Nigeria Capital Market in 2019, What Should We Expect In 2020?

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January 8, 2020

In 2019, we wore the poverty capital of the world tag with hope and unflinching will, and we lived daily in an economy that was tamed by global economic headwinds, erratic economic policies, aggressive fiscal policies, unconventional regulatory directives and pronouncements.

In 2020, we do not expect the headwinds and ‘policy gymnastics’ of the previous year to disappear overnight but ‘we move’ with tact and experience, hoping the momentum garnered in the previous year will come in handy to ensure a more productive year.

Topic by topic, join us to review the key headlines that shaped the Capital Market in 2019 and share insights on lessons to grow your wealth in 2020.

The Equities Market (‘the Market”)

A Farmer rejoices when his crops blossom with green leaves, green is an indication of bounties/gains to come but when it’s red/brownish, he mourns in fear of heavy losses because his farm is most likely on fire or the crops are dying. In the equities Market, green and red carry the same message as the farm.

From the chart, the equities market opened for 246 days in 2019, stocks blossomed in green for 100 days, and for the most part – 146 days, the Market was on fire, ravaging most stocks and leaving Investors with heavy losses on their investments.

More technically, the equities market started 2019 on a high with an All Share Index (ASI) of 31,430.50 and peaked at 32,715.20 on 15th February 2019. In the course of the year, political, economic, and global turbulence drove the market up and down until it nosedived to close the year at 26,842.07.

ASI is a parameter used to measure how well a stock market is performing. You can view it as the daily ‘jamb score’ or ‘CGPA’ measuring the combined daily performance of all stocks in the equities market. The higher the score, the better the performance of the stock market. Comparing first day in 2019 score of 31,430.50 with a last-day score of 26,842.07, you will be right to conclude that the market performed poorly, suffering a decline of -14.60%.

Like the ASI, all other market performance indicators were in the red zone except market capitalization, which gained not necessarily because of better performance but because of the listing of new companies like MTN, Airtel etc.

Here is the list of top gainers and losers for the year:

If you invested N500,000.00 in the shares of CI & LEASING on 31st December 2018, by now you will be on the millionaire’s list in your village at N1,657,303.37. Even if you had invested your funds equally between the top gainer and loser, you still would have been better off at N906,520.64, about 70% premium above inflation, that’s the beauty of the equities market.

What should we expect in 2020? We expect the market to enjoy some green moments in the early days of the year considering the excess supply of funds beyond the pipeline of attractive investments in the money market.

Eventually, the lethargy that we have come to know the market and players for will soon set in and burn the green moments. It will be difficult to fault the Market or blame the energy of Players since the Market is usually a reflection of the economy, you cannot have a sustained bullish market in a bearish economy with erratic policies, regulatory directives and pronouncements, along with global headwinds that we can only accept at best.

Be that as it may, there are always decent undervalued companies and penny stocks waiting to be hunted, waiting to be spotted, waiting for the next millionaire/billionaire. Imagine if you had bought penny stocks like CILEASING, CORNERSTONE, CHAMS etc in 2018 and play the waiting game? Patience is a virtue, right?

Double-digit Inflation Rate

Inflation! a subtle weapon of theft even more devious than tax at times. Like a burglar in thick darkness, inflation robs you of your wealth without you having a clue.

When the Government proposed an increase in VAT from 5% t0 7.5%, we all jumped into a royal rumble of comments and analysis. Check the records, the inflation rate was 8.2% in January 2015 and now 11.85%. Put simply, it is an additional VAT of 2.5% and what feels like an additional inflation tax of 3.65%.

While the effect of tax is clear and intuitive because we can actually feel the negative emotions of our cash moving to Government. In contrast, a higher rate of inflation does not generate an equivalent negative emotional reaction because it’s not intuitively felt.

Here is the implication of the current rate of inflation at 11.85%, if inflation were to stay at that rate for the next 12 months and you invest N100,000.00 in a fixed income security to earn 12% annually, after 12 months, your precious N100,000.00 will effectively worth N100,150.00 instead of N112,000.00, inflation just robbed you off N11,850.00.

Outlook for 2020: most certainly the next inflation figure will hit 12% and cross it in the coming months. Falling interest rates, potential VAT increase, Border closure along with the implementation of the new minimum wage, inflation won’t be declining soon.

The Lesson: To grow your wealth in 2020, the return on your investments and business ventures must give you some reasonable premium above the inflation rate.

Question: What can you invest in ‘to beat the thief called inflation rate’?

