DD
MM
YYYY

PAGES

DD
MM
YYYY

spot_img

PAGES

Home Blog Page 6509

Some Nigerian Banks Could Buy Lending Startups To Meet LDR Target

1

Most Nigerian banks cannot meet the 65% LDR (loan to deposit ratio) which the central bank has set. They have less than 10 weeks to close the gap. As I look at the data, I am beginning to think that some lending startups could be on play: Acquisition. Why? Bank stocks are rallying and if that stays, banks would have momentum to shop! The alternative of rejecting deposits makes no sense.

The Central Bank of Nigeria (CBN) increased the minimum loan-to-deposit ratio (LDR) of commercial banks from 60 percent to 65 per cent in the latter part of 2019.  According to a Bloomberg report, the measure was among a raft of regulations aimed at forcing banks to boost credit, mainly to farmers, small-and-medium-size businesses and consumers.

The loan-to-deposit ratio (LDR) is used to assess a bank’s liquidity by comparing a bank’s total loans to its total deposits for the same period. The LDR is expressed as a percentage. If the ratio is too high, it means that the bank may not have enough liquidity to cover any unforeseen fund requirements. Conversely, if the ratio is too low, the bank may not be earning as much as it could be earning.

According to the report, Nigeria’s banks are some of the most reluctant lenders in major emerging markets, with an average loan-to-deposit ratio below 60%. That compares with 78% across Africa, according to data compiled by Bloomberg, with 90% in South Africa and about 76% in Kenya. Compare this with developed markets such as the UK, which according to Statista.com, states that Shawbrook Bank’s loan to deposits ratio on the British market between 2012 and 2016 increased from 74 percent in 2012 to 102.7 percent as of 2016.

Sure, the big lending startups may be expensive to absorb. The smaller ones may not have enough user base to justify acquisition. Yet, the banks could be attracted to their technologies as some of the low-tier banks have really nothing for retail lending. Using the technologies and the brands, they could ramp up to meet CBN target. I do think acquisitions and acqui-hire in the neighborhood of $7 million would trigger great Easter and Sallah for some of the mid-tier startups. Yet, CBN can postpone the date when the banks lobby for more time! This is Nigeria, after all.

Lending Rates in Nigeria (source: TechCabal). 

Tekedia Mini-MBA – An Industry Expert To Lead The HR Management Session

0

When we released the Tekedia Mini-MBA program structure, Human Resources Management was not there. If you can weave a triple helix of people, process and tools management systems, you will notice that People is catalytic. Why? Going back to the classical factors of production, labour is a critical factor for location and localization of firms (chapter 3 in AO Lawal’s Economics textbook in secondary school). To attract, retain, motivate and promote human capital is one of the most important elements that drive competitiveness and organization productivity.

In my undergraduate business course in FUTO, the professor had a topic, Engineer Turns Manager; he posited on treating workers well, in order to maximize derivable output. The professor, Prof Onwuka, a professor of mechanical Engineering, who just finished his MBA then, put everything in an optimization equation; it was magical how central humans can be in commerce.

Ladies and gentlemen, our Mini-MBA would not be complete without a session on Human Capital Management. We have found a leader who will anchor it. Uchenna Anyanwu was GM Human Resources in one of Africa’s largest companies – the Halogen Group – which employs about 17,000 people. He later became Group Talent Director in Redslate, one of Africa’s finest experience companies. Today, he is the Managing Consultant in talent-focused advisory firm, Talgen Business Solution. A member of the HRD, the guild of directors in the human resources industry, he will take us into that HR management excursion.

If you have not registered, do so right away.

How To Register: 

  • PayPal: follow this link and pay $140 US dollars.
  • Bank transfer (Nigerian naira): Pay N50,000 into any of GTBank 0114016493, UBA 1019195493. Account owner: First Atlantic Semiconductors & Microelectronics.
  • Flutterwave: follow this link (naira) or this one (USD) to use your Verve, Visa, Mastercard, Amex, etc cards across Africa and beyond (you can use same links for other currencies, please ask for exchange rate before payment if not on Naira or USD)..

After payment, email tekedia@fasmicro.com with participant’s name and email to complete the registration.

The Fundamental Ride – Making Profits The New Investors!

2

Jumia is exiting some markets in Africa. Uber Eats has been eaten by Zomato in India. Glovo, the Spanish on-demand delivery platform is exiting Egypt. If you check these companies, one thing is clear: they are looking for a path of sustainable profitability. Businesses must make profits to be going concerns. While revenue growth is critical, a very fundamental element in business is a company’s capability to make profits. Without profit, a company dies, over time.

