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Analysts Assess FCMB Renewable Strategy, NGX Dividend Policy, and MTN 5G Launch

Sep 19, 2022   •   by TheAnalyst, Proshare Research   •   Source: Proshare   •   eye-icon 129 views

Being an Analys Note issued by Proshare Research on September 19th, 2022

 

 

FCMB Group Drives Sustainable Growth in Nigeria’s Renewable Sector

Nigeria’s FCMB Group has made a substantial contribution to the decarbonization and expansion of clean energy in that nation. The Group saw this as essential given its location in a region that is heavily dependent on fossil fuels. Despite still having a long way to go, the Group has significantly reduced its carbon footprint and increased its financial support for companies that are committed to developing clean energy sources. 

 

Thus, their subsidiary First City Monument bank has moved 150 (73%) of its pan-Nigeria branch network from grid/diesel generators to solar power. As a result, In the race toward a low-carbon future where renewable energy takes center stage, it is ahead of industry peers. The same applies to its strides in financing renewable energy resources to support global decarbonization efforts. 

 

The institution has worked with development finance institutions to provide targeted financing to improve Nigeria’s energy access through mini-grids and energy-efficient projects. Astonishingly, it has executed credit enhancement agreements worth over N21 billion to increase energy supply, with about N1.7 billion going to businesses in the renewable energy sector, improving cost-effectiveness and access to clean energy, and supporting clean off-grid energy solutions to close the supply gap in Nigeria as the demand for residential and commercial energy rises exponentially. This group's endeavour represents a drastic departure from the nation's main energy source, fossil fuels, and though it is modest, it significantly contributes to the growth of the renewable energy industry and raises the possibility of achieving net zero emissions by 2060.

 

NGX Group Releases New Dividend Policy to Improve Dividend Payout 

Nigerian Exchange Group (NGX Group) plc stated it will continue to ensure its shareholders received mouth-watering returns on their investment as it released a new dividend policy. The dividend policy seeks to guarantee shareholders’ rights especially as it relates to return on investments. According to the document, “the range of dividend payable in cash will range between a pay-out ratio 25 percent and 75 percent of the distributable profit of same year to which the dividend is applicable.  Analysts expect the new dividend policy to attract investors and pull up the company’s share price (see chart 1 below).

 

Chart 1: Share price movement of Nigerian Exchange Group from September 1, 2022 – September 16, 2022

 

MTN Launches 5G in Lagos, Targets Six more Cities

MTN Nigeria Communication plc launched its commercial 5G network in Lagos on September 18th, 2022, with a promise to launch the network in six other cities which are Abuja, Port Harcourt, Ibadan, Kano, Owerri, and Maiduguri. The Lagos 5G commercial launch came on the heels of its 5G pilot launch three weeks ago, as mandated by the telecoms industry regulator, the Nigerian Communications Commission (NCC). 

 

The implementation of 5G was expected to accelerate the actualization of the national targets in the Nigerian National Broadband Plan, the National Digital Economy Policy and Strategy, as well as other sectoral policies designed to enhance Nigeria’s digital transformation. Analysts believe that 5G technology would extend the reach and capacity of MTN Nigeria’s data network and enable much faster speeds and lower latency, giving customers near-instant access to the things they care about and downloads that take seconds, instead of minutes.

 

Food Prices to Increase in Pakistan and Nigeria as Flooding Affects Harvest.

Back-to-back rainfall has seen several countries suffer severe flooding in the past month. Pakistan is one of the countries hit the hardest by this extreme weather as the calamity comes at a time when the country is struggling with a balance of payment crisis, rising debt, and soaring inflation. Almost 1,500 lives were lost as a result of the rain which has affected about 33 million people. About 800,000 cattle have been lost to flood by farmers, and about 70% of onion harvest, along with rice and corn, has been destroyed which has also placed their wheat harvest at risk as almost all Pakistan households are consumers of Wheat.

 

Farmers in some northern states of Nigeria have also counted their losses as heavy rain in the past week has caused severe flooding in different parts. In Niger state, about 40,000 hectares of farmland are said to be submerged under water as flooding occurred when most of the rice farms were ready for harvesting.

 

As flooding hit these Nations, analysts expect food prices to rise as flooding reduces the quantity of food harvested thereby tightening supply on increased food demand (see chart 2 below).

 

Chart 2: Food Inflation for Pakistan and Nigeria from September 2021 to August 2022

 

India’s Foreign Reserve Dips as Central Bank Continues to Support the Falling Rupee

The Reserve Bank of India has used a net of US$38.8 billion from its forex reserves between January and July to support its dwindling currency. According to the central bank, the frequency of the foreign exchange reserves usage is at a quicker pace compared to the taper-tantrum issues the country had in 2013 which it sold only a net of US$14 billion between June and September. A net of US$19 billion was sold in July alone and intervention remained heavy in August when the rupee fell below 80 against the dollar. Alongside the intervention in the spot market, the central bank’s forward dollar holding has fallen to US$22 billion from US$64 billion in April. With these huge withdrawals, the country’s forex reserves have fallen to a two-year low of US$550 billion from a peak of US$642 billion in October 2021 as the drop in major currencies like the euro and yen against the dollar contributed to the dip. Analysts expect a further decline in the reserves as the Central Bank continues to support the Rupee (see chart 3 below). 

 

Chart 3: India's Foreign Reserves from August 2021 to July 2022

 

Cryptocurrency Market Heats Up as Bitcoin Approaches US$18,390 

The cryptocurrency market saw a turnaround as the major global crypto market cap shed more losses in the past 24 hours, declining by -7.68%. Bitcoin also lost its 40% market dominance as it failed to break above the significant bearish trendline of US$18,390.32; where it has held below since the bearish movement from the US US$25,000 level. Furthermore, major coins are also gaining bearish movement as Ethereum loses much more than Bitcoin, retesting from US$1,458.0 to US$1,287.42, down -10.59%. Despite the bearish trend, analysts noted that tokenize Xchange stood out, gaining +7.0% in the past 24 hours (see chart 4 below).

 

Chart 4: Bitcoin Price Movement

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