Treasury Bills and Crashing Yields

Treasury Bills used to be an answer to the question above, not anymore, it’s no more a Haven for Banks and Fund Managers. The tables below tell the story:

Outlook for 2020: it doesn’t appear the crash is stopping any moment, here is the result after the first auction in 2020;

At an average yield of 12.83% in January 2019, you will conveniently beat inflation. Fast forward one year after, at the current average yield of 4.533% and inflation rate at 11.85%, the return on treasury bills will come in negative at -6.541%, clearly, you cannot grow your wealth with T-bills.

External Reserves and Oil Prices

Nigeria continues to suffer from overreliance on crude exports to grow its external reserves. In the last six months, the reserves have declined by $6.46bn from $45bn in June 2019 to $38.6bn as of yearend 2019.

“At an investor meeting in London, Godwin Emefiele, governor of the Central Bank of Nigeria (CBN), told foreign investors that the apex bank would meet all foreign exchange demands so long as the nation’s external reserves are above $30 billion and the international prices of crude oil do not go below $45 per barrel” BusinessDay

If you own a company or have anything to do with strategy in any company, please print the statement above and paste it where you can see it on a regular basis, most importantly, factor it into your scenario modeling. At the current rate of depletion, circa $1 billion monthly, we may hit that alert point in September 2020.

In the coming months, the re-energized hostilities between Trump and Iran may just turn out to be the tailwind that will fuel the confidence of Investors in our external reserves and douse all speculations.

Despite the headwinds, the opportunities in the land are boundless, strategize, explore, execute brilliantly and be confident of a positive outcome.

Cheers to more wins in 2020.

Strategic Issues that will make or mar Amotekun’s Operations in South West Nigeria

By

Rasheed Adebiyi

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January 7, 2020

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The idea came at the time security of lives and properties was at its lowest ebb in the region. Stories of killing, wailing and loss rented the air and was almost making the southwest roads the next most dangerous after the Boko Haram ravaged the North Eastern Nigeria. Concerns by stakeholders was pointing towards the formation of a security network built on local intelligence involving the different security personnel of the Police, the Nigerian Army, the NSCDC, the Air Force and local militias.

This cry culminated in the joint meeting of the governors across the region in a summit tagged Southwest Security Summit held in Ibadan. And the name of the outfit was pronounced Amotekun. The headquarters is located at Gbongan ìn Osun State. And the outfit would be unveiled on Thursday January 9, 2020.Ordinary people and security experts have hailed the move by the governors of the Southwest to secure its road in a cooperative manner that portrays the potential of such approach if extended to other areas of her life. However, there are strategic issues that need to be looked into as Operation Amotekun comes on board in the security architecture of the region.

#Synergy between the Security Force and Local Militias. Days ahead of the inauguration, pointers are emerging as to the kind of relationship that would exist between the established forces and the local militia and vigilante groups in the region. For a region that has an abundance of local security groups such as OPC, Agbekoyas and others, it is important that the modus operandi of the outfit should be clearly spelt out. The roles of the different composition should be complementary. There should be a strong cohesion within the team. This is important in order not to jeopardize the purpose of the outfit. Already, there are insinuations that the different personnel of the existing security will not work with the local militias. This might not be a good omen for the new outfit.

#Corruption. Another major issue that would confront the smooth running of the operation is the corrupt tendency that exists within the major components that make up Amotekun. With existing efforts to curb the menace of criminal activities already compromised by extortion which happens on daily basis along the major routes. People are wondering if such collection of illegal toll would not have negative effect on the operation. Turning such an important security operation to a commercialized venture might not be the best approach to retain confidence.

#Local Intelligence+Advanced Tech. The security outfit has to blend indigenous intelligence with advanced crime fighting tech. An analysis of kidnapping victims’ narration of their ordeal reveals that the perpetrators understand the terrain very well. So, it requires an equal understanding on the part of those who are commissioned to secure the people. The use of drones and other modern crime detection and fighting tools should be deployed. This is not to discountenance the usefulness of the local intelligence. What would put an end or minimize the menace of these crimes is a combination of these two.

#Open Communication. Security of life and property as important as it is requires the cooperation of those to be secured. To have people buy in, the Amotekun outfit needs strategic communication. Such that would be good enough to give people the needed confidence and at the same time not jeopardize the intent of the organization. A well equipped internet enabled situation room is advised. The outfit needs to create a mechanism for feedback. This is necessary in the light of human right abuses by Nigerian security personnel.

Ayodele Ognin Explains Starting Up A Business And Funding In This Interview

By

Chinedu Junior Ihekwoaba

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January 7, 2020

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You don’t need much to start a business. All you need is information that will keep.you grounded in your pursuit for a breakthrough in the labour market.

My guest, Ayodele Ognin, is a financial management expert. She shared what it takes to run a business with little or no cash.

It is good to have you here, Ayodele, all the way from Benin Republic. So can we get to know you better?

