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Banks Begin Deduction of Loans from Chronic Debtors’ Accounts

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The Deposit Money Banks are recovering debts owed by chronic debtors
from their accounts in other banks to curb the growth of non-performing loans (NPL) in the industry, findings have revealed. Figures obtained from the Central Bank of Nigeria and the National Bureau of Statistics showed that the NPLs in the banks recorded a
slight decline from N1.

2tn at the end of second quarter of 2020 to N1.
1tn at the end of July 2021.

This is despite an increase in the gross loans in the industry in the
period. The CBN said the measures it introduced such as the Global Standing Instruction to reduce banking sector risks was helping to reduce the NPLs in the sector.
According to the CBN, the GSI, which commenced on August 1, 2020, allows banks to recover the outstanding principal and interest upon default from any account maintained by the debtor across all financial institutions in Nigeria.

It said the slight improvement reflected the strengthening of risk management practices, the GSI policy and regulatory forbearance that had allowed banks to restructure credits impacted by the COVID-19 pandemic.
Figures obtained from the NBS on banking sector for Q3 2020 showed that while the gross loans in the lending industry stood at N18.9tn, the total non-performing loans stood at N1.2tn. The latest figures from the CBN showed that while the gross loans rose to N22.2tn, the NPLs fell slightly to N1.1tn. The CBN said in the latest Monetary Policy Committee report that it would not raise the lending rates in the sector.“On loosening, the committee felt that this would lower retail interest rates and improve the ability of obligors to repay their obligations, with a complementary reduction in NPLs,” it said.CBN added that for the banking industry, “Recent data also show that stability has been maintained and a smooth functioning of financial intermediation ensured. “CBN staff report indicates that the banking sector’s non-performing loan ratio has fallen from 6.3 per cent in February to 6.0 per cent in March and further to 5.9 per cent in April.”
The MPC noted that the capital adequacy ratio and the liquidity ratio both remained above the prudential limits at 15.2 and 41.7 per cent, respectively at the end of July 2021.
The committee also welcomed the improvement in the NPL ratio at 5.4 per cent in July 2021, compared with 5.7 per cent in June. The committee urged the banks to sustain current efforts to bring the NPLs below the 5.0 per cent prudential benchmark.

Economy

Selloffs in Dangote Cement, MTN, others Push Equity own by 1.23%

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Selloffs in the shares of Dangote Cement, Conoil, MTN Nigeria, among others, on Friday, dragged the equity market’s performance indices down by 1.23 per cent to close the week’s trading sessions.

Specifically, investors lost N672 billion or 1.24 per cent, as the market capitalisation, which opened at N54.

707 trillion, closed at N54.035 trillion.

The All-Share Index also lost 1.

24 per cent or 1.228.32 point, to settle at 98,751.98, as against 99,980.3 recorded on Thursday.

Consequently, the Year-To-Date (YTD) return on the index dropped to 32.07per cent.

Selloffs in Dangote Cement, MTN Nigeria,  Fidelity Bank, Sovereign Trust Insurance and Nestle made the market performance to be on a negative terrain.

Analysis of the market activities showed trade turnover drop when compared to the previous session, with the value of transactions down 22.01 per cent.

A total of 367.62 million shares valued at N6.78 billion were exchanged in 9,168 deals, compared to 542.95 million shares valued at N8.70 billion exchanged in 9,650 deals posted previously.

Meanwhile, Dangote Cement and Conoil led the losers table by percentage terms of 10 each to close at N135, N90.90 per share respectively.

MTN trailed by 9.96 per cent to close at N200.70, Thomas Wyatt Nigeria lost 9.78 per cent to close at N2.03, while Sovereign Trust Insurance shed 6.52 per cent to close at 43k per share.

On the gainers table, The Initiative Plc and FTN Cocoa Processors led by 10 per cent each to close at N1.98 and N1.65 per share respectively.

Juli Plc followed closely by 9.97 per cent to close at N3.75, Champion Breweries Plc gained 9.94 per cent to close at N3.76 and PZ Nigeria rose by 9.93 per cent to close at N33.75 per share.

On the activity table, Transcorp led in volume with trade of 57.00 million shares valued at N792.05 million, while Access Corporation sold 31.77 million shares worth N667.8 million.

United Bank of Africa (UBA) traded 28.50 million shares valued at N674.07 million and Fidelity Bank transacted 28.07 million shares worth N297.65.

Also, First City Monumental Bank(FCMB) sold 27.92 million shares worth N227.22 million.

However, market breadth closed positive with 43 gainers and eight losers on the trading floor.(NAN)

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BUSINESS

Geometric Power Commissions Afreximbank-backed 141mw Aba Integrated Power Project

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By Tony Obiechina, Abuja

The 141 MW Aba Integrated Power Project (Aba IPP), an Afreximbank-financed project, was officially commissioned in Abia State by the Vice President of the Federal Republic of Nigeria, H.E Kashim Shettima. A first of its kind in Nigeria, the Aba IPP is a pioneering initiative capable of generating and distributing 141 MW of its produced power across nine local government areas (LGAs) within the Aba ring-fenced zone.

Adequate distribution of energy is a cornerstone for national development, playing a critical role in facilitating industrialization and trade.

