31 Oct

Daily Watch – Budget 2016 only half spent, Dangote profit plummets

  • Nigeria spent only a little more than half its budget for 2016 through September, even though the year is three-quarters over, the budget ministry said on Friday. The ministry however said it had faced “unanticipated revenue shortfalls” without giving details on the shortfalls. At the end of September, the ministry said, ₦3.6 trillion ($11.82 billion) of this year’s ₦6.06 trillion budget had been spent. Of that, ₦754 billion went for capital expenditures, exceeding 2015 levels. Debt service has been met on schedule, it said, adding that ₦1.14 trillion had been spent on domestic and foreign debt. The ministry gave no figures for revenue, but it said the unspecified shortfalls were caused by militant attacks on oil facilities, which temporarily cut output by more than half. Nigeria has seen oil revenues slump, eroding public finances and its currency. The government has been seeking to fund a 2016 deficit of ₦2.2 trillion from foreign and domestic debt. So far, only a $1 billion loan from the African Development Bank has been confirmed. Nigeria is currently trying to sell Eurobonds worth $1 billion, for which, according to the finance minister it has received commitments worth $500 million.
  • The FG plans to launch a $10 billion infrastructure investment programme in the Niger Delta. President Muhammadu Buhari made this known during the unveiling of the Seven Big Wins roadmap, a short to medium term strategy framework to grow country’s oil and gas sector. The president said he would be holding a crucial meeting with regional leaders on Tuesday to discuss a wide range of issues as part of efforts to end the agitations from the oil-rich region. The region has been a hotbed of crises for some time, particularly from armed groups led by the Niger Delta Avengers pushing for more share of the oil resources from the area. Oil production has fallen from an average of over 2.1 million barrels production capacity a few years ago to less than 1.1 million barrels, with critical export facilities, including the Forcados export terminal, constantly shut down due to incessant sabotage.
  • The CBN sold about ₦51 billion ($168 million) worth of treasury bills on Friday to mop up liquidity as the overnight lending rate traded flat around 10 percent, traders said. The bank sold ₦25 billion of 174-day open market operation bills at 18 percent and ₦26 billion of the 364-day paper at 18.5 percent at an auction on Friday. That brings the total of debt sales this week to ₦370.67 billion as the central bank has been trying to remove cash from the banking system to contain annual inflation, which hit a more than 11-year high in September. Liquidity got a lift by the regulator’s budget allocations for government agencies on Monday and the repayment of matured treasury bills due on Thursday. Traders said major players were willing to lend their cash at 10 percent for overnight lending, unchanged to Thursday.
  • Resort Savings and Loans is set to appoint an external auditor to carry out a forensic audit to determine details of fraud allegedly perpetrated by the previous management of the company. The company’s chairman, Senator Sunday Fajinmi, who was appointed during the company’s board meeting on October 17, said that an internal audit it conducted revealed massive financial mismanagement to the tune of ₦165 million. According to him, the matter has been reported to the Economic Financial Crimes Commission, which will carry out further investigations. Fajinmi told journalists at a news briefing in Lagos that a new management had taken over the operations of the company and was ready to hit the ground running. He said, “We have contacted the EFCC and they are studying all the evidence we have given to them. Fortunately, this evidence was not discovered in a day, they kept revealing themselves.” Resort Savings has been faced with allegations of diversion of depositors’ money and mortgage loans in the past few months. It was reported that the Consumer Protection Council had pledged to probe the activities of the company based on complaints it received from the bank’s customers.
  • Dangote Cement saw profit drop by ₦24.47 billion in the nine months ended September 30, 2016. The company attributed the drop from ₦157.993 billion recorded in the Q3 2015 to ₦133.521 billion in the Q3 2016 to money spent on the cost of sales for the period. The firm, however, recorded increased revenue of ₦442.09 billion in the last nine months, according to an NSE filing. The revenue for the Q3 2016 was 20.97 percent higher than the figure recorded during the same period in 2015, despite an unfavourable operating environment, the company said. It attributed the development to the management’s strategy to leverage its pan-African status. The report indicated that Dangote Cement increased the revenue by ₦76.642 billion from the ₦365.450 billion it made during the same period in 2015. Forex gulped a huge amount of its revenue, as it spent ₦231.684 billion on the cost of sales during the review period as against ₦138.694 billion spent on the same purpose last year, the report indicated. Reflecting on its outlook, the company’s MD, Onne Van der Weijde said the management was confident of delivering strong growth this year despite the challenging economic conditions facing Nigeria and the rest of Africa.
  • The Lagos Chamber of Commerce and Industry says it has admitted additional 169 companies into the organisation, bringing the total number of companies admitted into the chamber between April and October this year to 243. According to its President, Nike Akande, the latest figure was the highest in the history of the chamber. She said, “I must commend the membership committee for a job well done. This is also a tribute to the rising profile of the chamber in recent times.” She urged managers of the newly inducted firms to “pay adequate attention to the integrity of our business transactions and practices. I, therefore, enjoin you all to be committed to the ideals of high ethical standards and responsible corporate citizenship.”