07 Dec

Daily Watch – Dangote-BUA cement spat reaches PMB’s desk, FPI rises to highest mark since 2014

  • The SEC plans to go ahead with a forensic audit of oil company Oando, it said in a statement late on Tuesday, despite the suspension of the commission’s director. The finance minister suspended SEC Director General Mounir Gwarzo last week over allegations of financial impropriety, a month after Gwarzo started an investigation into Oando’s shareholding structure and froze trading in its shares. Lawmakers on Tuesday opened an investigation into Gwarzo’s suspension, pledging to look into whether the ministry had interfered with the SEC’s work, particularly issues related to the forensic audit of Oando. The SEC said it had sent a letter to Oando on Tuesday, informing the company of its decision to conduct the audit, which it has appointed accounting firm Akintola Williams Deloitte to handle.
  • CBN Governor, Godwin Emefiele, says the country’s foreign reserves have risen to $38.2 billion, its highest level in 39 months. Emefiele made this known on Tuesday while commissioning Unilever Plc’s 10,000 metric tonnes Blue Band factory in Agbara, Ogun state. “We have seen reserves move up from the $23 billion I talked about in October 2016, but as I speak today, external reserves are $38.2 billion,” he said. The governor said the Unilever plant was possible because of the foreign exchange restrictions placed on 41 items. “When the restriction of foreign exchange (forex) for the 41 items came on board about two years ago; before that time, Unilever had a factory producing Blue Band margarine. But margarine was also part of the 41 items,” he added.
  • Foreign Portfolio Investment jumped by 259.2 percent in Q3 to $2.77 billion, which is a consolidation on the increase recorded in Q2. The figures are the highest since the $5.13 billion recorded in Q3 of 2014. However, the sizeable increase in FPI was mostly driven by a monumental 860.7 percent year on year surge in equities (214.6 percent q/q) to $1.93 billion, accounting for 70 percent of total FPI, and a grand leap (105.6 percent y/y and 630.2 q/q to $719 million in capital investments in the form of money market instruments. Corroborating the significant inflows into equities, an NSE report on FPI showed that foreign inflows surged 205.7 percent y/y and 64.3 percent q/q to ₦252.33 billion in the three months to September, from ₦82.54 billion and ₦153.62 billion in Q3-16 and Q2-17 respectively.
  • The European Investment Bank has granted the African Export-Import Bank, a line of credit agreement amounting to €100 million. The agreement took place last week in Abidjan, Côte d’Ivoire, on the sidelines of the African Union-European Union Summit. The facility is aimed at financing trade-related long-term productive investments by private sector entities, or commercially operated public sector entities in Afreximbank member countries that are also signatories to the Cotonou Agreement. The seven-year loan will finance trade-related investments and projects in Africa, with particular emphasis on SMEs)engaged in export manufacturing.
  • BUA Group has accused the Dangote Group of trying to force it to relinquish mining rights in a limestone field as part of a bid to monopolise the cement market and asked the president to intervene, BUA’s chairman said. Both BUA and Dangote have an interest in cement in Nigeria and have expanded rapidly across Africa. BUA’s chairman, Abdulsamad Rabiu, said Dangote was undermining security around his plant in Edo state, a region with limestone, a key ingredient in cement. The mines ministry said BUA does not have a mining lease for the disputed site, which is the subject of a legal case. The ministry, in a statement, also said it had issued a stop work order to BUA. It said the area was within a section owned by Dangote. “Our cement business has of late come under intense, consistent attacks … as the minister, Dangote group and their cohorts have sought to employ instruments of state … to forcefully wrest control of our mining areas,” Reuters reports BUA as saying in a letter to President Muhammadu Buhari.
  • Lafarge Africa has announced its plan to raise ₦131.65 billion through a rights issue of ₦3.097 billion ordinary shares of 50 kobo each at ₦42.50 per share on the basis of 36 new shares for every nine ordinary shares held. The rights issue, the single biggest in the NSE’s history and the company’s first since 2015, saw the acceptance list opened 24 November to close on 15 December to existing shareholders whose names appear on the register of members. Lafarge MD Michael Punchercos, said, “the cash proceeds will essentially be utilised to deleverage the company, support working capital and expand operations by providing headroom for additional capital, help with cash preservation and improve liquidity.”