Recognising the challenges in the sector such as inadequate liquidity, high level of debt, and a lack of profitability, Afreximbank continues to support energy projects on the continent and has committed in excess of US$ 4.
6 billion to Africa’s power sector since inception. With approximately USD 900 million of funding in Nigeria, the Bank is one of the leading financiers in the Nigerian power sector. In 2021, Afreximbank signed a US$50 million term loan facility with Geometric Power Limited to support the completion of the generation and distribution infrastructure, commissioning of the gas supply pipeline and commencement of operations of the project.

Speaking at the official launch ceremony, Prof. Benedict Oramah, President and Chairman of the Board of Directors of Afreximbank said: “Afreximbank is proud to be part of this great milestone achievement in Nigeria. The 141MW Aba IPP underscores what can be achieved when public and private sector stakeholders join forces to impact humanity. As champions of trade and industrialization initiatives in Africa, we believe that it is projects like this embedded IPP that will catalyze trade and economic development in Nigeria and across the region.”  

The Aba IPP is unique as it is the only electricity company in Nigeria that is fully vertically integrated with embedded generation and distribution capabilities. This model ensures the Aba IPP can supply power directly to its immediate community, prioritizing local needs and distributing surplus power to Nigeria’s national power grid. This ground-breaking approach ensures constant power supply in the ring-fenced area and addressing the challenges associated with the national power grid. Furthermore, the integrated structure fosters value creation through improved cost management at various stages in the energy value chain: generation, distribution, and collection.

The Aba IPP is equipped with renowned world class infrastructure including three GE LM6000 Gas turbines, with a capacity to produce up to 47MW each. The power plant is also equipped with a 27km gas pipeline to ensure consistent fuel supply, three rehabilitated distribution substations, five new additional substations and 140km of 33kV/11kV lines using fibre optic cables for seamless data communication.

Strategically positioned in the industrial South-Eastern Nigeria, the Aba metropolis is one of the most commercial areas in West Africa, renowned for its cottage and small-scale industries specialising in the craftsmanship of leather goods, fabrics and related services. In addition to increased power supply and reliability, the Aba IPP is expected to enhance industrialization efforts and increase production of small and medium-scale enterprises, as well as local industries.

According to Geometric power, over 370,000 direct and indirect jobs would be created during the operational phase of the project. In addition, there are significant indirect benefits for the supporting industries including the development of road infrastructure, improvement in local services including enhanced water supply, schools and healthcare facilities, a boost in agricultural productivity due to a more reliable power supply, as well as increased support for rural electrification programs and enhanced tourism and leisure opportunities.

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Economy Grows Under Tinubu – IMPI

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By Tony Obiechina, Abuja

The Independent Media and Policy Initiative IMPI is convinced that Nigeria will witness economic growth in 2024, on the basis of the GDP figure of the last quarter of 2023

In a statement signed by its Chairman Niyi Akinsiju, IMPI said it expects the growth to be driven by the non-oil sector and expansion in the financial sector as the Central Bank of Nigeria battles to tame inflation rate and stabilize the foreign exchange rate.

The policy group explained that its position is based on a careful study of the latest GDP figure released by the National Bureau of Statistics (NBS) that also showed a sharp rebound in the oil production after a 3-year contraction.

It said:”According to NBS, real growth of the oil sector will spiral upward to 12.11 percent year on year in Q4 2023.

“This indicated an increase of 25.50 percentage points (highest in the last three years) compared to the rate recorded in the corresponding quarter of 2022 which was -13.38 percent. Growth also increased by 12.96 percentage points when compared to Q3 2023 which was -0.85 per cent.

“By way of production breakdown, the nation in the fourth quarter of 2023, recorded an average daily oil production of 1.55 million barrels per day (mbpd), higher than the daily average production of 1.34mbpd recorded in the same quarter of 2022 by 0.21mbpd.

“This is higher than the production volume of the third quarter of 2023, which is 1.45mbpd, an increase of 0.10mbpd. This has implications for inflow of foreign exchange because the nation depends on crude oil export for more than 90 percent of its foreign exchange earnings.

“The principal explanation for this impressive crude oil production increase is that the country now has about 30 functioning rigs in its upstream oil and gas sector.

“According to OPEC data, Nigeria’s average rigs count was 11, 7, and 20 in 2020, 2021 and 2022 respectively. Rig count is a measure of vibrant activities in the oil industry. It also referred to the number of active drilling rigs extracting oil from the ground at a given time. It is an important metric in the oil and gas industry as it provides insight into the level of drilling activity, which can influence oil production levels and market dynamics.

“The draw down from this is that the Tinubu administration must have rolled up its sleeves and went to work to redeem the nation’s problematic crude oil production activities as soon as it was sworn into office.”

It is against the backdrop of the performance of the oil sector as well as the non-oil that IMPI envisages further economic growth.

“By our conservative estimation, we can posit that the economy may have survived the most elementally critical stage as it adjusts to the subsidy removal policy and unification of the foreign exchange rates. We, therefore, envisage an economic growth trajectory, even in the face of prevailing challenges confronting the economy.

“We are confident of increased GDP growth in 2024, buoyed by the non-oil sector and driven by expansion in the financial sector which shall benefit from regulatory increase in interest rates as the Central Bank of Nigeria battles to tame inflation and stabilize the foreign exchange rate. These will act together to impact the living standards of the citizens in the months ahead,” it added.

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