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Capital importation into Nigeria hits $8.4 billion, rose by 216% in Q1 2019

The total value of capital importation into Nigeria in the first quarter of 2019 was estimated at a whopping $8.48 billion. This is revealed in the latest capital importation data released by the National Bureau of Statistics (NBS). 

According to the NBS data, the $8.48 billion capital importation in the first quarter represents an increase of 216.03% compared to Q4 2018 (quarter-on-quarter). Also, capital importation year-on-year into Nigeria rose by 34.61% when compared to the first quarter of 2018.

Capital Importation by type: Basically, Nigeria’s capital importation is categorized into three investment types, and these include Foreign direct investment, Portfolio investment and other investment.

The Portfolio Investment in Nigeria is made up of three items which include Equity, Bonds and Money Market instruments. During the period under review, the largest amount of capital importation by type was received through Portfolio investment, which accounted for 84.21% ($7,145.98 ) of total capital importation.

  • Money Market instruments account for 82% total portfolio investments, amounting to $5.92 billion, representing a 376.9% rise within the quarter.
  • Equity ranks second with $656.19 million or 9%, recording a 110% growth within the quarter.
  • Bonds received the lowest portfolio investment with $565.6 million or 7% of total capital. However, in terms of growth, portfolio investment into bonds rose by 173% within the quarter.

Othe Investment is broken-down into four categories which include Trade credits, Loans, Currency deposits and Other claims. However, the bureau only provided data for loans and currency deposits. In the first quarter of 2019, other investments recorded the second biggest capital importation, accounting for 12.91%  or $1.09 billion of total capital importation.

  • Loans investment was estimated at $752.2 million, rose by 2.62% within the quarter.
  • Other claims within the quarter stood at $343.8 million, indicating a 2,025% growth when compared to

Foreign Direct Investment investments in Nigeria has just two components and this includes Equity and other capital. Specifically, FDI accounted for the least of total capital importation in the first quarter with $243.36 million or 2.86% of total capital imported in 2019.

  • Equity FDI inflow in the first quarter was estimated at $242.67 million, rose by 39.97%. Equity constitutes almost 100% of the entire FDI.
  • Other Capital stood at $700,000, less than 1% of the FDI inflow.

Capital Importation by Sector: Further analysis of the capital importation shows that five of the fifteen sectors recorded a decline in capital importation. Sectors with positive growth include Banking, Financing, Production / Manufacturing, Servicing, Agriculture, Electrical, I.T Services and Consultancy. On the other hand, five sectors recorded negative growth within the quarter, the sectors include Shares, Telecomms, Oil and Gas, Construction, Brewing, Drilling and Marketing.

  • Nigerian banking sector received the biggest share of capital importation in the first quarter with $2.85 billion or 33.6% of the total capital. Also, capital importation into the banking sector grew by 141.45% within the quarter.
  • Despite negative growth in capital importation of shares, the sector record the second biggest capital inflow, with $2.40 billion or 28.32% of total capital importation.
  • Three other sectors that made the top five sectors with the biggest share of capital importation include Financing ($2.13 billion) production and manufacturing ($418 million) and Servicing ($409 million).

Capital Importation by origin: The United Kingdom emerged as the top source of capital investment in Nigeria in Q1 2019 with $4.53.22 billion. This accounted for 53.40% of the total capital inflow in Q1 2019.

Also, by the destination of Investment, Lagos state emerged as the top destination of capital investment in Nigeria in Q1 2019 with $4,773.26 million. This accounted for 56.25% of the total capital inflow in Q1 2019.

By Bank, Stanbic IBTC Bank Plc emerged at the top of capital investment in Nigeria in Q1 2019 with $3,606.09 million. This accounted for 42.50% of the total capital inflow in Q1 2019.

Nigeria’s economy is gathering growth momentum: With over 216.03% increase in the value of capital importation into the economy, it suggests Nigeria’s economy is gathering the much need momentum for sustained growth in the second half of 2019. This is a good boost for the Central Bank’s aim to achieving double-digit growth by 2020.

Basically, capital importation refers to the movement of capital into Nigeria in the form of investments in assets, bonds, shares and so on. FDI is an investment in form of a controlling ownership in a business in one country by an entity based in another country while FPI is the entry of funds into a country where foreigners deposit money in a country’s bank or make purchases in the country’s stock and bond markets, sometimes for speculative purposes.

