20 children do not play together for 20 years but they sure can for 20 weeks. We’re super pumped that this is our 20th edition of this newsletter. This means we’ve been sending newsletters out for 20 weeks in a row.
We’re proud of the journey so far, it has had its highs and lows – yeah we notice the typos and poor formatting, it really sucks 😞 – but we couldn’t let that stop us from trying again.
Thank you for sticking with us as we keep on doing what we know how to do best – telling the news as a friend would.
Let’s dive into the news 😊
The International Monetary Fund (IMF) upgraded Nigeria’s Gross Domestic Product (GDP) growth forecasts for 2019 and 2020. The Fund which keeps track of the global economy and the economies of member countries predicts the Nigerian economy will grow by 2.3% in 2019 and 2.6% in 2020, up from 2.1% and 2.5% in April 2019.
What it means
Every quarter the IMF releases GDP growth forecasts for nearly every country, and changes to their estimates is often a good indication of the direction a country is going.
While the IMF does not provide too much information on the logic behind Nigeria’s upgrade, it attributes it to expected higher oil prices.
Why it matters
If things play out as forecasted this is good news because higher oil prices lead to an increase in revenue for the government, this would cater for capital and recurrent costs. Also, it means a greater inflow of dollars for CBN, so we should expect the exchange rate to be stable.
Dig Deeper: World Economic Outlook Reports
Nigeria’s opposition Party (PDP) accused the ruling APC led government of squandering the $1 billion that was withdrawn from the Excess Crude Oil Account (ECA) a few months to the recent 2019 election. The government, however, replied stating that it kept the receipts as only about $880m was spent on a dozen fighter aircrafts ($490M) and other military procurements.
About the ECA
Nigeria earns its income majorly from Oil revenue, Oil revenues tend to fluctuate because oil price is volatile, this often leads to higher than expected Oil revenue. Any excess crude oil revenue is to be put into the ECA. The ECA economically was set up to save resources when oil prices are high, and to be drawn on when oil prices are low
K, Continue something doesn’t add up here 🤔
Maybe. It’s no secret that ruling political officeholders tend to come up with fictitious expenditure close to elections.
Case in Point: The Governor of Bauchi state accused his predecessor of spending N2.3bn to buy materials for burial in the state (N900m on the purchase of white cloth used for wrapping corpses while over N1.4bn was used to buy the wood for lacing the graves after burial).
It’s true that we shouldn’t deny the dead a befitting burial but N2.3 bn??? Please, how many people died?😩
Why it matters
The government should be held accountable. This call-out by the opposition party made the government reveal further details of what the $1B was spent on.
Nigeria’s Excess Crude Account has recently been ranked as the most poorly governed among similar funds operated by resource-rich countries in Sub-Saharan Africa. This is worrisome as the ECA balance which stood at $3.32 billion in 2014 has dropped by 85% to $480m as at today.
Interswtich has switched on its initial public offering (IPO) plan, again – for the third time. Bloomberg reported that the digital payment company has hired some financial institutions including JPMorgan Chase and Standard Chartered to work on its IPO, which is expected to be a dual listing on the London Stock Exchange (LSE) and the Nigerian Stock Exchange (NSE).
Another dual listing?
Yes. A dual listing is when a company lists its securities on two or more different exchanges. In Nigeria, Seplat Petroleum Development Company is the first company to do a dual listing – on the LSE and the NSE. Followed by Airtel Africa, which did a primary and secondary listing. Most companies in developing countries, like to do a dual listing because it provides additional liquidity, increased access to investors and improved public profile. If Interswitch succeeds this third time, it will be third company on the Nigerian bourse to be on two exchanges.
Why didn’t Interswitch previous IPO plans succeed?
Because of exchange rate crisis (not enough dollars) and recession. Interswitch, whose 70% of its shares is owned by London-based Helios Investment Partners, first announced plans for a dual listing in 2015 but later cancelled it because of exchange rate crisis. Thereafter, it aimed to achieve its dual listing in 2017 but couldn’t because of Nigeria’s economic recession in 2016.
Why should you care
Interswtich ought to have been the first African unicorn to go public and not Jumia, as it is expected to go public at a market valuation of $1.3 billion to $1.5 billion. A successful dual listing of Interswitch is another win for the NSE and Nigerian investors. It gives them the option of diversifying their portfolio across the stocks of MTN, Airtel or Interswitch. Instead of the previous banking, manufacturing and oil and gas sectors options.
BTW, JPMorgan has said more African companies are expected to issue an IPO in the next 12 months. Hence, it is hiring more personnel to strengthen its workforce in Africa.
Nigeria’s erratic power supply issues are coming to an end as the Federal government this week signed a Power deal with German-based company, Siemens on an electricity road map agreement.
What does this mean?
The deal is to achieve 7,000 megawatts (MW) by 2021, 11,000 MW by 2023 and overall grid capacity to 25,000 MW.
Currently, power generation hovers at an average of 3,700 MW.
