25 Feb

Daily Watch – MTN bends its knee, IMF warns Nigeria on economic trends

  • MTN has paid about $250 million out of the $3.9 billion fine imposed on it by the Nigerian Communications Commission. The South African company has also withdrawn its legal action against Nigeria. MTN had taken the government to court hoping to get the fine slashed through legal proceedings. The market yesterday widely welcomed steps by MTN to de-escalate tension in its relationship with the NCC. MTN shares rose 2 per cent on the Johannesburg stock exchange after the announcement of the withdrawal of the court case, as well as payment of about $250 million by the company. Analysts said the steps should pave the way for a negotiated settlement by creating a conducive atmosphere for further negotiations by the parties.
  • The IMF has warned that unless Nigeria’s government took urgent steps to stem the current economic decline, there could be a worsening of unemployment and widespread poverty in Africa’s largest economy. The fund therefore called on Nigeria to stop pegging its currency and to remove curbs on access to foreign exchange as economic growth is estimated to have eased to its slowest pace in 16 years amid low oil prices. The economy of Africa’s largest oil producer expanded 2.8 percent last year, compared with 6.3 percent in 2014, the IMF said in a statement on Wednesday. That’s probably reversed progress in reducing widespread unemployment and poverty, while straining the banking industry and company balance sheets, the Washington-based lender said.
  • N370.4 billion was shared in January among the three tiers of government as allocations for carrying out their duties and obligations. In December 2015, The sum of N387.771 billion was shared among the Federal, States and Local Governments as revenue. A breakdown of the revenue among the three tiers, states that the Federal Government received N137.5 billion, representing representing 52.68 per cent, states N69.7 billion, representing 26.72 per cent. The local governments received N53.7 billion, amounting to 20.60 per cent of the amount distributed. A total sum of N6.3billion was refunded to the federation by the NNPC and was also proposed for sharing.
  • FBN Holdings Plc retreated to its lowest level in almost 13 years after Nigeria’s largest lender by assets warned that full-year 2015 earnings would drop from the previous year. The Lagos-based bank’s shares fell 4.4 percent to N3.47 per share at 11:13 a.m. on Wednesday, its lowest since August 2003 on a closing basis. “The reduction in earnings is as a result of the recognition of impairment charges on some specific accounts resulting from a reassessment of the loan portfolio within our commercial banking business,” FBN said in a statement on the website of the Nigerian Stock Exchange. The reassessment is driven by the “challenging” economic environment along with fiscal and monetary headwinds which have resulted in a marked reduction in domestic output, the bank said.