Analysts have stressed that capital inflows into Nigeria’s economy will improve after the general election. It is evident that portfolio investment accounts for the biggest share of capital importation, this could be largely attributed to the attractive yields in the fixed income market.

Source: Nairametrics

5 Obnoxious Sales Tactics Used in Real Estate… and What to do Instead

Not every real estate agent has their clients’ best interests in mind. There are some bad apples in the industry that come across as a vocal minority much of the time.

Luckily, consumers today have the internet: a wealth of information, knowledge, and resources. It is easier than ever to see through slimy and dishonest sales tactics.

Today, honest agents are rewarded for putting their clients first. Here are five slimy sales tactics you should avoid, and some recommended alternatives:

Key Takeaways
A perfect sales pitch in real estate often involves more listening than talking
Respect your clients’ boundaries; don’t push their budget or insult their tastes
Communicate honestly when answering questions and making commitments
Source: Realvolve
1) Pushing them to make an offer before they’re ready.

In a competitive real estate market, you have to move fast if you’re serious about a listing. This is where some agents might be tempted to push their clients to make an offer they aren’t ready to make.

Do this instead: Inform your clients that this listing won’t last long, but also stress the importance of only making an offer on a home they LOVE.

2) Talking more than listening.

We’ve all experienced the dreaded Sales Pitch—a sales rep yammering on and on about why we need THIS product NOW! In real estate, this translates to the agent telling the buyer what they want…instead of listening.

Don’t do all the talking.

Do this instead: Learn about your client’s wants and needs so you can connect them with the perfect home. It’s not about you, and what you want them to buy. It’s about helping them find their dream home.Here’s a great blog post that might help!

3) Disregarding their budget.

When my husband was apartment hunting (way back in the day, before we were married), he asked the leasing agent for the cheapest unit they had.

The leasing agent’s reply: “Oh, you don’t want the one-bedroom. The layout is weird. You walk through the door, and the living room is RIGHT THERE.” Um, okay.

It was annoying, and even though my husband did end up living there (he was a recent college grad with no money, so he didn’t have many options), he did stay in the one-bedroom, and he did tell everyone what a crappy experience it was.

Don’t try to stretch your buyer’s budget just so you can get more commission.

Do this instead: Focus on saving them money. They’ll love you for it, and they’ll reward you with repeat and referral business.

4) Insulting them.

If they have their heart set on a galley kitchen, don’t try to push a different property on them by laughing and saying, “Really? A galley kitchen? When you could have this gorgeous open plan?” Don’t act like they’re stupid for wanting something that doesn’t have as high a resale value or isn’t as “stylish.” Don’t insult prospects’ tastes, opinions, or budgets.

Do this instead: Ask them WHY they want the galley kitchen, and LISTEN to their reasons. Then, if you feel they truly might like an open plan, tell them about the benefits of that layout, but remain objective and informative. Let them make their own decision.

5) Dodging their questions.

Let’s say your buyer client asks, “Has this house ever had water damage?” The deceptive agent will answer, “Look at these beautiful baseboards! Absolutely no evidence of water damage!”

But that’s clearly dodging the question.

Say this instead:“That’s a good question. I can understand why you might be worried about that since this is in a flood zone. I’ll find out and let you know.”

Source: Realvolve

Banks to tighten criteria on corporate loans—CBN

TheCentral Bank of Nigeria, CBN, has said banks will tighten criteria for corporate loans in the third quarter of the year. The apex bank said the criteria include more collateral, stronger loan covenants and higher fees/commissions for corporate loans. CBN disclosed this in its Credit Condition Survey, CCS, report for the second quarter. Governor, Central Bank of Nigeria (CBN), Mr Godwin Emefiele The report also indicated that though there was a decline in the availability of corporate loans  in the second quarter of the year, banks intend to reverse this trend in the third quarter. Banks to jerk up lending rate for corporates in Q1’19(Opens in a new browser tab) The report stated:

“The overall availability of credit to the corporate sector decreased in the second quarter, but was expected to increase in third. “This was driven by favourable economic conditions, changing sector-specific risks, changing appetite for risk, market share objectives and changing liquidity positions.

“Lenders reported that the prevailing commercial property prices positively influenced credit availability of the commercial real estate sector in the current quarter.

“Lenders expect the prevailing commercial property prices to positively influence secured lending to public non-financial corpora-tions in the current quarter.” “Availability of credit increased for all business sizes in Q2 2019.

