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Fx Crisis: PZ Cussons Nigeria Begin Plans to Sell

By
Rhoda Onuzulike
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Multinational consumer goods company, PZ Cussons, says it has commenced plans to sell its African subsidiaries to any interested buyer.

The parent company of PZ Cussons Nigeria said it is looking at a partial or full sale to mitigate the company’s exposure to fluctuations in the naira, which has devalued by 70 per cent.

The company stated this in its preliminary results published on its website for the year ended May 31, 2024.

According to the consumer goods manufacturer, the board has also received multiple interests regarding the sale of its African business.

The document read, “Over the last 12 months, we have made continued operational progress and delivered against the strategic priorities set out at the start of the year, against the backdrop of macro-economic challenges.

“At the same time, we have taken the important first steps to transform our business and maximise shareholder value, by refocusing our portfolio on where we can be most competitive.

“The period was marked by a 70 per cent devaluation of the Nigerian naira, which has had significant implications on our reported financials. We have worked hard to mitigate the impact of this on the group, while continuing to serve Nigerian consumers who are facing unprecedented inflation and economic difficulties.”

It, however, noted that revenue in its UK Personal Care business has significantly improved to a year of profitable, double-digit revenue growth.

On the sales of subsidiaries, the company said it has received, ” a number of expressions of interest for our African business”, which recognises the potential of its brands and could lead to a partial or full sale.

“The favourable trends of the second half of FY24 have continued into the new financial year. We are progressing with our plans to sell St. Tropez and have received a number of expressions of interest for our African business, w the potential of our brands and people, which could lead to a partial or full sale.

“Against this backdrop, we remain confident in the long-term potential for PZ Cussons as a business with stronger brands in a more focused portfolio, delivering sustainable, profitable growth,” PZ Cussons said.

Commenting on the impact of the naira devaluation, PZ Cussons said a foreign exchange loss of £107.5m “primarily arose from the translation and settlement of USD denominated liabilities in our Nigerian subsidiaries and is wholly the result of the devaluation of the naira, which fell by 70 per cent from May 31, 2023 to May 31, 2024”.

In April, the Chief Executive Officer, PZ Cussons, Jonathan Myers, said the company was reviewing its brands and geographies over macroeconomic challenges and complexities in Nigeria.

He spoke a month after the Securities and Exchange Commission rejected PZ Cussons’ request to acquire the shares of minority shareholders in PZ Cussons Nigeria Limited, its Nigerian subsidiary.

In September 2023, PZ Cussons had shown interest in buying the remaining 26.73 per cent minority shares in its Nigerian subsidiary, at a price of N21 per unit.

Stock Market Closes January With N1.1 trn Loss

As of May 31, PZ Cussons holds a 73.27 per cent stake in the Nigerian subsidiary, which represents 2.90bn shares, worth N45.53bn as of September 18.

The Nigerian subsidiary of the company, PZ Cussons Nigeria Plc has continued to struggle, as it posted a N94.78bn loss in the third quarter of 2023/24 compared to the N11.213bn gain it had in the corresponding period in 2022.

The firm suffered a N74.14bn loss in Q2. PZ Cusson remained in a negative net asset position, as liabilities surpassed assets by N46.420bn on the back of naira depreciation.

Earlier this year, the Securities and Exchange Commission rejected the ‘No Objection’ sought by the multinational to buy out minority shareholders at N23 and delist from the Nigerian exchange.

In another notice posted on the Nigerian exchange website, the company stated, “Please note that the company’s closed period, which commenced on September 1, 2024, will remain in effect until 24 hours after the release of the Unaudited Financial Statements for the first quarter ended 31 August 2024, to the market.”

Nigeria’s Second Quarter Nominal GDP Hits N60.93tn

By
Rhoda Onuzulike
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0

The Federal Government has announced that Nigeria’s nominal Gross Domestic Product reached N60.93tn in the second quarter of 2024, reflecting a significant improvements in the nation’s economy.

It also stated its commitment to implement policies to help identify inefficiencies and ensure that resources are directed toward their intended purposes.

The Permanent Secretary of the Federal Ministry of Finance, Lydia Jafiya, said this at a sensitization programme on the forth-coming implementation of quarterly citizens and stakeholders engagement held at the ministry headquarters on Thursday in Abuja. 