Why it matters
At a glance this looks like another episode of Nigeria selling out to a foreign company, but looking closer at the results five years after the privatisation of the sector, it obvious that the six-generation companies and 11 Distribution companies that emerged after the unbundling of the Power Holding Company of Nigeria are still grappling with the old problems in the sector.
Two months after the swearing-in of President Buhari, he finally seems to be setting up his cabinet. 43 names of ministerial nominees were sent to the Senate this week, out of the 43, 8 were former governors, 7 women and 14 Former ministers.
About the list
Returnees: Babatunde Fashola (Power, Works and Housing), Rotimi Amaechi (Transportation, Chris Ngige (Labour), Ogbonnaya Onu (Science and Technology), Geoffrey Onyeama (Foreign Affairs), Lai Mohammed (Information).
Those won’t didn’t make it back: Ibe kachikwu (State for Petroleum), Audu Ogbeh (Agriculture), Adebayo Shittue (Communication), Solomon Dalung (Youths and Sports).
Prominent newcomers: Festus Keyamo (SAN), Godswill Akpabio, Olorunnimbe Mamora, Sharon Ikeazor, Sunday Dare, Gbemisola Saraki, Timpre Sylva, Rauf Aregbesola.
During the screening before the senate, nominees who were previous senators were asked to Take a bow and go without being questioned, Should “Take a bow and go” be continued?
Can these new ministers deliver?
Tell me more
The Lake Turkana Wind Power farm, located in Northern Kenya has 365 turbines and it is expected to account for 15% of the nation’s total supply and power about 330,000 local homes. This wind project set Kenya on course to achieve 100% green energy by 2020; it currently generates 70% of its electricity from renewable sources, primarily hydropower and geothermal.
Why it matters
Since the Turkana project was connected to the national grid last September, the plant injected more than 1.2 billion kilowatt-hours of electricity and saved taxpayers up to 8 billion shillings ($77.5 million) from reduced usage of diesel-generated thermal power.
PepsiCo has agreed to acquire South Africa-based company, Pioneer Foods for $1.8b. Pioneer Foods is the maker of local brands such as Weet-Bix breakfast cereal, Ceres fruit juice and Nigerian bread brand Butterfield.
What’s in it for Pepsi
The acquisition gives PepsiCo whose growth in the US is thinning out because many people are moving away from sugar and soda the chance to expand its footprint by owning more brands and manufacturing facilities in countries such as Nigeria, Kenya and South Africa.
What’s in it for Pioneer Foods
For Pioneer, the takeover comes at a time when the company has been struggling to cope with a consumer-spending slump in its home market. The slump in consumer spending has been caused by the country’s high unemployment and rising living costs – and this reflected on the company’s first-half profit which declined.
After 9 years as the highest-grossing movie of all time, Avatar finally gave way for Avengers: End game to become the top-grossing movie of all time. Thanks to End game’s re-release that featured a deleted Hulk sequence, a Stan Lee tribute and post-credits scene, as well as an extra bump from the release of Spider-Man: Far From Home.
Disney will get the chance to upset Endgame‘s global box office title when it releases Avatar 2 on December 17, 2021.
Marvel announced phase 4, a suite of new superhero movies set for release over the next two years.
BTW The Lion King, a reboot of Disney’s 1994 animated classic, has made an estimated $626 million worldwide in just 2 weeks of its release.
UK’s prime minister Theresa May officially resigned this week and was replaced by Boris Johnson.
What to expect
Boris Johnson a former foreign secretary and hard-line supporter of Brexit promises to make Brexit happen by the end of October. This gives him a little over three months to come up with a divorce deal that both the EU and Parliament can get on board with. Or else he’s threatening a no-deal Brexit.
Trivia: Boris Johnson will be the 14th prime minister during Queen Elizabeth II’s reign.
The Federal Trade Commission (FTC) approved a $5 billion settlement – FTC’s largest fine ever – with Facebook for mishandling users’ data (Cambridge Analytical Scandal).
The full package
Asides the $5 billion fine Facebook has to create an independent board charged with overseeing privacy-related efforts at all levels of the company and also giving periodic updates on how Facebook is complying with FTC requirements.
The Securities and Exchange Commission (SEC) is to charge Facebook a separate $100 million related to the same issue. Also this week, The U.S. Department of Justice announced an antitrust probe involving Facebook, and the FTC opened another official investigation into antitrust issues.
Bottom line: Considering that $5 billion is just less than a tenth of Facebook’s annual revenue, some say it’s pocket change for Facebook and not nearly enough to phase the company. Facebook’s Business keeps thriving despite regulatory scrutiny with its 2nd quarter results beating expectations – $16.89 billion Revenue, 2.41 billion monthly active users.
As per Reuters, A pair of running shoes — one of the first made by Nike — was auctioned for $437,500, shattering the sneaker record. The highest previous price fetched at public auction for sneakers was $190,373 in California in 2017 for a pair of signed Converse shoes said to have been worn by Michael Jordan in the 1984 Olympic basketball final.