The equities market opened the week positive, extending gains from the previous week into the third consecutive trading session as the All Share Index rose 2.4% to settle at 38,849.65 points while YTD return expanded to 4.2%. Consequently, market capitalization rose by N329.7bn to settle at N14.2tn. Today’s performance was buoyed by price appreciation in DANGCEM (+5.0%), GUARANTY (+2.3%) and ZENITH (+2.5%). However, activity level was mixed as volume traded declined 19.7% to 604.5m units while value traded inched 46.7% higher to N16.1bn.

Industrial Goods lead Positive Sector Performance
Sector performance was largely positive as all indices closed in the green. The Industrial Goods index led the gainers chart, up 2.3% primarily due to price appreciation in DANGCEM (+5.0%).

The Banking index trailed, rising 2.0% on the back of gains in GUARANTY (+2.3%) and ZENITH (+2.5%) while uptick in MOBIL (+5.0%) and CONOIL (+10.2%) pushed the Oil & Gas index 1.7% higher.

Also, the Consumer Goods and Insurance indices rose 1.1% apiece consequent on investors taking position in NIGERIAN BREWERIES (+1.4%), GUINNESS (+4.6%) and MANSARD (+4.4%).

Investor Sentiment Weakens
Investor sentiment – measured by market breadth (advance/ decline ratio) – weakened to 4.1x from 4.4x recorded the previous Friday as 37 stocks advanced against 9 decliners.

Today’s best performers were CONOIL (+10.2%), UNITY (+9.7%) and CADBURY (+8.6%) while the worst performing stocks were VITAFOAM (-4.9%), CILEASING (-4.9%) and MEYER (-4.3%). In line with expectation, market performance was positive today as investor sentiment remained strong.

Hence, we expect the trend to be sustained in subsequent trading sessions against the backdrop of a broad based rally across sectors.

Market Statistics: Monday, 8th January 2018

The Asset Management Corporation of Nigeria (AMCON) has so far acquired over 12,000 Non-Performing Loans (NPLs) worth about N3.7 trillion from 22 banks in the country while it has injected N2.2 trillion as financial accommodation to 10 commercial banks in order to prevent systemic failure in the banking sector. This has contributed in stabilising the financial system in Nigeria.

Records from AMCON also indicate that about N3.66 trillion of depositors’ funds were protected since the creation of the Corporation during the 2008/2009 financial crisis while approximately 14,000 jobs were saved as a result of AMCON’s intervention in the banking sector.

The idea is to recover the debts either through structured repayment or dispose of transferred assets towards settlement of the Bonds.

Meanwhile, leading legal luminaries including the former Chief Judge of the Federal High Court, Hon. Justice I. N. Auta and the President of Court of Appeal, Hon. Justice Zainab Adamu Bulkachuwa have joined the campaign by the management of AMCON) in calling for a paradigm shift in debt recovery processes in Nigeria.

Such shift according to them would act as act as panacea, if indeed the Corporation were to meet its mandate of resolving its huge outstanding obligation.

Current AMCON management under the leadership of its Managing Director/Chief Executive Officer, Mr. Ahmed Kuru upon assuming office and reviewing the challenges as well as bottlenecks inhibiting recoveries mounted a strong campaign that the current practice where habitual and recalcitrant debtors are treated with kid gloves, especially by agencies of government would not help AMCON resolve these loans before its sunset date.

According to Justice Auta, the approach to debt recovery and resolution must change at this point in the life of AMCON especially going into 2018 and beyond because the Corporation came as a child of necessity at the time it was created with all the good intentions in the world to recalibrate the beleaguered economy of the country at the time.

In his words: “Nigeria witnessed the 2007 global financial crisis, which was caused by insolvency, illiquidity, poor corporate governance and outright financial crimes. However, with the creation of AMCON by the federal government, no bank has been liquidated, depositors’ funds are safe and no bank has been subject to collection queues. The financial crisis led to the depression in value of the securities created against these defaulting loans thereby leaving the banks with an unfortunate inability to recover their losses. The effect of such monumental exposure was that banks were unable to sustain the equilibrium of lending required to maintain a vibrant economy. This in turn led to higher interest rates and an inability to perform the bank’s primary functions of financial intermediation like the pooling of savings and lending.”