Lenders expect the same trend in the next quarter. Spreads between bank rates and MPR on approved new loan applications narrowed for all business, except for small business, in Q2 2019, but were expected to widen for all business sizes in Q3 2019. “The proportion of loan applications approved for all business sizes increased in the current quarter, and are expected to further increase in Q3 2019.

“Lenders required stronger loan covenants from all firm sized businesses in the current quarter. Similarly, they reported that they would require stronger loan covenants for all firm sized businesses except for small business, which they plan to leave unchanged, in the next quarter “For the current quarter, fees/commissions on approved new loan applications fell for all firm sized businesses except for large PNFCs, while for Q3 2019 lenders expect fees/commissions on approved new loan applications to rise for all firm sized businesses except for large PNFCs.

“More collateral requirements were demanded from all firm sizes on approved new loan application in Q2 2019, except for large PNFCs. However, lenders will demand for more collateral from all firm sizes in the next quarter.”

Source: Vanguard

Nigeria’s ‘Dead capital’ Rises to $900 Billion

Latest report by the PricewaterhouseCoopers (PwC), has revealed that Nigeria needs to unlock as much as $900billion worth of dead capital to increase economic activities and stimulate growth.

In a new report titled, ‘Bringing dead capital to life – What Nigeria should do’, estimated the amount of dead capital in residential agricultural and real estate sectors in Nigeria, which it said: “holds at least $300billion or as much as $900billion worth of dead capital in residential real estate and agricultural land alone.”

The report said the high-value real estate market segment held between $230billion and $750billion in value, while the middle market carried between $60billion and $170billion.

‘Dead capital’ was coined by a Peruvian economist, Hernando de Soto, to define assets that cannot be converted to economic capital.

With Nigeria’s population projected at 200 million and 40 million families with five members each, the report said, “Approximately 95 per cent of household dwellings in Nigeria have no title or a contestable title.”

PwC said the International Monetary Fund (IMF’s) most recent report on Nigeria, concluded that the country was set to experience an incremental decline in income per capital over the next eight years, through 2022.

It said, “This decline is a result of slow GDP growth exceeded by a population growth rate that is not expected to slow in the near future. The population is expected to reach 263 million by 2030. In contrast, GDP is growing at a slower and less consistent rate, averaging 1.4 per cent since 2016.

“In order to circumvent this projected crisis, Nigeria requires more investment in critical areas that directly impact economic growth. Heavy investment in infrastructure, coupled with structural reforms, will loosen domestic and foreign capital, allowing more businesses to thrive. In the long run, investing in human capital will yield economic prosperity by overriding high unemployment in a large population.”

The PwC report also noted that lack of access to finance is a major contributor to persistent poverty.

“Presently, a large proportion of Nigeria’s population operate in the informal sector by living in informal dwellings and/or working in the informal sector. For many, the costs accrued in the formal sector outweigh the benefits. However, this creates a large stock of dormant assets. Capital is scarce in societies with a large stock of dormant assets.

“Land tenure system in Nigeria is still largely in the communal and informal sectors. Sporadic efforts by the government on the formalisation of property rights through the certificate of occupancy in cities like Lagos have yet to meet the intended goal.”

It added that land ownership had been quite a stressful process as a result of the complex land tenure system, as the Land Use Act had failed to establish a uniform land tenure system that would govern ownership in the country.

According to the report, about 97 per cent of land in Lagos is unregistered, and makes it difficult for banks to validate claims to land or for land occupants to use their land to create wealth.

Source: Guardianng

Selling a Property With Mortgage

Investing in real estate is something many people are keen about and as a result of their commitment, some investors go the extra length to secure funding to make their dream of owning their own property a reality. Sourcing for and securing funding for real estate could be a serious challenge depending on the terms and conditions of the loan.
In some countries, mortgage is easy and comes with reasonable terms and conditions. In Nigeria securing a mortgage is a herculean task for many.
For those who manage to cross that hurdle, the challenge that they still must deal with going forward is enormous.

Real estate investment requires an incubation period for it to gain value. Value in real estate takes time. While shares can gain value overnight, real estate investment usually takes time.

While a person can borrow money at a high interest and effectively gamble it speculating in shares and if it works out he or she could make enormous amount of money, the same feat will be rare in real estate. This is one reason a high interest rate regime is a disincentive for real estate investment.

In Nigeria, if you are fortunate to qualify for a mortgage you must be prepared to pay a high interest rate. The banks are not real estate investment- friendly.