Nigeria’s GDP Grows By 2.51% In Q2 Of 2023

She stated the programme marks a significant step towards improving the transparency and accountability of financial policies and strategies.

She said the ministry has spearheaded several reforms aimed at improving revenue generation, reducing leakages, and ensuring fiscal discipline which has in turn improved the nation’s GDP.

According to her, the country recorded a nominal GDP of N60.93tn, which represents a 16.94 per cent improvement compared to the N52.103tn recorded in the second quarter of the previous year.

A statement by the Director of Information and Public Relations, Mohammed Manga, explained that the Q2 GDP growth was driven mainly by the services sector, which recorded a 3.79 per cent growth and contributed 58.76 per cent to the aggregate GDP.

The agriculture sector grew by 1.41 per cent from 1.50 per cent recorded in the second quarter of 2023, while the industry sector grew by 3.53 per cent, an improvement from -1.94 per cent recorded in the second quarter of 2023.

The statement read, “It is pertinent to note that despite the challenging economic outlook, economic growth strengthened in the second quarter of 2024, with GDP growth by 3.19 per cent (year-on-year) in real terms.

“This growth rate is higher than the 2.51 per cent recorded in the second quarter of 2023 and higher than the first quarter of 2024 growth of 2.98 per cent. The performance of the GDP in the second quarter of 2024 was driven mainly by the services sector, which recorded a growth of 3.79 per cent and contributed 58.76 per cent to the aggregate GDP. The agriculture sector grew by 1.41 per cent, from the growth of 1.50 per cent recorded in the second quarter of 2023.

“The growth of the industry sector was 3.53 per cent is an improvement from -1.94 per cent recorded in the second quarter of 2023. In terms of share of the GDP, the industry and services sectors contributed more to the aggregate GDP in the second quarter of 2024 compared to the corresponding quarter of 2023. In the second quarter of 2024, aggregate GDP at the basic price stood at N60,930,000.58 million in nominal terms.”

She further informed that, “This performance is higher when compared to the second quarter of 2023, which recorded aggregate GDP of N52.1tn indicating a year-on-year nominal growth of 16.94 per cent.”

Mrs Jafiya emphasised the federal government’s commitment to accelerating the nation’s economic growth through collaboration with stakeholders and stressed the importance of transparency, accountability, and inclusive dialogue in managing the country’s finances and economic policies.

The introduction of Quarterly Citizens and Stakeholders Engagement by the Central Delivery Coordination Unit aims to enhance communication between the government and its citizens.

This initiative marks a significant step toward improving transparency and accountability in financial policies and economic strategies.

Rail Transport Generated N1.69bn in Q2– NBS

By
Rhoda Onuzulike
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The Nigerian rail system generated N1.69bn in revenue from passengers in the second quarter of 2024, reflecting a 53.14 per cent increase compared to the N1.10bn recorded in the same period of 2023.

This data was disclosed by the National Bureau of Statistics in its report released on Thursday.

Nigerian Railway Corporation Begins Free Train Services

According to the report, a total of 689,263 passengers travelled by rail in Q2, representing a growth rate of 45.38 per cent compared to 474,117 passengers in the corresponding quarter of 2023.

The volume of goods transported via rail also saw a significant increase, with 143,759 tons moved in Q2 2024, up from 56,936 tons in Q2 2023.

Additionally, the Nigerian Railway Corporation reported a volume of 5,940 tons of goods transported through pipelines in Q2 2024, an increase from the 2,856 tons recorded in the same period of the previous year.

Revenue from goods conveyed via rail stood at N537.36m in Q2 2024, a remarkable increase of 206.68 per cent compared to N175.22m in Q2 2023. The movement of goods through pipelines also contributed to revenue generation, with N42.08m collected in Q2 2024, compared to N12.81m in Q2 2023.

Other revenue receipts amounted to N994.68m in Q2 2024, representing a staggering increase of 5,206.68 per cent from the N18.74m recorded in the corresponding period of last year.

In the first quarter of 2024 report, Nigeria spent more on servicing the debt incurred for building its railways than the revenue generated by its railway system. The country spent 2,470 per cent more on railway debt servicing than it made from revenue from rail services in the first quarter of 2024.

