By KEHINDE SALLAH
The managing director of the International Monetary Fund (IMF), Christine Lagarde, has called for a crackdown on the misuse of cryptocurrencies like bitcoin by using the blockchain technology behind the digital currency to fight the criminals.
Lagarde said central bank authorities around the world could harness the potential of cryptocurrencies to help bring them under control, warning that failure to do so would allow the unfettered development of a “potentially major new vehicle for money laundering and the financing of terrorism”.
Writing in an IMF blogpost, Lagarde said the same innovations that powered cryptocurrencies could be used to help regulate them. “We can harness the potential of crypto-assets while ensuring that they never become a haven for illegal activity or a source of financial vulnerability.”
Distributed ledger technology, which enables the authentication of transactions without them needing to be administered or guaranteed by a central authority, could be used to speed up information sharing between regulators to improve their monitoring of the financial system.
She said the developments driving cryptocurrencies, including blockchain, were exciting advances, which could help revolutionise financial services by providing low-cost payment methods for those who did not have bank accounts. However, she said, there was “peril that comes along with the promise. It would not be wise to dismiss crypto-assets; we must welcome their potential but also recognise their risks,” Lagarde said.
Lagarde is the latest senior financial figure to issue a warning over the potential dangers of bitcoin, as well as to hail the potential of the technology behind it. Backers of bitcoin have said the technology has the potential to make everyday payments easier and cheaper. However, economists have said the digital currency represents a dangerous speculative bubble.
Lagarde said cryptocurrencies could cause new vulnerabilities to develop in the world’s financial system, illustrated by its rapid growth and volatile price swings. Bitcon, the best known of thousands of digital currencies developed in recent years, gained in value by more than 900 per cent last year to hit almost $20,000 (£14,400) a unit before Christmas, but has since crashed to less than half that.
By CNBC Africa,
Abidjan, Côte d’Ivoire, 16 March 2018 – On Wednesday, March 14, 2018, the African Development Bank, rated Aaa/AAA/AAA (Moody’s/S&P/Fitch), priced a new US $2.0-billion 3-year Global Benchmark bond due 22 March 2021.
This bond issue represents the Bank’s first public market deal of 2018. It follows the US $2.0-billion 5-year Global Benchmark priced in November 2017, and is in line with its strategy of issuing larger size, more liquid benchmark transactions. The Global Benchmark was very well oversubscribed, with an order book in excess of US$4.25 billion. More than 80 investors participated in the transaction, including six that were new to the Bank, demonstrating that the deal was well placed across diversified geographies and investor type. The high quality of the order book is illustrated by the strong participation of Central Banks and Official Institutions.
The African Development Bank decided to take advantage of the positive market backdrop and of the widening in US dollar swap spreads to issue its first Benchmark of the year. The issuer announced the mandate on Tuesday, March 13, at 2:50pm London time with Initial Pricing Thoughts (IPTs) in the context of mid-swaps plus 1 basis point (bp) area.
The deal enjoyed a very strong reception from the outset. Indications of Interest (IOIs) from the high-quality investor base accumulated at a rapid pace, and by the end of the US trading session, IOIs exceeded US$2.0 billion (excluding Joint-Lead Managers interest). Books officially opened in the European morning at 8:00am London time, with price guidance reviewed to mid-swaps flat, 1 basis point tighter than IPTs, reflecting the strong dynamics of the transaction.
Momentum continued to build throughout the European morning, with books exceeding US $3.0 billion within an hour, and US$4.0 billion (excluding Joint-Lead Managers interest) by midday London, allowing the issuer to set the spread 1bp tighter at mid-swaps minus 1bp. Investors showed strong commitment to the transaction through limited price sensitivity.
The transaction was priced at 4:50pm London with a re-offer yield of 2.661%, equivalent to a spread of 26.35bps over the 3-year US Treasury benchmark 2.375% March 2021.
By CNBC Africa,
Africa’s expanding population and strong economic growth could translate into especially high returns for investors, but Western countries are losing ground to China, Professor Landry Signé warns.
By Professor Landry Signé, a David M. Rubenstein Fellow at the Brookings Institution’s Africa Growth Initiative, Distinguished Fellow at Stanford University’s Center for African Studies, Chairman of the Global Network for Africa’s Prosperity, and World Economic Forum Young Global Leader.