Explaining further he said: “In addition to significant reduction in lending to customers, financial crisis created by non-performing loans can result in breakdown of interbank lending, which in turn leads to drastic drop in liquidity of banks and a consequent reticence or direct inability to advance loans to the broader public. Collectively, these factors create a vicious cycle resulting in a hike in interest rates; concomitant default and insolvency; volatility of currency values; a drop in investments and general stagnation of the economy among other crisis.”

Justice Auta having enumerated the facts argued that it is extremely important for all stakeholders, especially Judges to note the correlation between bank failure, which AMCON saved, and a large concentration of non-performing loans.

He added that Judges have critical role to play in the insulation of the macro-economy from fragmentation since most disputes that relate to banking, which AMCON currently shoulders are presented before them. Describing the AMCON framework as “extremely complex” he said AMCON’s goal can only be accomplished if all stakeholders, especially the entire hierarchy of the bench appreciates the fundamental underpinnings of its regime.

Lending her voice to Justice Auta’s position, Justice Bulkachuwa in her own analogy argued that since the rise of the financial sector is tied to economic growth, Nigeria’s economy, the livelihood and wellbeing of the citizenry are inextricably related to finance. She said all over the world, whenever the economy goes into crisis, governments across the world intervene to stabilise the macro-economy, which AMCON did in the case of Nigeria.

But with what she described as “deliberate reluctance” of debtors to redeem their obligations to AMCON, Justice Bulkachuwa said: “Having realised deliberate reluctance of debtors to redeem their obligations to AMCON, it would seem that AMCON has limited options other than resorting to our courts to enforce its enormous powers towards debt recovery. To recover as much debt as possible within its defined lifespan, expediency is essential if AMCON is to achieve its value maximization and financial stability goals.”

Corroborating the position of the two distinguished Justices, Kuru submitted that AMCON is currently indebted to the CBN to the amount of N4.7trillion, which is more than half of the proposed 2018 national budget. Aside that, more than 70 per cent of AMCON’s Eligible Bank Asset (EBA), portfolio is also locked in one form of litigation or the other meaning that without the support of the judiciary, AMCON cannot see the light of day.

On the back of that, he said there is also a rising number of appeals emanating from trial courts on AMCON cases, adding that at this stage in AMCON’s existence, expeditious determination of appeals brought before the courts remains key to AMCON’s ability to resolve all outstanding assets and prevent the undesired economic consequences of failure to recover the assets. The inability to resolve the debt he argued would have dire implications for the entire Nigerian economy.

The Chief Executive Officer of The Nigerian Stock Exchange (NSE), Mr. Oscar N. Onyema has been inducted as associate member of the Chartered Institute of Stockbrokers (CIS) of Nigeria at the induction ceremony held at the Stock Exchange House, Lagos. With this, Mr. Onyema has become the first CEO of the Exchange to be inducted as an associate member after passing the requisite examination of the institute.

CIS is the body statutorily empowered to train and certify professionals in the Nigerian capital market. It is the only professional body in Nigeria authorized to carry out qualifying examinations into the stockbroking profession. The Institute controls the activities of its members and matters associated with it.

In his opening remarks, the President of CIS, Mr. Oluwaseyi Abe, stated that “we are witnessing a rare manifestation of humility and leadership by example, as the CEO of the Exchange, Mr. Onyema, is formally inducted as an associate member of the institution.  Today’s induction ceremony is unique because Mr. Onyema, despite his qualifications and experience as a well-grounded investment and securities expert qualified to practice in the United States and Nigeria, voluntarily enrolled as a member of CIS, sat and passed the institution’s examination”.

He went further to state that “we are not just witnessing an induction ceremony, we are showcasing exemplary leadership, a demonstration to the commitment to the rule of law and processes, uncommon dedication and patriotism of the highest order”.

Mr. Abe congratulated Mr. Onyema and urged him to maintain the good name and reputation of the institute as he continues to contribute positively to growth of the institution and indeed the Nigerian economy. “Your induction as an associate of this noble profession, is a landmark event that confers on you a new level of respect and honour. It is a mark of character, capacity and competence”, he noted.