Although the books may state that your interest rate is a certain percentage, if you look further and ask questions you should not be surprised that there are several add-ons that will push your interest rate and cost closer to or over twenty per cent.

This cost also comes with quarterly charges, registration and other charges that will significantly increase your cost.

This scenario makes repayment burdensome and costly for most investors who have a mortgage on their property.

In a slow economy or a recession, the above scenario could mean serious financial pressure for an investor. If there happens to be a negative change in circumstances, the investor could find it difficult to meet up with their repayment which could lead to a default in payment.

If there is a default and it is not rectified, the bank has a right to foreclose on the property and carry out a short sale in order to recover its money.

The bank is not interested in maximising profit for the investor. Their sole aim is to recover the principal loan and possibly interest. Many times, they sell under the value and for an amount that does not cover the loan obligation of the investor.

In cases like this, the investor not only lose their initial deposits, repayments made so far and the property they also end up having to pay the bank some additional costs.

Many investors who find themselves in this situation often wonder whether or not they have the right to sell the property.

An investor who has a mortgage should realise that by virtue of the mortgage agreement, he or she is no longer the owner of the property. The bank’s interest comes first. Usually the bank takes custody of all the title papers and secures the right to sell the property with or without the involvement of the owner once there is a default that leads to foreclosure.

You should also  realise that it is unethical and illegal to sell the property without disclosing to the buyer that  there is a mortgage on the property. Remember, you could be charged with fraud if you do not  disclose all the legal interests on a property or sell a property that you do not have the right to sell.

However,this does not mean that the property cannot be sold. It simply means that you must take care of the interest of the lender.

If the property has appreciated in value, it is possible to sell the property,settle the loan and still make a profit.

What some investors do is to make full disclosure to the buyer and if the buyer is convinced, they ask him or her to pay off the mortgage and receive a letter of release from the bank.The balance can then be paid to the seller.

It is also possible to have the transaction managed in such a way that the bank can release the title documents to the buyer.An investor who desires to buy a property that has a mortgage on it should insist on working with the lender and getting full details about the sum total of the obligation on the property.

It is safer to pay directly to the bank and ensure that the property documents are released to you or your lawyers.

Source: Punchng

Proposed Regulations Allow Majority of Homes to be Sold Without Human Appraisal

The battle between man and bot has a new front: your mortgage.

Federal regulators have proposed loosening real-estate appraisal requirements to enable a majority of U.S. homes to be bought and sold without being evaluated by a licensed human appraiser. That potentially opens the door for cheaper, faster, but largely untested property valuations based on computer algorithms.

The proposal was made earlier this month by the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corp. and the Federal Reserve. It would increase to $400,000, from $250,000, the value of homes that can be bought and sold without a tape-measure-toting appraiser visiting a property.

Key Takeaways
Federal regulators have proposed loosening real-estate appraisal requirements to enable a majority of U.S. homes to be bought and sold without being evaluated by a licensed human appraiser
Some worry, though, that dropping appraisal requirements would introduce new risks into the $10.7 trillion market for home loans.
“The appraisal profession is suffering a death by a thousand cuts,” said Joan Trice, chief executive of Allterra Group
More than two-thirds of U.S. homes sell for $400,000 or less, according to U.S. Census data and the National Association of Realtors. If the regulators’ proposal had been in force last year, about 214,000 additional home sales, or some $68 billion worth, could have been made without an appraisal, regulators said in their 69-page proposal.

Some worry, though, that dropping appraisal requirements would introduce new risks into the $10.7 trillion market for home loans.

“We still would prefer a human being doing the appraisal,” said Lima Ekram, a mortgage-backed securities analyst at Moody’s Investors Service.

One issue: Automated valuations done by computers are largely unregulated. The 2010 Dodd-Frank financial overhaul required regulators to propose quality control standards for so-called automated valuation models, but they have yet to do so.

“There are a lot of problems with appraisals, but there are voluminous standards,” said Ritesh Bansal, chief executive of Appraisal Inc., a New York-based provider of automated valuations. “On the AVM side, it’s a wild, wild West. And that just invites abuse of all kind.”

Regulators say the immediate effect of dropping appraisal requirements would be limited because a vast majority of home loans in that range are bought these days by mortgage giants Fannie Mae and Freddie Mac , or guaranteed by other federal agencies. Those typically require appraisals regardless of home value.