I am Ayodele Ognin, 29 years old. I am from Benin Republic. I have an MBA in Financial Management with 7 years working experience in Finance, Banking, Microfinance, Asset Management and Private Equity before founding my own company – WURAMI CONSULTING, a year ago.

Your career sounds really interesting. I am eager to know how it all started and what led you into creating your own firm?

Oh, Thank you!

It’s GOD’s plan. It all started in the Bank, seeing challenges women face to get Loans or defend their project to get finance. I decided to create a firm that can help Managers develop their businesses with a special focus on business managed by women. We started with Financial Literacy and Business Management Training skills.

I am always happy to see women challenging the status quo. So I must admit that – I am proud of you. What problems have you solved since your company started?

Thank you, Chinedu!

The major problem is in the management of the company. Most of the time, women think they need more money or loan to develop their business, what we do is to help them in the management and restructuring, so that we can reduce the charges, work on strategy to make more money, work on their value proposition and business model, and grow the business without asking for a loan.

Secondly, when loans are needed, we work on the business project to ensure that the business plan is well structured, that gives them more chances to get a loan. With the AFDB project to finance women with AFAWA, we make sure that the women we work with have their financial and everything needed by banks ready.

Thirdly we do financial literacy and women empowerment for the less privileged women. We teach them how they can start little businesses, like soap, méat pie, cleansing services and also we focus on they core competencies. For example, a woman that like cooking is oriented in catering, the one with talent in hair, go to hair business and so on.

We have trained till date, 2800 women in rural area, generally, 15000 people – youth and women.

That’s really a huge impact you have made. How easy is it to obtain loan from your company and at what interest rate?

We don’t do loans, we work with financial structure that we direct our customers too. But our objective is to grow the business without having to borrow. We also have an association called Women Impact Network, where we borrow little money for women in our community.

But for now, we don’t have the government authorization, so we will avoid to communicate on that side. Training is our main competencies

What steps have you taken to get the government authorization?

That is another project, a second business – Wurami Finance. It is a microfinance institution that we introduced a 3 months ago but it will take up to a year or two to get the authorization

I strongly believe that it will work out. Being a woman, how challenging is it to run an organization?

AMEN!

Challenges come with everything but when you can differentiate between what you want from what you need, GOD makes the rest easy. People will always make certain propositions to get you distracted, or sometimes they look down on you because of the age, but when you stay focused on you, show professionalism and stay firm to your value, you will overcome everything. When you also have the support of your family, you get good advice that will help you on the matter.

From your question, ”Being a woman, how challenging is it to run an organization?”

I can’t really answer that question because we don’t know how challenging it is for men. We are all used to certain gender challenges since younger age, today we don’t see it as a challenge anymore, we compose with it.

That’s just the best way to look past it.

What goals do you set to achieve with your organization this year?

To train 10000 women entrepreneurs in partnership with different organizations this year.

That’s huge. What’s your website and social media handles should in case anyone wants to contact you?

They can reach out to me here:

https://www.linkedin.com/in/ayodélé-ognin

Facebook: Ayodele OGNIN

Website: www.wurami.com

Email: ayodeleognin@wurami.com or ogninlayo@gmail.com

Where do you see your organization in the next five years?

I see myself being listed amongst the Top 10 CONSULTING Firm on the Continent, and be the first in every Business Woman mind.

With much dedication and passion, you are almost there.

Thank you for your time. Have a wonderful year ahead.

AMEN. Thank you very much Chinedu and the Tekedia crew.

Why Most of Our Leaders Are Unqualified

By

Onunwa Chima

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January 7, 2020

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You might have been wondering why African leaders are synonymous with critique and conundrum?

Well keep on reading to discover where the problem stems from

I feel the reason why our leaders always pose divisive figures is because most of them didn’t strive to get to wherever they are now. They got to top offices and positions by connection i.e because they know someone, who knows someone who will assist them to attain that position and all that.

Ecclesiastes 10:15-16 KJV, says;

Woe to thee, O land, when thy king is a child, and thy princes eat in the morning!

And mind you, this scripture wasn’t talking about the leader being a child or youth in every sense of the word. Solomon was a young ruler and yet his kingdom was happy in him, rather it was referring to fickleness and weakness of the ruler.

Brian Tracy said; “Leaders are made, not born”. A lot of people occupying leadership positions in various countries were not properly prepared. They were not made.

They didn’t pass through the fire, so they could be molded into genuineness. Most of them had things handed to them in a platter of gold. They never faced difficult situations and conquered such situations by sheer will power and determination.

It is sad, seeing a lot of countries especially in Africa in this predicament. We are kind of find ourselves between a rock and a hard place, because it’s starting to be a cycle, a culture, incompetence being passed down from generation to generation with no sign of it stopping anytime soon.