In 2023, the Nigerian Railway Corporation generated N1.07bn as revenue from passengers.

CBN Eyes N50bn On Cybercrime Levy in 2024

By
Rhoda Onuzulike
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0

The Central Bank of Nigeria is projected to generate approximately N50bn by the end of 2024 from the newly introduced 0.005 per cent cybersecurity levy on electronic transactions, this is according to some economic analysts.

The Head of Research, FMDQ Group Plc, Vincent Nwani stated, “The CBN is expected to raise N50bn from the cybersecurity levy by 2024.”

The data from the Nigeria Inter-Bank Settlement System reveals that electronic payments reached a combined total of N987tn between 2022 and 2023.

Applying the 0.005 per cent levy to this total results in an estimated revenue of approximately N49.35bn.

How the N50 Transfer Levy Can Stifle Nigeria’s Fintech Growth and Impact Everyday Transactions

He added that in 2022, electronic payments totalled N387tn, generating N19.35bn from the levy, while in 2023, with transactions soaring to N600tn, the revenue from the levy reached N30bn.

“For instance, we saw a remarkable 55 per cent surge in the total electronic payments, from N387tn in 2022 to N600tn in 2023 and the 2024 figure is projected at N999.9tn. At 0.005 per cent cyber security fees, the Nigerian government will earn N19.5bn for 2022, N30bn for 2023; 2024 will be equivalent to N50bn [projected figure] from its citizens,” he expounded.

Nwani also highlighted an increase in point-of-sale transactions, which surged by 27.85 per cent from N8.39tn in 2022 to N10.73tn in 2023, noting that PoS transactions cost Nigerians N214.6bn in 2023 due to the N100 fee on every N5,000 withdrawal.

“On the other hand, in 2023, the total value of PoS transactions surged to N10.73tn, up from N8.39tn in 2022, marking a notable 27.85 per cent increase. Additionally, a fee of N100 is charged for every N5,000 withdrawn via PoS, equating to two per cent of the withdrawal amount.

“POS transactions cost Nigerians a total of N214.6bn in 2023 and N167.8bn in 2022. This growing reliance on PoS and the associated charges reflect the broader economic effects of the cashless policy on the population,” the economist stated.

Also, the Vice Chairman of Highcap Securities, David Adonri, added, “The increase in electronic payments is driven by the CBN’s cashless policies and naira redesign. Despite the CBN’s contractionary monetary policy, the money supply continues to expand, which might push electronic payments even higher in 2024.

“With the projected rise in electronic payments to N999tn, the levy could indeed generate as much as N50bn for the government.”

The 0.005 per cent levy, enacted under Cybercrime (Prohibition, Prevention, etc.) (Amendment) Act 2024, applies to all electronic transactions and is intended to fund the National Cybersecurity Fund managed by the Office of the National Security Adviser.

Despite initial resistance from President Bola Tinubu and the House of Representatives, who had called for a suspension and review of the policy, the CBN has restated its resolve to enforce the levy.

Investors Lose N130bn As Equity Market Reverses Gains

By
Rhoda Onuzulike
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0

Equity investors lost N130bn as the Nigerian Exchange reversed the previous day’s gain on Thursday.

The All Share Index declined by 0.23 per cent to settle at 98,003.75 points from 98,230.92 points.

The market capitalisation closed at N56.32tn, down from the previous day’s N56.45tn, as investors traded 473,091,884 units of shares in 9,848 deals valued at N11.349bn.

This was a 26 per cent improvement in trade volume compared to Wednesday when 361,302,533 shares were traded in 9,627 deals valued at N7.567bn.

Despite the higher volume of trades, there was a 14 per cent decline in turnover and a marginal two per cent improvement in the number of deals.

On the gainers’ list, McNichols led with a 10 per cent increase, closing at N1.65, followed by Associated Bus Company with a 10 per cent rise to N0.99.

NGX: Trading All Week Ended With Positive Sentiments

Other top gainers included University Press Ltd, which gained 9.95 per cent to close at N2.43, and Fidson Healthcare with a 9.85 per cent increase to N14.50 per share.

However, the losers’ table had Honeywell Flour Mill topping the list with a 9.98 per cent loss, closing at N4.87, followed by FBN Holdings, which dropped 9.88 per cent to N30.55.