Oscar Pierre, the co-founder and CEO of Glovo, commenting on exits, said, “This has been a very tough decision to take but our strategy has always been to focus on markets where we can grow and establish ourselves among the top two delivery players while providing a first-class user experience and value for our Glovers, customers and partners.”

“Leaving these four markets will help us to further strengthen our leadership position in South West and Eastern Europe, LatAm and other African markets, and reach our profitability targets by early 2021. I want to place on record our thanks to all of our Glovers, customers and partners in the markets from which we’re withdrawing for their hard work, dedication, commitment, and ongoing support,” Pierre added.

I am sharing this because the playbook is changing rapidly as investors update their strategies, demanding from founders and CEOs a clear path to the desired destination: I have funded this company, now I need you to show me how you can be weaned from more outside capital and be a real business. That is a message every founder needs to hear right now. It is global and even more awakening in Africa. We need to be aware that our gestation period to profitability in Africa is long, and that requires exploring ways as early as possible to make money. When no further funding can be guaranteed, profits must become the new investors!

While you may think that raising capital may help you, most people have noticed that you can raise capital and still crash. Think of Efritin which just gave up on Nigeria. It happens daily. They think that market growth is the solution when the path to profitability is what matters [path to profitability may not matter to a U.S. founder because they have massive sources of new capital. We rarely have here].

Yes, your new business problem in Nigeria is not just capital but the long gestation period required for profitability, affected by many factors at scale.

Meanwhile, Jumia has a new boss in Nigeria. Massimiliano Spalazz takes over from Juliet Anammah who moves to Chair position of Jumia Nigeria.

Dealing with Long-Profit Gestation in Nigerian Startups

Update: You can add Lime (a scooter company) in this club of “finding profitability”.

Lime is hoping to achieve profitability this year by laying off about 14% of its workforce and ceasing operations in 12 markets, as first reported by Axios. CEO Brad Bao told us, “Financial independence is our goal for 2020, and we are confident that Lime will be the first next-generation mobility company to reach profitability (Techcrunch newsletter)

Megxit: The Price Harry and Meghan Paid for Their Freedom

0

The British Royal Family has come to terms with the decision of Prince Harry and Meghan Markle, the Duke and the Duchess of Sussex. This is coming after all parties sat on a table and talked about the announcement made by the Royal couple that they are stepping back from their roles as senior members of the royal institution.

At the break of the news, The Queen has appealed for calm and understanding as the family was trying to work things out with Harry and Meghan. The couple had announced that they will be living between North America and the UK in pursuant of independent life, but will keep the values of the Royal Family.

Part of the deal announced by the family is that Prince Harry and Meghan Markle will drop their royal titles – HRH, and would be addressed henceforth as Harry, Duke of Sussex and Meghan Duchess of Sussex.

They will also repay the 2.4 million pounds spent in renovating the Frogmore Cottage home. They are allowed to make whatever commercial deals they want as long as the monarchy values are not compromised.

The following agreement marks the conclusion of talks with the royal couple. After outlining the dos and don’ts of the agreement, The Queen was pleased that they were able to work things out with the couple. The statement issued by Buckingham Palace reads:

“As agreed in this new arrangement, they understand that they are required to step back from Royal duties, including official military appointments. They will no longer receive public funds for Royal duties.

“With the Queen’s blessing, the Sussexes will continue to maintain their private patronages and associations. While they can no longer formally represent The Queen, the Sussexes have made clear that everything they do will continue to uphold the values of Her Majesty.

“The Sussexes will not use their HRH titles as they are no longer working members of the Royal Family. The Duke and Duchess of Sussex have shared their wish to repay Sovereign Grant expenditure for the refurbishment of Frogmore Cottage, which will remain their UK family home. This new model will take effect in the spring of 2020.”

Part of the agreement is that Harry and Meghan will henceforth pay 360,000 pounds for the use of the Frogmore Cottage.

In a personal statement, The Queen thanked the couple and wished them well as she respects their decision to pursue an independent life.

“Following many months of conversations and more recent discussions, I am pleased that together we have found a constructive and supportive way forward for my grandson and his family.

“I recognize the challenges they have experienced as a result of intense scrutiny over the last two years and support their wish for a more independent life.

“I want to thank them for all their dedicated work across this country, the Commonwealth and beyond, and am particularly proud of how Meghan has so quickly become one of the family. It is my whole family’s hope that today’s agreement allows them to start building a happy and peaceful new life,” the Queen said.

Meanwhile, Prince Harry has issued his first statement on the matter since the announcement. At a dinner for Sentebale, the charity he started with Lesotho Prince Seeiso, in 2006 to help orphans with AIDS, he said the decision will not affect his family relationship, even though it’s a painful one.