Appraisals help “ensure that the estimated value of the property supports the purchase price and the mortgage amount,” regulators wrote in their proposal. “However, the agencies also are aware that the cost and time of obtaining an appraisal can, in some cases, result in delays and higher expenses.”

Scrapping the appraisal requirement would open a swath of new turf for upstart property valuation companies, like HouseCanary Inc., which use artificial intelligence, algorithms and sometimes even drones to value homes. Jeremy Sicklick, the company’s chief executive, said that replacing appraisers with computers will speed up home sales by weeks, reduce costs for buyers and eliminate human bias and error from the process of valuing mortgage collateral.

“The technology has reached the level to where this change creates a win-win for the consumer and lender,” Mr. Sicklick said.

Although appraisals are based on criteria such as sales of recent comparable homes, they are sometimes more art than science. And appraisers came under fire following the housing crisis, shouldering much blame for inflating home prices at lenders’ behest.

Their latest turf battle comes months after a defeat at the hands of lawmakers rolling back some financial-crisis-era banking rules. That change eliminated a chunk of appraisers’ business by exempting many rural properties from appraisals.

“The appraisal profession is suffering a death by a thousand cuts,” said Joan Trice, chief executive of Allterra Group, a Maryland firm that tracks the industry.

Source: The Wall Street Journal

National Association of Realtors: ” Real Estate will continue to see growth, amid a strong economy”

National Association of Realtor’s chief economist Lawrence Yun’s remarks came during a talk at the Realtors Conference & Expo in Boston last week, where he added that in his opinion another recession seems unlikely in the short term due to the country’s sound economic fundamentals.

Yun also forecast around six million new and existing home sales by the end of this year, and slightly more in the next couple of years. The economist also believes home prices will continue to grow at a modest rate, around 4.7 percent in 2018, 3.1 percent in 2019 and 2.7 percent in 2020.

Key Takeaways

  • Yun forecast around six million new and existing home sales by the end of this year
  • New homes are being added to the market at a rate of around 1.2 million per year, but that’s below the historical average
  • Yun said there’s little chance of a recession happening as inflation remains under control, and so any interest rate increases by the Federal Reserve will likely be moderate.

However, Yun said these positive trends would only occur if homebuilders are able to keep up with demand by adding new inventory to the market. New homes are being added to the market at a rate of around 1.2 million per year, but that’s below the historical average and well off the 1.9 million homes that were built in 2004.

There are no signs of a housing bubble at least, Yun added. He said that even though home prices have been outpacing income for several years now, the overall economy in the U.S. is still fundamentally sound, that mortgage quality is high, and that due to the persisting inventory shortages in many markets, there is no danger of the overbuilding that preceded the Great Recession.

Some risks do exist though. Yun said the threat of a full-scale trade war between the U.S. would hamper economic growth, and lead to higher interest rates for long-term debt instruments. If that happened, it’s likely a recession would occur, Yun said.

One piece of good news is that Realtors themselves can help do their bit by reminding their clients that the economy is still healthy and that all signs point towards positive home price increases. Yun said there’s little chance of a recession happening as inflation remains under control, and so any interest rate increases by the Federal Reserve will likely be moderate.

In other words, it’s a good time to buy a home, Yun said.

“All indications are prices will keep moving higher, and buyers who wait risk missing out on wealth gains,” he said.

Source: Realty Biz News

The Next Housing Bubble Could Come From Technology

(Bloomberg Opinion) — A decade after the housing crash, it is now possible to buy or sell a house with the click of a mouse. If the practice catches on, it could lead to a far more efficient and affordable housing market — or another devastating bubble.

So-called iBuying (for instant buying) involves firms using algorithms to provide sellers with fixed-price offers on their homes. While housing is a good long-term investment, it is bedeviled by multiple instances of market failure. The most fundamental is that the seller has a lot more information about the condition of the property than the potential buyer. Buyers and investors are therefore cautious. Disclosure requirements help, but they are often lengthy and confusing.

This is where the algorithms come in: They read disclosures, do market comparisons, evaluate timing, assess nearby rental vacancies and consider a host of other factors to arrive at an estimate of the house’s value. That allows the iBuying firms to comfortably offer an instant price. Last year in Phoenix, Arizona, approximately 5% of the homes were sold through instant buying, and investors own as many as 22,000 houses in the area.

But the real potential of iBuying is during the next real estate downturn. As the real estate market slows, the opportunity to sell instantly will become more attractive, and more properties could end up in the hands of big investors.

