AFREXIMBANK UNVEILS $500 MILLION FUND FOR AFRICAN CREATIVE INDUSTRY
FOLLOWING the example of the Nigerian Bankers Committee N200 billion creative industry initiative, the African Export-Import Bank (Afreximbank) has announced a $500 million credit facility to support the production and trade of African cultural and creative products over the next two years.
Afreximbank President, Prof. Benedict Oramah disclosed this in Kigali, capital of Rwanda, while speaking at the Creative Africa Exchange Weekend (CAX WKND), Africa’s first continental event dedicated to promoting exchange within the creative and cultural industry.
Speaking at the opening ceremony on Friday, Oramah explained that the funds, which would build on what the bank was already doing, would be accessible as lines of credit to banks, direct financing to operators and as guarantees.
He said that the creative economy was increasingly recognized as a significant sector and meaningful contributor to Africa’s gross domestic product and that the cultural and creative industries catalysed economic growth by fostering more inclusive, connected and collaborative societies.
“Creative industries can be potent vehicles for more equitable, sustainable and inclusive growth strategies for African economies,” stated President Oramah.
He, however, noted that, while Africa had a deep pool of talent, it lacked the infrastructure and capacity to commercialize its creative talent and reap the vast fortunes lying in wait.
“Because of underinvestment in the creative and cultural industries, Africa is largely absent in the global market of ideas, values and aesthetics as conveyed through music, theatre, literature, film and television. African countries import overwhelmingly more creative goods than they export or trade amongst themselves,” he noted.
He commended Egypt’s “astronomical growth in creative exports over the last decade” and the Nollywood industry’s increasing importance which had prompted the Nigerian government, in its Economic Recovery and Growth plan, to forecast export revenues of $1 billion from the industry by 2020.
Oramah described the African market as the lowest hanging fruit for African creative products but noted that, until recently, “that market was fragmented and balkanized, such that a Senegalese knew more about creative products in France than in Ghana”.
“But today, change has come!” he said. With the African Continental Free Trade Agreement in force and trading starting in July, Africa would begin to break down the borders and a single market for creative products would emerge.
EXTERNAL RESERVES HALT 6 – MONTH DOWNWARD TREND, RISE TO $38.32 BILLION
THE nation’s external reserve halted a six months downward trend, as it rose to $38.32 billion last week, the first week-on-week (w/w) increase since July last year.
The development which raises hope of continued exchange rate stability in 2020 saw the external reserves first rising by $53 million to $38.342 billion on Wednesday, January 15, from $38.289 billion on Friday, January 9, the previous week, before dropping to $38.32 billion on Thursday, January 16 last week. This translated to w/w increase of $31 million, the first since July 5 last year.
After falling persistently for seven months, from peak of $47.989 billion on July 5, 2018, to $42.296 billion February 28, 2019, the reserves commenced steady upward trend which peaked at $45.175 billion on June 10. But, after a four weeks fluctuation which ended on July 5 at $45.149 billion, the reserves commenced a six months downward trend which resulted to $6.83 billion or 8.4 percent decline before the upward trend from January 9, 2010
The analysis showed that the upward trend recorded last week, was triggered by the 6.3 percent jump in the price of Nigeria’s Bonny Light crude oil, in the first seven days of the month, courtesy of the tension generated by the US killing of Iran’s General Qasem Soleimani, and the latter’s retaliation with missile strikes on two US military bases in Iraq.
Data from the Central bank of Nigeria (CBN) showed that the price of Bonny Light rose by 6.3 percent to $72.18 per barrel on January 7 from $67.91 per barrel on December 31 2019, before dropping to $68.64 per barrel on January 13.
With this development, the naira is expected to maintain its two weeks upward trend this week, even as the CBN sustained its weekly injection of $210 million into the interbank foreign exchange market last week.
The analysis showed that for the second weeks running the naira appreciated last week in the parallel market and in the Investors and Exporters (I&E) window.
At the I&E window the naira appreciated by 76 kobo as the indicative exchange rate for the window dropped further to N361.84 per dollar last week from N362.6 per dollar the previous week, even as turnover in the window rose sharply by 108.6 percent, w/w, to $1.81 billion.
Similarly, the naira appreciated by 30 kobo in the parallel market last week as the exchange rate in the market dropped to N360.7 per dollar last week from N361 per dollar the previous week.
Projecting that this trend will persist this week, analysts at Afrinvest Limited said: “n the coming week, we expect the CBN to maintain its foreign exchange stability drive by sustaining interventions.”
Analysts at Cowry Assets Management Limited also projected that, “In the new week, we expect stability of the Naira against the Dollar across the market segments amid increased crude oil prices given the U.S and Iran hostilities.”
Cost of funds decline to persists amidst N833bn inflow
Meanwhile, the decline in cost of funds in the interbank money market last week is expected to persist this week courtesy of expected inflow of N833 billion.
Last week, an upsurge in excess liquidity, prompted by inflow of N586.7 billion from matured treasury bills caused cost of funds to fall, with average short term interbank interest rate falling by 678 basis points (bpts).
Data from FMDQ showed that interest rate on Collateralised (Open Buy Back, OBB) lending rate dropped by 671 bpts to 3.0 percent last week from 9.71 percent the previous week.
Similarly, interest rate on Overnight lending dropped by 685 bpts to 3.86 percent last week from 10.71 percent the previous week.