“I’ve accepted this, knowing that it doesn’t change who I am or how committed I am. But I hope that helps you understand what it had come to, that I would step my family back from all I have ever known, to take a step forward into what I hope can be a more peaceful life.

“I was born into this life, and it is a great honor to serve my country and the Queen. When I lost my mom 23 years ago, you took me under your wing. You’ve looked out for me for so long.” Harry added that media is formidable force that needs to be tamed with sincere care for each other.

“But the media is a powerful force, and my hope is one day our collective support for each other can be more powerful because this so much bigger than just us.

“I will always have the utmost respect for my grandmother, my commander in chief, and I am incredibly grateful to her and the rest of my family for the support they have shown Meghan and I over the last few months.”

However, there are yet some issues not included in the agreement, one of them, the security of the Sussexes. The cost of the couple’s security is at the tune of 7.6 million pounds, and it’s likely going to be funded by taxpayers’ money.

This is a turning point in the British Royalty and the British people are accusing Prince Harry of disrespecting the Institution just to please his wife.

The Planned US Travel Ban – The Nigerian Diaspora Remittance Under Siege

0

A new list has emerged of countries that the Trump administration is considering adding to the already existing ones on its travel ban. The controversial travel ban came into play as soon as Trump assumed office, and it affected mainly Muslim countries.

It has been three years since the travel ban took effect and according to Politico, White House will announce the additions to the list on the third anniversary of the original order. The new list of countries cuts across three continents: Sudan, Tanzania, Eritrea, and Nigeria in Africa; Kyrgyzstan and Myanmar in Asia; Belarus in Europe.

According to the Wall Street Journal, “the administration plans to place visa restrictions on seven new countries: Belarus, Eritrea, Kyrgyzstan, Myanmar, Nigeria, Sudan and Tanzania. The countries wouldn’t all face blanket bans on travel to the US, but could have restrictions placed on specific types of visas.”

What is not clear is the reason behind the selection of the recent countries enlisted. The first list of countries under the travel ban has been made up majorly of Islamic nations on the basis that they foster and harbor terrorists who would eventually get to the United States and cause mayhem.

Trump signed the original travel ban on Jan. 27, 2017. But the order was met with severe opposition and court challenges, forcing the administration to modify the list. The Supreme Court eventually allowed a third iteration to go into effect, restricting Iran, Libya, Somalia, Syria and Yemen along with North Korea and Venezuela from entry into the US. The amendment removed Chad from the original list.

Trump administration has firmly defended the travel ban. White House spokesman, Hogan Gidley said the original ban has been to protect Americans from terrorists, but refrained from saying anything about the motive behind the new ban.

“The travel ban has been profoundly successful in protecting our country and raising the security baseline around the world. While there are no new announcements at this time, common sense and national security both dictate that if a country wants to fully participate in US immigration programs, they should also comply with all security and counter-terrorism measures – because we do not want to import terrorism or any other national security threat into the United States,” he said.

The new list is made up of countries that do not fall in the same category with the first; some of them are notably in good relationship with the US. The intriguing turn of events has raised some questions that its answers could be found outside the alibis of terrorism.

For instance, Politico noted that “Nigeria is a US counter-terrorism partner and the country has a large diaspora community in the United States.” Evidently, the faux behind the move has gone beyond terrorism and bilateral ties. Politico pointed out that in the past, Trump has made reference to Nigeria as a sh..hole country who he doesn’t want their citizens in the US.

The New York Times once quoted Trump saying: “If Nigerians come to the US, they will never go back to their huts in Africa.” There is an indication that the indictment of Nigeria is as a way of Trump getting back to Buhari for the excesses of his administration concerning human rights, free speech and religious tolerance. It could be recalled that in 2018, during a White House meeting between the two presidents, Trump has warned Buhari that if the religious persecution of Christians in Nigeria doesn’t stop, he will do something about it.

However, US travel ban is a development that Nigeria will find hard to cope with now. The country’s economy has been for long augmented by remittances from diaspora. According to data published by the Nigerian Bureau of Statistics (NBS), Nigeria received $96.5 billion in remittances from diaspora in 6 years. The highest volume came in 2018 at $25.08 billion, signifying 126% increase in 6 years.

The remittances represent 5.74% of Nigeria’s GDP as at 2018. Analysis  by PWC shows the inflow will like rise from $25.08 billion in 2018, to $34.89 billion in 2023. The inflow came mostly from Nigerian residents in the United States. The projected increase by 2023 was based on the number of Nigerians who are likely going to leave Nigeria in search of greener pastures in developed countries, mainly the US.

Although the restriction will make room for some types of visa applicants, with a travel ban in place, the future spells doom for dreamers whose hope for a better life depends on immigration to the United States, and for Nigerian Government whose economy is a beneficiary of Nigerian immigrants in the US.