Since 2000, at least half of the world’s fastest-growing economies have been in Africa. And by 2030, Africa will be home to 1.7 billion people, whose combined consumer and business spending will total $6.7 trillion. Seven years ago, the Harvard Business Review pointed out that Africa is also home to many of the world’s biggest opportunities. And yet, despite its tremendous business potential, Africa has not risen to the top of Western business leaders’ agendas.
In fact, between 2014 and 2016, U.S. exports to Africa fell by almost half, from $38 billion to $22 billion. And while the United Kingdom’s investments on the continent more than doubled between 2005 and 2014, reaching £42.5 billion ($57.6 billion), only 2.5 percent of its total exports are to Africa. Western countries are quickly losing ground to China, which increased its exports to Africa more than sevenfold—to $103 billion—from 2005 to 2015. If Western businesses hope to keep up, they will need to tap into the African countries and sectors with the highest potential for growth.
By 2030, more than half of Africa’s population will reside in seven countries: Nigeria, Ethiopia, the Democratic Republic of Congo, Egypt, Tanzania, Kenya, and South Africa. But, more important, 43 percent of Africans will belong to the middle or upper classes, up from 39.6 percent in 2013, implying considerably higher demand for goods and services. By 2030, household consumption is expected to reach $2.5 trillion, up from $1.1 trillion in 2015.
Nearly half of that $2.5 trillion will be spent in three countries: Nigeria (20 percent), Egypt (17 percent), and South Africa (11 percent). But there will also be lucrative opportunities in Algeria, Angola, Ethiopia, Ghana, Kenya, Morocco, Sudan, and Tunisia. Any one of these countries would be a good bet for companies seeking to enter new markets.
By 2030, the sectors generating the most value in Africa will be food and beverages ($740 billion), education and transportation ($397 billion), and housing ($390 billion). But there will also be strong growth in consumer goods ($370 billion), hospitality and recreation ($260 billion), health care ($175 billion), financial services ($85 billion), and telecommunications ($65 billion).
Of course, much of this growth will depend on the African Union properly implementing its new Continental Free Trade Area, which would create a single market for goods and services, offering corporations many points of entry.
Moreover, the CFTA will increase the need for connectivity, so there will be new opportunities to invest in infrastructure and sectors ranging from transportation and energy to information and communications technology (ICT) and water supplies. For its part, the African Development Bank can help investors find promising projects through its Program for Infrastructure Development in Africa.
Another major growth area between now and 2030 will be in African business-to-business spending, which will reach $4.2 trillion, up from $1.6 trillion in 2015. Here, the largest sectors will be agriculture and agricultural processing ($915 billion), manufacturing ($666 billion), and construction, utilities, and transportation ($784 billion), followed by wholesale and retail ($665 billion), resources ($357 billion), banking and insurance ($249 billion), and telecommunications and ICT ($79.5 billion).
The expected growth in agriculture and agricultural processing reflects the fact that food and beverages will constitute the largest share of total household spending. Moreover, 60 percent of the world’s unused arable land is in Africa, which still contributes a meager share of worldwide agricultural exports. That means there is a lot of room for growth. And, because severe hunger still affects many African countries, investors can even contribute to the public good by investing in fertilizers, machinery, water and irrigation systems, and other areas of the agriculture sector.
As of 2012, the African countries with the highest agricultural value-added in terms of annual growth included Burkina Faso, Ethiopia, Nigeria, Mali, Mozambique, Rwanda, and Tanzania. In addition, Angola, Morocco, and South Africa now all have sizable markets, and have committed to expanding their agricultural sectors.
According to the Harvard Business Review, Africa also has the potential to become “the world’s next great manufacturing center.” China is expected to lose from 85-100 million low-cost, labor-intensive manufacturing jobs by 2030, and Africa stands to capture many of them.
This helps to explain why manufacturing will be the second-largest sector in terms of business-to-business spending. Another reason is that many of the manufacturing opportunities in Africa happen to be in globally competitive sectors such as automobiles and transport equipment, refined petroleum, computers, and office and industrial machinery. South Africa, Egypt, and Nigeria are already becoming promising places to invest in these areas. And investors will also be able to find high returns and favorable business environments in Ethiopia, Morocco, and Rwanda.
Africa is the world’s last frontier market, and Western businesses need to start taking advantage of its tremendous potential, as Chinese firms already are. Doing business in Africa will also create sustainable jobs and advance the United Nations Sustainable Development Goals to eliminate poverty and hunger. And that, too, will be good for the bottom line. As the Business and Sustainable Development Commission has shown, pursuing the SDGs “could raise trillions in new market opportunities in ways that extend prosperity to all.”