UPDC fell by 9.74 per cent to N1.76, while Tantalizers recorded an 8.82 per cent decline to N0.62.

Japaul Gold and Ventures recorded the highest volume of traded shares with 107 million units, followed by UAC of Nigeria with 57.9 million shares, Fidelity Bank (48.7 million), and Honeywell Flour Mill (26.1 million).

Performance across our sectors was broadly negative, as five indices experienced losses, while the AFRICT index remained unchanged.

The banking and insurance indices led the underperformers, dipping by 0.6 per cent due to price declines in Stanbic IBTC Holdings (-3.5 per cent), Cornerstone Insurance Company (-1.6 per cent), and AXA Mansard Insurance (-2.31 per cent).

Similarly, the consumer goods index was down by 0.3 per cent as a result of selling pressure on stocks like Honeywell Flour Mill (-10.0 per cent) and Dangote Sugar Refinery (-10.9 per cent).

The oil & gas and industrial goods sectors dropped by 0.1 per cent each, influenced by price depreciations in OANDO (-4.89 per cent) and Lafarge Wapco (-12.8 per cent).

Some Analysts believed that with the market showing signs of weakness and cautious trading expected ahead of the upcoming Monetary Policy Committee decision, there would be a relatively subdued trading session tomorrow.

“Tomorrow, we expect the market to be mildly quiet as investors trade cautiously ahead of the upcoming MPC decision,” they noted.

Pay N70,000 Minimum Wage or Face Jail, FG Warns Private Sector

By
Tosin Onisuuru
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0

The Federal Government has issued a strong warning to private sector employers, stating that any company paying below the N70,000 minimum wage faces legal consequences. This announcement emphasizes the necessity of the new wage level in light of current economic conditions, ensuring that all Nigerian workers, regardless of their employment sector, receive fair compensation.

During the 13th Annual General Meeting of the Employers Association for Private Employment Agencies of Nigeria in Ikeja, Lagos, Alhaji Ismaila Abubakar, Permanent Secretary at the Federal Ministry of Labour and Employment, underscored the importance of compliance. He was represented by John Nyamali, Director of Employment and Wages.

Abubakar stated, “The minimum wage is now a law, and it is a punishable offense for any employer to pay below N70,000. Private employment agencies must ensure that all contracts stipulate this minimum wage for their workers. Every worker in Nigeria deserves to earn at least N70,000 after deductions.”

He further reiterated the government’s commitment to enforcing this law, emphasizing that non-compliance could lead to imprisonment.

In his remarks, Dr. Olufemi Ogunlowo, President of the Employers Association for Private Employment Agencies, urged the government and the Nigeria Labour Congress to clarify whether the N70,000 figure refers to net or gross pay, highlighting the need for transparency in the legislation.

UK’s Train Drivers Accept Pay Deal to End Strike

By
Rhoda Onuzulike
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0

Train drivers have accepted a pay deal that will see the end of more than two years of strike action in England, Scotland and Wales.

Aslef union members accepted an offer which included a 5% backdated pay rise for 2022-23, a 4.75% rise for 23-24, and a 4.5% increase for 24-25.

The walk outs started due to a row over pay and working conditions. Union bosses sought better pay for drivers, but the previous Conservative government said changes to working practices were required in return.

Industrial action has caused widespread disruption on the railways since strikes began in July 2022.

German Train Drivers Demand 3.2% Salary Increase As Strike Begins

The government and the union have refused to release an exact figure of what the average salary of a train driver will be following the pay rises. In 2023, the average wage was £60,055 per year, according to the Rail Delivery Group, which represents train companies.

Based on the pay increases announced, the average salary is estimated to be about £69,000 in 2024/25.

Aslef said that when compounded, the offer works out at 15%, is backdated, pensionable and includes drivers who retired or left the industry during the dispute.

The breakthrough heralds the end of industrial action which saw drivers stage 18 strikes and take part in several overtime bans, leading to cancelled services.

Some strikes caused an almost complete shutdown of railway lines in England and some cross-border services, including during major sporting and public events.

Mick Whelan said the vote marked the end of the longest train drivers’ strike in history.