Expressing his delight after receiving his certificate as an associate member of CIS, Mr. Onyema said “I am very humbled by your recognition of my modest contributions to our market. I believe that my writing the CIS examination was a matter of cause and a continuous quest for knowledge and high performance. I commit to project the best image of the institution by ensuring adherence to the code of ethics of the profession. And I look forward to working with you all to improve the state of our market and the Nigerian economy at large.”

Nadine Tinen has been named Regional Senior Partner of PwC Sub-Saharan Francophone Africa thus also joining the Territory Leadership Team for PwC France & Francophone Africa. Appointed on 1 July 2017, she takes over from Edouard Messou.
Nadine Tinen, 45, is a graduate of the University of Bourgogne (Dijon), where she earned a DESS postgraduate diploma in tax law, a Magistère specialised postgraduate diploma in corporate law, tax and accounting and an international diploma in European tax law (Diplôme International de Droit Fiscal Européen). Specialising in tax, Nadine has become well-known over her 20 years in the field for her expert advice to businesses.
Nadine began her career in 1996 at PwC Cameroon and was admitted as a partner 10 years later. In 2010, she took over the Firm’s Cameroon practice and, in 2014, joined the Leadership Team for PwC Sub-Saharan Francophone Africa as Tax & Legal Leader, responsible for legal and tax advisory services.
Nadine is also a CEMAC-certified tax lawyer (Conseil Fiscal Agréé CEMAC) and a member of the Cameroon Association of Tax Lawyers (Ordre National des Conseils Fiscaux).
“Africa is a continent on the move, with an important role to play in the future of global affairs. In 2050, Africa will represent 12% of global wealth. Demographic, economic and social change is underway on the continent, and it’s happening now. This is why we need to work with the stakeholders in African development – spanning society, local communities and national, pan-African and even international businesses – to help them carry out their projects, from the initial strategy phase right up to completion. We believe that helping these stakeholders grow will allow us to contribute toward the development and promotion of Africa as a whole,” said Nadine Tinen.
With a view to dealing with the three major challenges that have been identified for the next five years – a Volatile, Uncertain, Complex and Ambiguous (VUCA) political, economic and social environment, technological developments and the growth of the regional economy, Nadine Tinen has set herself four strategic objectives:

• To drive PwC’s transformation in Sub-Saharan Francophone Africain a bid to improve support for clients with their own transformations, which are chiefly digital but may also be cultural. This process will involve introducing new innovative and collaborative tools, solutions, concepts and methodologies.
• To develop the Firm’s Advisory services for businesses and public authorities in the region, with two ambitions:

Working with the governments of the region on their economic diversification programmes and large-scale projects for transforming and enhancing performance and competitivity;

Working with businesses, regional champions and start-ups with high growth potential with a view to their becoming the future leaders of the region.

• To boost PwC’s employer brand in Sub-Saharan Francophone Africa, in two ways:

Implementing policies that promote employee well-being and real opportunities for career development;

Fostering the development of future talents in the region via the creation of a “PwC Academy”.

• To develop synergies between PwC offices in Africa as ameans of meeting the needs and expectations of both the public and private sector.

PwC reported revenue of nearly €50 million between 1 July 2016 and 30 June 2017 in the Sub-Saharan Francophone Africa region. By meeting her four strategic objectives, Nadine Tinen intends to grow the Firm’s revenue in the region by more than 40% by 2022.
The investments made to achieve this ambitious growth will focus on human capital, innovation and technology and developing synergies. Accordingly, the total headcount of PwC offices in Sub-Saharan Francophone Africa is set to climb by 20% over the next five years, growing from over 700 employees today to close to 900 in 2022. Further, there are plans to promote 12 partners over the same period, growing the partnership from 28 members to 40 over five years. The transformation has already begun: three new partners were appointed as of 1 July 2017 (see appendix for their biographies).
“In addition to setting ambitious financial and business objectives, I will make diversity the focus of my term as Regional Senior Partner. I will continue to take positive action to support the advancement of women in business and in African society as a whole. At PwC, we believe in rewarding excellence regardless of gender and in encouraging individual career plans that allow our employees to achieve a healthy work/life balance,” added Nadine Tinen.