My friends and fellow African citizens how do we defeat this Goliath?

And to my upcoming leaders, i urge you, show commitment, take responsibility for things around you, it will go a long way eventually when you get to the top, don’t chicken out of difficult situations, don’t buy your way out of challenges that are designed to develop and nurture your strengths.

We may not have solutions to the recklessness of our present leaders but we must do all we can to ensure that the sequence is broken.

Do We Really Need The Government To Thrive in Nigeria?

By

Onunwa Chima

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January 7, 2020

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The Nigerian government has a huge role to play in the betterment of the lives of her citizens. Yes, that is absolutely correct, but come to think of it, does that mean if the government fails in her duty, then we have a justifiable excuse for being stagnant and not progress as individuals.

I believe that there are two types of systems; The Government system and The Personal system. Let me explain: in the Government system; individuals or citizens only prosper when the government is doing well, whereas, in the Personal system, the success of the citizens does not depend on the government.

Nigeria’s are always complaining, we complain about a lot of things from lack of quality education to inadequate power supply (justifiably so) but are there not people, visionaries in this country that are achievers? People that legitimately made wealth in this country. We know of Tony Elumelu, Aliko Dangote, Mike Adenuga and lots more. Why don’t we focus our strength and energy in thinking and brainstorming of ideas that would lead to us amassing wealth?

Fellow Nigerian citizens, the day we stop complaining is the day, we will find vision.

Develop an entrepreneurship mindset, a business mindset, stop waiting for the government to “create jobs” for you, to build factories all over the country and open the gates for thousands of unemployed to flood in. You may ask; is it not their responsibility? YES! it is, but there’s a snowball’s chance in hell that that’s going to happen.

John. F. Kennedy said: “ask not what your country can do for you but what you can do for your country”. Some people may disagree and say that’s inappropriate but if we look at the statement closely and analyze it carefully, you will find out that we have nothing to lose everything to gain if we adopt that mentality.

John D. Rockefeller, the American Business Magnate, the first-ever billionaire in the United States of America didn’t require the U.S. government to achieve that feat. He and his friend went into the oil business with the money he borrowed from his father, by his 40’s, he was in control of 90% of oil in the country. His personal wealth constituted 1% of the national economy. Nigerians, we don’t like to utilize our brain. We like being spoon-fed.

Success is a personal decision, poverty or failure is a personal decision. No one owes you anything. There are a lot of Nigerians that even if they were to be given #5 million Naira, they will still remain poor, due to their bad habits and poor lifestyle choices. Have people not won lottery worth millions in the past? but presently, they are the ones leading the protests of ” Nigerians are poor”. You begin to ask yourself, where did all the lottery money go?

Important advice, stop waiting for office or white-collar jobs, start thinking about launching your own business. Let me let you in on a little secret, the billionaires in the world today, the majority were self-starters, they were businessmen.

You don’t need money again as a tool for breakthrough but a mind that works. Technology has made it easy so much that there is almost nothing between you and your success, not even government. We are living in a golden age, unlimited knowledge can be accessed, a lot of free resources everywhere, you have Google, YouTube, etc. Use these platforms within the confines of your room, learn money-making skills, sell your skills, create value, solve problems and money will come to you.

Money is a reward for value created or problem solved.

There’s information everywhere, we just have to start implementing them. Implementation is what we lack.

“Your economic security does not lie in your job; it lies in your own power to produce—to think, to learn, to create, to adapt. That’s true financial independence. It’s not having wealth; it’s having the power to produce wealth.” –Stephen Covey

DON’T JUST PLAN. ACT!

I’ve come to discover that a lot of people have plans and good ones at that. But having a great plan is the easy part, actualizing that plan is where many find difficult.

I saw a movie about a young man who left his village to the city to find greener pastures, so he could take care of his poor mother and siblings back in the village. The boy ventured into all sorts of businesses from selling of electronics to hawking of sachet water, after four and the half years of hard work with measly earnings, he met a wealthy man who introduced him to his Korean and Japanese business partners. This was how the young man’s life turned around from grass to grace.

What am i trying to point out?

You don’t have to see the whole staircase before taking the first step. Start now! Start small.

Don’t worry about the lack of resources, people are watching. Benefactors only locate and support those who start, resources and capital will become available when you start.

Stop learning, planning and hoping. Start learning, planning and doing.

Proverbs 22:29 says;

“Seest thou a man diligent in his business? he shall stand before kings; he shall not stand before mean men.”

Start that business no matter how small, implement that idea no matter how ordinary it seems, be diligent and you will entice success.

“An idea not coupled with action will never get any bigger that the brain cell it occupied” – Arnold Glasow