This ability to sell properties instantly also encourages the adoption of a second technology: click-to-buy. For many of the same reasons big investors have been reluctant to move into the home market, small-time real estate investors have traditionally taken their time and stayed in neighborhoods they know well.

But now online real-estate firms such as Redfin are offering better technology, such as 3D maps, which allows potential homebuyers to purchase sight unseen. A large inventory of homes owned by respected firms would add liquidity to this market, allowing small investors to get in and out more easily.

Together, these two technologies could serve as a kind of market-maker: A platform that allows buyers and sellers to find each other. As an asset that can be easily bought and sold at known prices, real estate would be coveted by investors, who are willing to accept a lower return on their investment in exchange for the convenience of easy trading.

The yield on an asset is its price divided by the yearly cash flow it generates. For stocks, the cash flow is dividends. For houses, it is rental income. Housing investors have generally considered a price-to-rent ratio of 12 to 15 as a good investment. That corresponds to a yield of  7% to 9%. On the other hand, the average dividend yield on stocks is about 2%, corresponding to a price-to-dividend ratio of just over 50.

So what would happen if houses became as easy to trade as stocks? At first, the price of homes would soar. That happened during the last housing bubble, when lower lending standards added liquidity to the housing market by making it easier for investors to sell quickly to less qualified borrowers.

At the peak of the housing bubble, the average price-to-rent ratio in the U.S. rose to about 21, well outside the range housing investors consider safe. The existence of a market-maker in housing, however, could drive yields down to the level of stocks, creating a potential bubble twice as big as the one that occurred in the early 2000s.

A lot depends on how the home construction market responds if this new technology catches on. With homes selling at 50 times yearly rent, the incentive to build more homes would be huge. Investment would flock to home construction, expanding supply and pushing down both prices and rents. The price-to-rent ratio would remain high, but because rents were falling, home prices would eventually come down to affordable levels.

On the other hand, if the supply of houses did not expand, then housing prices would remain elevated — and investors would eventually crowd out owner-occupiers in the housing market. The U.S. would become a nation of (mostly) renters.

A rigid supply of housing would also make prices more volatile. During good times housing prices would soar, just as they do in the stock market. In bad times prices would crash. That volatility could add permanent instability to the U.S. economy.

How cement makers turned Nigeria’s big challenge into opportunity

Once upon a time, Nigeria imported cement in millions of metric tons (MT). Lafarge was the only major cement maker in Nigeria and could not even satisfy one-thirds of the market. China, India, Brazil and several countries found Nigeria a big export market.

Annual cement production between 1999 and 2002 was around 1.7 million MT, but demand was almost 8 million MT.

In 2002, Olusegun Obasanjo, then president of Nigeria, challenged the likes of Aliko Dangote, today’s Africa’s richest man, to move into the cement production business. Obasanjo came up with a policy that revolutionised the cement industry. The policy was simple: Unless you set up a local cement plant, you would not be allowed to import. Nigeria’s population was rapidly growing and it was becoming clear that cement demand would be rising. With a rising population, infrastructure gap was widening.

Between 2006 and 2007, Dangote set up local plants while Lafarge expanded. The likes of Unicem and Cement Company of Northern Nigeria (CCNN) came on board later to chase market share. In December 2018, CCNN merged with BUA’s Kalambaina plant in Sokoto, North-West Nigeria.

From mere 7.5 or 8 million metric tons, demand has shot up four times since 2002. Local production of cement is over 40 million MT today, with Dangote pushing out 70 percent of the entire capacity. Dangote has moved to Edo (Okpella) and Ogun (Itori), with the two plants having a capacity of nine million MT. Dangote has since then established many cement plants across Africa.

“Sales of cement from our Nigerian plants increased by 11.4 per cent to 14.2 million MT in 2018,” Aliko Dangote, president of Dangote Group, said on June 18, 2019, at an annual general meeting in Lagos.

The entry of BUA changed the face of the industry, with expansion happening so fast. Fewer than six months after commissioning its 1.5million MT Kalambaina Cement Plant in Sokoto State, BUA completed its newest Obu plant in Edo State, with a capacity of three million MT annually.

This brings the total capacity of BUA Obu cement operations to six million tonnes and moves the entire group’s installed capacity to eight million MT. The cement plant started three years ago when BUA engaged Sinoma at the height of foreign exchange crisis and began production in March last year.