Analysts expects this trend to continue this week due to inflow of N833 billion comprising of N433.8 billion from maturing TBs, N42.1 billion from FGN bond coupon payment and N350 billion from statutory allocation funds to be distributed by the Federation Accounts Allocation Committee (FAAC).
Making this projection, analysts at Zedcrest Capital Limited said: “With FAAC money and OMO maturities flowing in next week, we expect significant demand in Treasury Bills by market participants. We also anticipate the CBN to float OMO auction(s) to mop-up excess liquidity.”
Similarly, analysts at Cordrous Capital said: “In the coming week, inflows worth a combined NGN475.86 billion – FGN Bond coupon payments (N42.10 billion) and OMO maturities (N433.76 billion) – will hit the system on the 20th and 23rd respectively. This, we expect, will boost system liquidity and cause a contraction in the Overnight rate.”
NIGERIA’S ECONOMY BIG ENOUGH FOR BIGGER STOCK EXCHANGE – SEC BOSS
Acting Director-General of the Securities and Exchange Commission (SEC), Ms Mary Uduk, says the Nigeria’s economy is big enough to accommodate a bigger and more attractive capital market. Uduk made this known in a statement issued by Mrs. Efe Ebelo, the commission’s Head of Corporate Communications, in Abuja on Sunday.
She noted that capital market contributed less than 10 per cent to the country’s Gross Domestic Product (GDP), adding that the same market contributed almost 100 per cent to the GDP of South Africa. According to her, we want a deeper, bigger, more attractive market.
“We think our economy is big enough to have a much bigger market. “The capital market makes up less than 10 per cent of the GDP of the country. If you look at other countries even South Africa, it is over 100 per cent of GDP.
“We believe we have a large room for expansion and that is what we are pursuing,” Uduk said. On electronic filing, Uduk said that the commission was working hard to ensure it commenced soon.
She said SEC was also in the process of deploying software that would help to actualise the plan. “That will make filing more efficient, easier for capital market operators to send in returns to us and make the market more transparent”. The director-general said that the introduction of electronic offering in the country’s capital market was a major achievement that would help solve the problems of unclaimed dividends. Uduk said the commission was excited about electronic offering and was in support hence the need to develop the rules to guide its implementation.
SANITARY PADS, 19 OTHERS EXCLUDED FROM VAT HIKE
The Federal Government has listed the sanitary pads among the 20 basic food items exempted from the new Valued Added Tax (VAT) increase expected to take effect from February.
President Muhammadu Buhari last week signed the Finance Act to increase the government’s revenue base.
The new law, according to the government will promote fiscal equity and support Micro, Small and Medium Enterprises (MSMES).
A statement issued by the Senior Special Assistant on Media and Publicity to the Vice President, Laolu Akande, said the VAT increase would not lead to a rising cost of living for Nigerians.
The statement read: “In a bid to ensure that the cost of living does not rise for Nigerians because of the changes in the Value-Added Tax, several basic food items, locally manufactured sanitary towels, pads and tuition relating to nursery, primary, secondary and tertiary education have been added to the exemption list of goods and services on the VAT under the Finance Bill 2019, signed by President Muhammadu Buhari last week, on the 13th January 2020.L
“Amongst other benefits, the law will consolidate efforts already made in creating the enabling environment for improved private sector participation and contribution to the economy as well as boost states’ revenues.
“To allay fears that low-income persons and companies will be marginalized by the new law, reduce the burden of taxation on vulnerable segments, and promote equitable taxation, the Finance Act 2019 has extended the list of goods and services exempted from VAT. The additional exemptions include the following:
“Basic food items – Additives (honey), bread, cereals, cooking oils, culinary herbs, fish, flour and starch, fruits (fresh or dried), live or raw meat and poultry, milk, nuts, pulses, roots, salt, vegetables, water (natural water and table water)
” Locally manufactured sanitary towels, pads or tampons. Services rendered by microfinance banks Tuition relating to the nursery, primary, secondary and tertiary education.”
“The increased new VAT rate of 7.5 percent is still the lowest in Africa, and one of the lowest anywhere in the world. (South Africa VAT: 15 percent; Ghana: 12.5 percent; Kenya: 16 percent; Egypt: 14 percent; Rwanda: 18 percent and Senegal: 18 percent)
“Under Nigeria’s revenue sharing formula, 85 percent of collected VAT goes to States and Local Governments. This means that the bulk of additional VAT revenues accruing from the increase will go towards enabling States and Local Governments to meet their obligations to citizens, including the new minimum wage as already noted by State Governors. Before now, the Buhari administration had firmly resisted previous suggestions to raise VAT.”
“The new Finance Act exempts Businesses with turnover below 25 million from VAT payments.”
PIPELINE EXPLOSION DESTROYS PROPERTIES AT ABULE EGBA LAGOS
A very serious fire outbreak has occurred in Abule Egba area of Lagos State. The inferno, which happened on Sunday evening, reportedly destroyed properties worth millions of Naira.
According to reports, the unfortunate incident precisely took place at the Ekoro area of the busy Abule Egba, a suburb of Lagos State along the Lagos/Abeokuta Expressway.
It was reportedly caused by the vandalization of a petroleum pipeline belonging to the Nigerian National Petroleum Corporation (NNPC).
However, authorities have already been contacted to bring the situation under control. Men of the Nigeria Police Force were already at the scene to prevent looting by thugs, who might want to take advantage of the inferno to wreck further havoc.