial condition and its sustainability to take on more financial credit. At -$85.21bn, foreigners own more assets in Nigeria than the value of foreign assets owned by FG, the state governments, Nigerian-owned companies and Nigerian individuals. To understand Nigeria’s creditworthiness, the IMF measures the NIIP as a percentage of a country’s GDP. With a GDP of $432.30bn (World Bank), Nigeria’s NIIP stood at -19.71 per cent as of December 2020. Alessandro Turrini and Stefan Zeug of the European Commission’s Directorate-General for Economic and Financial Affairs in a 2016 paper titled ‘Benchmarks for Net International Positions’ stated that the median value of NIIP norms which account for balance of payments and consistency with healthy financial position is set at -17 per cent of GDP. At -19.71 per cent, Nigeria’s current account deficits due to lower earnings from oil revenues in 2020 places the country below the benchmark. However, the same paper says that when measuring the immunity of a country against the risk of external crises which is measured by a separate metric called NIIP prudential, the median value ‘is about -44 per cent of GDP’. WEDNESDAY 18/8/2021 – STOCK MARKET REBOUNDS AS INVESTORS GAIN N23BN The equities market on the Nigerian Exchange Limited rebounded from the loss recorded on Monday with investors gaining N23.04bn as the market capitalisation hit N20.61tn. The NGX All-Share Index rose by 0.11 per cent to 39,550.36 basis points at the end of trading on the floor of the exchange on Tuesday from 39,505.40bps recorded the previous day. The trading volume dropped by 21.60 per cent as investors exchanged 110.77 million shares valued at N3.08bn in 3,305 deals, compared to 141.28 million shares worth N1.64bn traded in 3,393 deals on Monday. Industrial firms and the NGX Premium Board led gains as they rose by 1.73 per cent and 1.36 per cent respectively with other indices such as the NGX Main Board (-1.07per cent), Oil&Gas (-0.15per cent), Insurance (-1.17per cent), Consumer Goods (-4.61per cent) depreciating by the end of trading. Market sentiment, as measured by market breadth, was neutral as the gainers and losers were 16 each. Honeywell Flour Mills Plc grew by 9.78 per cent, closing at N2.47 per share and leading the gainers’ chart. Pharma-Deko Plc followed with its 9.24 per cent increase to end the day at N1.30 per share. Wema Bank Plc, Neimeth International Pharmaceuticals Plc and Dangote Cement Plc were the other top gainers on Monday, with +3.70 per cent, +3.66 per cent and +3.31 per cent gains respectively. The losers’ table was led by SCOA Nigeria Plc, whose share price fell by 9.74 per cent to N1.76. THURSDAY 19/8/2021 – SEC TO COLLABORATE WITH STAKEHOLDERS ON CAPITAL MARKET DISPUTE RESOLUTION The Director-General of the Securities and Exchange Commission (SEC), Mr. Lamido Yuguda has expressed the commission’s readiness to collaborate with relevant Alternative Dispute Resolution professionals as a means to ensuring effective dispute resolution in the capital market. Yuguda stated this when the Abuja Chapter of the Chartered Institute of Arbitrators (CIArb) led by its chairman, Mr Sola Ephraim-Oluwanuga held a meeting with him in Abuja yesterday. Yuguda stated that the need for a veritable dispute resolution mechanism has long been recognised in the capital market. He said that traditional litigious and adversarial dispute resolution mechanism has fallen short of achieving its purpose, adding that investment in the sector would suffer if disputes among investors are not well resolved. According to him, “The whole nature of the market is that people come together to make investments. But along the line, something happens and the same people actually fall out. “And the problem with investment is that if the true parties to an investment fall out, investment falls. We understand that both parties usually cling to their positions but there is a superior situation, which could benefit both parties. This is where an arbitrator is needed to actually bring them to that position. And that arbitrator, who is seen as independent, performs his professional duty by talking to the parties.” Earlier, the CIArb Chairman, Mr. Ephraim-Oluwanuga said the institute was desirous of partnering with SEC to deepen the access to justice in the Securities Industry. He said CIArb has trained competent International arbitrators with demonstrable experience in capital market issues, adding that the institute can also assist the SEC in training and capacity building of its personnel. FRIDAY 20/8/2021 – CBN WARNS MICROFINANCE BANKS AGAINST FOREX TRANSACTIONS The Central Bank of Nigeria has warned microfinance banks against performing certain non-permissible activities, including wholesale backing and foreign exchange transactions. This was contained in a circular titled ‘Cessation of non-permissible activities by microfinance banks’ released on Friday by Ibrahim Tukur on behalf of CBN’s Financial Policy and Regulation Department. The circular read, “The Central Bank of Nigeria has observed the activities of some microfinance banks that have gone beyond the remit of their operating licence by engaging in non-permissible activities, especially wholesale backing, foreign exchange transactions and others. “Given the comparatively low capitalisation of MfBs, dealing in wholesale and/or foreign exchange transactions are a significant risk with dire consequences for financial system stability.” The bank said it had, therefore, become imperative to remind all MfBs to strictly comply with the extant Revised Regulatory and Supervisory Guidelines for Microfinance Banks in Nigeria 2012. It said, “For the avoidance of doubt and consistent with the permissible activities of specialised micro-institutions: MfBs are strictly prohibited from foreign exchange transactions. “MfBs are to primarily focus on providing financial services to retail and/or micro-clients with a limitation of N500,000 per transaction for Tier 2 Unit MFBs and N1m for other categories.”