20 Oct

Daily Watch – Barclays on the investor prowl for 9mobile, BudgIT places states’ debt at ₦3.89 trillion

  • Nigeria has revised down its forecast for 2017 economic growth to 1.5 percent from 2.19 percent, according to a document seen by Reuters on Thursday. Oil production, on which Nigeria relies for about two-thirds of government revenues, was at 1.9 million barrels per day for 2017, as of July, against an estimated 2.2 million barrels per day, said the document. Titled “The 2018-2020 Medium Term Expenditure Framework and Fiscal Strategy Paper”, the document was prepared by the Ministry of Budget and National Planning and is dated August 2017.
  • Nigerian lenders have picked Barclays to try to find new investors for debt-laden 9mobile, Reuters quotes two banking sources as saying on Thursday. Barclays has started work on the mandate and is in the process of setting up a database for prospective investors to conduct due diligence, they said. Banking sources had previously said Citigroup and Standard Bank were in the running for the role. But the lenders decided against them due to their previous links with 9mobile, the sources said on Thursday. Standard’s local unit, Stanbic IBTC Bank, is among the group of lenders to 9mobile while Citi has advised the telecom company, formerly known as Etisalat Nigeria, in the past, they said. Etisalat Nigeria took out a $1.2 billion syndicated loan from a group of 13 local banks but struggled to make repayments this year due to a currency crisis and recession in Nigeria. The CBN intervened to save the company from collapse and prevent creditors from putting it into receivership, leading to a change in its board and management, as well as the new name 9mobile. The crisis forced the telecoms company’s one-time parent Etisalat to terminate its management agreement with its Nigerian business and surrender its 45 percent stake to a trustee following the CBN’s intervention. 9mobile has 20 million subscribers with a 14 percent share of the Nigerian market.
  • BudgIT, a civic tech organisation, has expressed worries over the increasing rate of debt profile of states. Speaking at the launch of the organisation’s state of state report in Abuja on Thursday, Oluseun Onigbinde, BudgIT’s lead partner, said the exchange rate has made it difficult to service such loans. He said states’ debt rose from ₦3.03 trillion in 2015 to ₦3.89 trillion in 2016. According to him, Lagos has 24.2 percent of the total debt stock of state governments, having risen from N500.8bn in 2014 to ₦734.7 billion in 2016. “Total debt stock of Nigerian states has increased significantly from the 2012 level of ₦1.79 trillion to ₦2.12 trillion in 2014. With increased inability to meet recurrent expenditure obligations and increased pressure, most states resort to more debt uptake,” he said. A report released by the OAGF showed that Nigeria’s 36 states spent ₦2.67 billion to service external debt in September alone.
  • Dangote Cement is still interested in acquiring South African rival PPC and would do a deal at the right price, its outgoing chief executive officer Onne van der Weijde said on Thursday. Weijde said PPC was a “good fit” for Dangote Cement, which is majority owned by Africa’s richest man, Aliko Dangote. “We are still very much interested at the right price. We think it’s a good fit and we certainly would like to do a deal,” Weijde told an analysts call discussing its nine months earnings. Dangote Cement made an approach to PPC in September, but later withdrew, saying it did not want to get into a lengthy process with an uncertain outcome, Weijde told the call, adding that the Nigerian company made an offer. PPC is already the subject of an all-share merger bid by local rival AfriSam that values it at $700 million. Dangote Cement has invested $6.5 billion to develop cement plants across Africa.
  • The Johannesburg Stock Exchange has suspended trading in shares belonging to Oando. According to a statement issued by JSE’s Sens service on Thursday, Oando’s listing was suspended following the review of subsequent correspondence received on October 18 from the NSE and the SEC. On Wednesday, the NSE said it followed the directive of the SEC to suspend trading till the regulator concluded investigations on the company. SEC said it made the findings at the end of its investigation into the breach of the provisions of the Investments & Securities Act 2007. Two major shareholders of the company, Dahiru Mangal and Ansbury Inc, had submitted a petition to SEC demanding the postponement of the company’s annual general meeting and accused the management of gross abuse of corporate governance and financial mismanagement.