Being an Analyst Note issued by Proshare Research on March 24th, 2023

FGN Set to Expand Asset Register to N100trn, to Reduce Debt Service Cost

According to the CEO of the Ministry of Finance Incorporated (MOFI), the Federal Government plans to increase the value of assets in its register from N18trn to N100trn. The MOFI stated that it would be starting 40 companies and over the next 10 years, it would include other companies and major infrastructure owned by the government like airports, seaports, and mining rights. While the idea behind the expansion of the National Assets Register is to have the assets generate cash flow for the government via outright sale or concession arrangements, Analysts say that the exercise presents the Federal Government with the opportunity to adjust its approach to a budget deficit and debt management.  The 2023 budget projects that budget deficits would rise from N4.34trn in 2022 to N11.34trn most of which would be funded by new borrowing, which along with the planned securitization of the ways and means borrowing is expected to burgeon the country’s debt profile from N44trn to N77trn. Experts say that the FG can leverage such state-owned assets as corporate assets, real estate, and infrastructure to issue convertible bonds at lower coupon rates.

Domestic Oil Refining May Resume in Q2 2023 Despite Stakeholder Doubts 

Echoing analysts’ worries, the Independent Petrol Marketers Association of Nigeria (IPMAN) has expressed concern over the Minister of State for Petroleum, Timipre Sylva's pledge on the completion date of the Port Harcourt Refinery. The minister recently stated that the refinery will be ready by the end of the second quarter of 2022, but the oil marketers' association believes that this is one of the ministry's fruitless promises. Although we have expressed reservations about the Port Harcourt Refinery starting operations in the second quarter of the year and the lack of an official start date for the Dangote refinery, we believe both refineries have been marred by the same operational challenges, including slow capital inflows and engineering issues, among others. Yet, we remain optimistic that the current administration will push to commission both refineries before leaving office, a situation that would ease the severity of the subsidy removal. 

Fitch Upgrades Ghana’s Credit Rating to CCC from RD

Ghana’s inability to pay elevated bond interest in 2022 prompted a downgrade of its credit rating to Restricted Default by Fitch. The country sorts for a USD$3bn bailout from the IMF and part of the requirement is to restructure its debt. The country has restructured its domestic debt which will lower its interest payments by 10% of the government’s expected revenues and has resumed the payment of outstanding local bonds. The improvement has made Fitch upgrade the rating of Ghana’s long-term local-currency issuer default to Substantial Credit Risk ‘CCC’ from ‘Restricted Default ‘. Nonetheless, the country recently defaulted on the Eurobond interest payment as it is yet to conclude the restructuring of the $13bn to international bondholders and other bilateral debts with members of the Paris Club of creditors nations and China. Analysts believe the restructuring of the bilateral debts will eventually improve the overall rating of the country and guarantee the financing assurances required from creditors to secure access to the USD$3bn International Monetary Fund loan.   

Dangote Cement's N340 Billion Dividend Payment Signals Strong Growth 

Dangote Cement Plc has announced its plan to pay its shareholders approximately N340 billion, pending approval at its Annual General Meeting (AGM). Shareholders who have unclaimed dividends have been advised to contact Coronation Registrars Ltd to address their claims. Dangote Cement has also urged its shareholders to open bank and stockbroking accounts to receive their dividend payments electronically. The company's 2022 financial statements show a significant increase in revenue and profit after tax due to sales generated from cement, despite an upward adjustment in the price of cement.

In a bid to encourage more young people to invest, Mr. Nestor Ikeagu, the Director of Market Development at the Securities and Exchange Commission (SEC), has reiterated the governing body's commitment to educating young people on the importance of saving and investing early for their future. The commission plans to reach out to more students and mentor them on how to manage their money and invest wisely. This is a positive development, as early investment education is essential in avoiding get-rich-quick schemes from illegal fund managers, according to analysts.

Oil Prices Stay Bullish Despite Global Demand Fears

Oil prices fell further on Friday as a result of unanticipated growth in US inventory and concerns about a future surplus, following comments by US Energy Secretary Jennifer Granholm that replenishing the country's Strategic Petroleum Reserve (SPR) might take several years. Prices, on the other hand, rose for the week, recovering from their biggest weekly drop in months last week due to the banking sector turmoil and fears of a recession. This week's gains were aided by Russia's announced output cut, soaring Chinese demand, and a weaker greenback. Analysts expect oil prices to be pressured in the coming week on potential oversupply and rising US inventory. In the local market, analysts expect continuous stability in the petroleum product market.  

Metamask to Partner Crypto Fintech to Bring Direct Crypto Purchases to Nigeria

Another huge boost for Nigerian’s crypto users as Metamask expanded its partnership with web3 payment company MoonPay to make self-custody cryptocurrency purchases become more reliable and accessible in Nigeria. This new feature will enable Nigerian users to purchase crypto via bank transfers directly from their mobile device without having the need for credit or debit cards which were previously the only available options in Moonpay. Despite the current issues crypto investors and traders are facing in Nigeria where the Central Bank of Nigeria (CBN) placed a ban on all financial institutions in the country from servicing cryptocurrency exchanges which makes attention to be shifted to peer-to-peer trading. Analysts is of the opinion that this new feature would increase the adoption of cryptocurrencies in the country and open way for Nigerians to invest and store cryptocurrencies.

Tech Company Layoffs Raise Concerns 

The pandemic-led boom that boosted tech companies and their valuations has now turned into a bust in the face of decades of high inflation and rapidly rising interest rates. Big tech companies have been announcing massive layoffs and hiring freezes, most recently Amazon disclosed it would cut 9,000 jobs, bringing the total so far this year to 27,000. Since the start of the year, 522 tech companies laid off 152,858 workers, according to the data from Layoffs. Although the tech unemployment rate fell to 1.5% in January from 1.8% in December, according to CompTIA’s analysis. An indication that many tech workers were hired and absorbed back into labour market. The tech unemployment rate is also an indication that many of the layoffs occurring at the tech sector level are non-technical workers, such as in sales, marketing, or related business support positions. These companies argue that the layoffs and cut-offs are due to the redundancy of roles, low performances, and override of contract staff as occasioned by COVID-19. Analysts believe that if the layoff rate continues, the industry could cut more than 900,000 jobs in 2023. That’s nearly six times the total for the industry in 2022, according to the site.