“It was not a fight we sought, or wanted. All we sought after five years without a pay rise, working for private companies who, throughout that period, declared millions of pounds in profits and dividends to shareholders, was a dent in the cost of living,” he said.

But Mr Whelan, believe the biggest issue was not pay, but rather 55 proposed changes to working terms and conditions that ended up being dropped from the deal.

The union has called the agreement a “no-strings deal”, adding it was safeguarding working practices was something “it was not willing to give away for nothing”.

However, Transport Secretary Louise Haigh said solving the row would also ensure a more reliable service but added the deal “crucially” cleared the way for “vital reform – including modernising outdated working practices to ensure a better performing railway for everyone”.

She said the end of the dispute was “an important step towards fixing our railways and getting the country moving again”.

Under the new Labour government, senior officials began direct pay talks with Aslef bosses in July.

A major stumbling block which resulted in previous talks breaking down was due to proposed changes to working conditions.

A spokesperson for the Rail Delivery Group said it welcomed the news that the dispute had been resolved.

“The whole railway now needs to pull together and focus on delivering the best possible service for our customers,” they added.

The union, which claims to represent more than 21,000 train drivers, said 96.6% of its membership who voted backed the new offer. The turnout was 88.5%.


Separately on Wednesday, The RMT union added that it received new pay proposals from the government after pay talks, which included a 4.5% increase for Network Rail staff for 2024.

How Nigeria’s N50 Fintech Levy Is Shaping The Future Of Digital Finance And Economic Growth

By
Tosin Onisuuru
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0

The N50 levy imposed on fintech transactions in Nigeria has sparked a wide-ranging debate about its potential impacts on the country’s rapidly growing financial technology sector. As fintech companies continue to revolutionize how Nigerians access and manage financial services, this tax raises important questions about its broader implications.

Impact on Fintech Growth

Nigeria’s fintech sector is renowned for its innovation and ability to reach the underbanked and unbanked populations. However, the introduction of a N50 levy on transactions may slow the industry’s momentum. Fintech companies, which thrive on providing cost-effective solutions to users, could face challenges maintaining competitive pricing as transaction costs increase. This may also deter small businesses and individuals from fully embracing digital financial services, thus limiting the sector’s growth potential.

Economic Consequences

The economic implications of this levy are multifaceted. On the one hand, the tax is expected to generate much-needed revenue for the government, particularly as it seeks to diversify its income sources in a time of fluctuating oil prices. On the other hand, critics argue that the tax could stifle innovation and discourage investment in a sector that has been a major driver of economic growth in recent years. Additionally, it may lead to a rise in informal financial practices as individuals and businesses look to avoid the extra costs associated with digital transactions.

External Influence and Policy Rationale

The rationale behind the N50 levy draws from broader global trends, where governments are increasingly looking to tax digital services. However, in Nigeria’s case, external influences such as the need to comply with international financial standards, as well as the push for greater transparency and formalization of the economy, have played a role in shaping the policy. Policymakers argue that the levy will help formalize the fintech space and ensure that all players contribute to national revenue.

While the N50 levy presents potential revenue benefits for the government, it also raises concerns regarding its effects on the fintech sector’s growth, economic innovation, and the overall adoption of digital financial solutions. The ongoing discussions among stakeholders will determine how this policy evolves to balance the need for revenue generation with supporting fintech’s long-term sustainability in Nigeria.

U.S Federal Reserve Slashes Interest Rates By 0.5%

By
Rhoda Onuzulike
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0

On Wednesday, the U.S. Federal Reserve implemented a 0.5% cut to its interest rates, marking the start of what many analysts anticipate will be a sustained phase of monetary easing.

This more aggressive reduction in borrowing costs follows rising concerns about the state of the U.S. job market.

In its latest statement, the Federal Open Market Committee (FOMC) expressed greater confidence in inflation moving steadily towards its 2% target.

The committee believes that risks to meeting both inflation and employment objectives are now more balanced. However, not all officials were in agreement—Governor Michelle Bowman preferred a smaller 0.25% cut.

U.S Federal Reserve’s tilt towards tighter policy

The Fed’s projections indicate further cuts, with another 0.5% reduction anticipated by the end of 2024, a full percentage point drop in 2025, and a final 0.5% cut in 2026.