The plant runs on coal, heavy oils or a mixture of both, and the use of coal is expected to save over 70 percent of energy costs compared with 15 million litres of fuel oil per month or 40 tonnes or even 20 trucks of fuel that could have been used per day.

“We have built a 32 megawatts multi-fuel captive power plant and a coal mill. To put this in perspective, this new plant will be generating more power than is currently generated by the entire Sokoto State,” Abdul Samad Rabiu, chairman and CEO of BUA Group, said in Sokoto in 2018.

Lafarge has been conservative in cement investment over the years in Nigeria, but it remains a strong player in concrete. It recently divested its South African operations with a sale to another affiliate of LafargeHolcim Group.

Cement revenue and profits have helped to turn entrepreneurs into mega billionaires. Between the first quarter of 2015 and that of 2019, cement makers listed on the Nigerian Stock Exchange (Dangote, Lafarge, and CCNN) grew revenue from N180 billion to N236 billion. The number certainly exceeds N200 billion if BUA is factored in.

In Q1 of 2019, they grew revenue by four percent. In fact, Dangote is already exporting the product while BUA is exploring markets in Nigeria, Burkina Faso and other parts of West Africa.

The huge opportunity found by cement makers is down to the country’s huge infrastructure gap.

The gap is so huge that Nigeria has to spend $100 billion for the next six years to close the hiatus, according to Bureau of Public Enterprises (BPE). A federal government data show the country must spend three to five percent of its gross domestic product (GDP) to bridge the gap.

The Financial Derivatives Company, an economic and financial research firm, puts its own estimate at $15bn annually for 15 years.

Roads are bad but increased spending to close the gap by federal and state governments is providing opportunities for manufacturers who supply cement and concretes.

Nigeria has a population of 200 million people but housing deficit is between 17 and 20 million units. Houses are springing up in cities and must be built with cement and other materials. Bridges are also critical. Federal and state governments are embarking on several bridges now and again, and cement makers are always in the mix.

More opportunities are even knocking. The Centre for Affordable Housing Finance in Africa says that currently, Nigeria has a low homeownership rate as its housing production is roughly 100,000 units, yearly which are below one million units needed annually to bridge the gap by 2033.

The transport sector is a determinant for a country’s economic development. According to an infrastructure report for 2017, budgetary allocations for the transport sector was N19.5 billion in 2015, N424.27 and N365.1 billion in 2016 and 2017 respectively.


By Odinaka Anudu & Gbemi Faminu

NSE to engage CBN on banking sector recapitalisation — Onyema

THE Nigerian Stock Exchange, NSE, has said that it will dialogue with the Central Bank of Nigeria, CBN, in implementation of a fresh banks’ recapitalisation as capital base weakens. The Chief Executive Officer, CEO, NSE, Mr. Oscar Onyema, stated this at the Rand Merchant Bank, RMB, Nigeria Economic and Business Conference in Lagos last week

Governor, Central Bank of Nigeria (CBN), Mr Godwin Emefiele He noted that though the Exchange did not have full picture of the recapitalisation plan, it pledged to engage the apex bank on the way forward, adding that the last banking sector recapitalisation in 2005 raised the sophistication and liquidity of the Nigerian capital market. Recapitalisation : Shareholders laud NAICOM’s cancellation

“We are still studying the pronouncement that was made last week; we are not quite sure what it means, but what I can say is that historically if you look at the last big recapitalization efforts for the banking sector, the capital market was greatly used for raising the financing and indeed it was very beneficial to the capital market to the extent that the market became more sophisticated and a lot more players came into the market from the investors perspective,” he said.

He added:
“Till today, the financial sector is still one of the most liquid sectors listed on the stock exchange. So, we know that potentially, it could be very beneficial to the capital market.

” Speaking in the same vein, Prof. Uche Uwaleke, Professor of Capital Market and Chairman, Chartered Institute of Bankers of Nigeria, Abuja branch, said that five year policy thrust is a good development with a lot of positive impact on the economy, adding that the recapitalisation of banks would strengthen financial system stability and put the banks in a stronger position to finance big projects needed for development as well as play in the global scene.

He commended the CBN on the plan to scale up the anchor borrower programme and target of massive funding support for 10 commodities that consume a lot of foreign exchange (forex) to import, saying that it would help to conserve forex, grow external reserves, reduce food prices and possibly create job opportunities.

Source: Vanguard Ngr

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