03 May

Daily Watch – Right of Way charges leap, Forte Oil is heading to the gym

  • The World Bank says unemployment and poverty rates increased in Nigeria despite an exit from recession in 2017. The Bretton Woods institution, in a report titled ‘Nigeria Bi-annual Economic Update: Fragile Recovery’ said that “the decline in the non-oil, non-agriculture sector, however, continued, as aggregate demand remained weak and private sector credit low.” “Policymakers may want to focus on investments that reinforce clusters and economies of scale and optimise the connectivity between rural areas and the major urban markets,” the World Bank said. In March, the IMF said the country needed urgent and coherent policies because Nigerians were getting poorer.
  • Oil trading was muted on Wednesday as market participants in Asia and parts of Europe returned after holidays this week. Roughly a third of Angola’s June programme had yet to trade, while some Nigerian barrels could be reoffered, Reuters reports. While most traders said Asian buying would pick up following holidays in the region, no fresh deals were reported on Wednesday. While Nigerian cargoes have sold into tenders, most of them from Indian refiners, other sales have mostly gone to traders, meaning they could be re-offered later, traders said.
  • Nigerian telcos licensed to deploy broadband infrastructure will have to pay about ₦600 billion in Right of Way charges to the 36 states, according to a New Telegraph report which highlights the obstacle such fees pose for the country’s broadband penetration objectives. This paper said the amount based on the recent declaration that Nigeria requires 120,000 kilometres of fibre to achieve nationwide broadband coverage and an average of ₦5,000 per meter of fibre being charged by states. This sum is, however, conservative considering the fact that some states, according to NCC data, charge as high as ₦25,000 per meter of fibre. These charges are also in defiance of a 2013 National Economic Council recommendation of ₦145 per meter fee for RoW across states, which formed part of the 30 percent penetration target set out in the National Broadband Plan.
  • The CBN on Wednesday injected the sum of $210 million into the inter-bank forex market in continuation of its efforts to sustain liquidity in the market. The regulator offered the sum of $100 million to authorised dealers in the wholesale segment of the market. The Small and Medium Scale Enterprises segment received $55 million while the sum of $55 million was apportioned to invisibles such as tuition fees, medical payments and basic travel allowance. A statement by spokesman Isaac Okoroafor reiterated the CBN’s capacity to continue to sustain forex interventions. Okorafor urged deposit money banks to continue to honour requests from customers with genuine needs, noting that the bank will continue to sustain liquidity in the foreign exchange market.
  • Forte Oil plans to sell its upstream services and power businesses in Nigeria and divest from Ghana to focus on its core fuel distribution operation at home and to invest in storage infrastructure, the company said on Wednesday. Forte Oil, majority owned by billionaire Femi Otedola, did not give a reason for the change in direction but said the downstream sector in Nigeria had gone through changes in recent years and was expected to evolve further. Forte Oil’s share price plunged 49 percent last year after the company struggled to get hard currency to import products. It now has a total market value of ₦57.3 billion ($188 million) but gave no indication on Wednesday of how much the businesses for sale might fetch. It now plans to seek shareholder approval for the sale on 23 May and appoint advisers, it said in a notice to investors.
  • Guinness Nigeria said CEO Peter Ndegwa will be stepping down to take up a new role within Diageo, Guinness Nigeria’s parent company. In a statement to the NSE, the brewer said that Baker Magunda, currently Managing Director of Meta Abo Brewery in Ethiopia will take over as the new CEO following a period of transition. He has nearly twenty years’ experience in the consumer goods and alcohol industry and has worked across Africa in Uganda and Kenya as well as Ethiopia and Sudan. Ndegwa has been at Guinness Nigeria for nearly three years, overseeing a successful Rights Issue as well as the implementation of a productivity programme.