The long-term federal funds rate is expected to settle between 2.75% and 3.00%, a slight upward revision from previous expectations.

Fed Chair Jerome Powell explained, “This action underscores our increasing confidence that, with proper adjustments to our policy, the labour market can remain robust while inflation steadily declines toward our 2% target.”

WHAT IT MEANS FOR NIGERIA

The U.S. Federal Reserve’s rate cut is likely to influence the upcoming decision of Nigeria’s Monetary Policy Committee (MPC), which meets next week to discuss potential rate adjustments.

With the Fed lowering borrowing costs, Nigeria’s central bank might feel pressured to follow suit, especially as it balances inflation concerns with the need to stimulate economic growth.

The Fed’s move could also attract foreign portfolio investments (FPIs) back into Nigeria. In times of lower global interest rates, investors tend to seek higher returns in emerging and frontier markets like Nigeria. This inflow of foreign capital could boost Nigeria’s financial markets and strengthen its economy.

For the naira, a weaker dollar resulting from lower U.S. rates could help stabilize the exchange rate. With a softer dollar, Nigeria might experience less pressure on its currency, offering some relief after prolonged depreciation.

Additionally, lower global interest rates can stimulate both private and public sector spending, potentially driving up global economic activity.

This could lead to increased demand for Nigerian crude oil, providing a further boost to foreign exchange inflows and economic growth.

However, while the potential benefits are clear, inflation remains a significant challenge for Nigeria. Imported inflation has already reached double digits, and while lower rates may lead to cheaper imports, this could create more competition for local businesses.

As foreign goods become more affordable, Nigerian businesses might face increased pressure from imports, impacting their profitability and market share.

FG Unveils $100bn Plan to Transform Creative Economy

By
Rhoda Onuzulike
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0

The Federal Government has introduced an ambitious $100 billion plan to invigorate Nigeria’s creative economy, with a goal of generating over two million jobs annually.

The detailed strategy was unveiled by the Minister of Art, Culture and the Creative Economy, Hannatu Musawa, at an investor roundtable held in Lagos.

Creative Industry To Contribute $100bn To Nigeria’s Economy By 2030 –  Minister

Musawa outlined the government’s eight-point plan and roadmap, which aims to unlock the sector’s vast potential. The plan focuses on eight critical areas: a unified national initiative to elevate the arts, culture, and creative industries under a single vision; enhancing the capabilities of Nigerian creatives through targeted training programmes and implementing supportive and efficient policies to foster industry growth.

Others are strengthening governance and collaboration among key stakeholders; Forming strategic alliances to drive innovation and expansion; Setting ambitious targets to boost the sector’s contribution to GDP; Creating favorable conditions for business success and ensuring the protection and promotion of Nigeria’s rich cultural heritage.

Currently, Nigeria’s creative industry contributes just $5 billion annually to the economy, representing a mere 1.2% of the GDP in 2022. This is relatively low compared to benchmark countries such as Morocco (2.7%), South Africa (3.0%), and Egypt (4.3%). Additionally, the sector’s contribution to government revenue is significantly less than in South Africa, where it stands at 12.5%.

To overcome these challenges, Musawa highlighted 14 key initiatives organized into four main pillars

Musawa projected a 400% growth in the creative economy by 2027, positioning it as a significant contributor to Nigeria’s economic development. She highlighted several ongoing initiatives, including the Creative Leap Acceleration Program, CultRise, and Origins, which are focused on infrastructure development and data management.

Infrastructure projects in the pipeline include the Digital & Immersive Art Centre, the Renewed Hope Creative City at the Wole Soyinka Centre, Arts Village in Abuja, and Creative Hubs across Nigeria’s 36 states.

To support job creation, the Ministry has partnered with BigWin Philanthropy to implement a transformative capacity-building and job creation strategy. The roundtable featured a panel discussion with prominent officials, including Obi Azika, Director-General of the National Council for Arts and Culture; Faiz Imam, Principal Adviser to the Minister; and Aliyu Nuhu, Managing Director of the Nigerian Film Corporation.

The strategic plan represents a significant step toward unlocking the full potential of Nigeria’s creative sector, driving economic growth, and creating a dynamic and sustainable industry.

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