By Jeff Cox, CNBC International
- U.S. stock-focused funds took in $43.3 billion in fresh cash over the past week, a new record, according to Bank of America Merrill Lynch.
- The move comes barely a month after major indexes plunged into correction territory following an inflation scare.
- Investor pessimism is at its lowest level since early this year, according to the American Association of Individual Investors survey.
With the market correction barely a month in the rear-view mirror, investors have jumped back into stocks in record numbers. Stock-focused funds took in $43.3 billion in fresh cash over the past week, a new peak that reverses much of the angst over the past several weeks, according to Bank of America Merrill Lynch.
Resurgent interest in equities came as stock market indexes staged modest gains. The S&P 500 was up about 1.4% for the week ended March 14. The Dow industrials were flat during the period. Investors had pulled $9.4 billion from stock funds the previous week. Bond funds also are looking up, with $2.4 billion of inflows, BofAML reported.
The new money for stock funds amounted to nearly 0.6 percent of total assets, the best since September 2013. Distribution was widespread, with international funds taking in $53.9 billion and U.S. getting $11.1 billion.
Market sentiment has improved since the major indexes tumbled into correction territory in early February following an inflation scare that generated worries over whether the Federal Reserve would raise interest rates more aggressively than anticipated. A correction is generally defined as a 10 percent or more drop from the most recent high. Pessimism fell to its lowest level since the first week of 2018, at 21.3 percent a drop of 7.1 percentage points, according to this week’s reading from the American Association of Individual Investors Sentiment Survey.
For the year, stock-based ETFs have pulled in $82.7 billion while bond funds have seen $11.7 billion in inflows, according to FactSet.
By Patrick ATUANYA, BusinessDay
We herewith republish the above named article authored by Businessday Newspapers as a matter of public record and responsibility. We intend to expand on the arguments and central theme of the message given the discretionary rate reduction announced yesterday which elicits questions about best governance practices. We believe that this gallant approach to financial journalism by BusinessDay must be recognized as is; and built upon – Editorial Board
In 2016, Akinwunmi Ambode the Lagos State Governor had a bright idea to reform the established Waste Management processes for one of the largest cities in the world. He would consolidate the various environmental policies in the state including restructuring of the existing waste collection and management system to ensure efficiency and incorporate global best practices.
Soon, the Government of Lagos State of Nigeria through the Ministry of the Environment introduced the Cleaner Lagos Initiative (CLI) backed by a recently passed Environmental Management and Protection Law.
The Lagos State Government then awarded contracts to the Visionscape Sanitations Solutions limited and its strategic partners for deployment of waste management infrastructure. Visionscape Group executed a Memorandum of Understanding on February 23, 2017 authorising the incorporation of a Special Purpose Vehicle (“SPV”) – the Municipality Waste Management Contractors Limited for the purpose of issuing Medium Term Notes (bonds) to finance implementation of the CLI.
In an unprecedented move the State Executive Council at a meeting held on March 21, 2017 passed a resolution to secure the financing structure adopted by the Consortium to raise funds for the project via issuance of an Irrevocable Standing Payment Order (ISPO) as a charge on the State Internally Generated Revenue account/ Environmental Trust Fund. This meant the Lagos State Government was basically agreeing to be on the hook in case of default for a N50 billion bond programme the Visionscape Group through its SPV was set to issue.
A letter from the State Government seen by BusinessDay which was dated 20th April 2017, signed by the Director of Treasury operations and Permanent Secretary/Accountant General of Lagos State and addressed to Municipality Waste Management Contractors Limited, said:
“Pursuant to the Lagos State Executive Council Resolution (Ref. No.SSG/CO/S.126/VOL.XVI/60) passed on the Provision of a Guarantee for the above mentioned contract, and following the execution of State wide Residential and General Waste Collection Agreement between Visionscape Sanitation Solutions Limited, and the Lagos State Government, and under which Agreement the LASG is required to issue to the Contractor a guarantee, I am directed to convey the approval for an Irrevocable Standing Payment Order (ISPO) in respect of the above referenced Contract Agreement.”
The letter goes on to read : “Consequent upon the above, this office would implement the monthly remittance of the gross sum of Seven Hundred and Thirteen Million, Seven Hundred Thousand Naira Only (NGN713,700,000) as a first line charge from the revenue account of Lagos State Government which is to commence in June 2017 and terminate in June 2027.”
The consequence of this is that in a 1 year period the state would spend N8.56 billion as guarantees for the bond and be on the hook for about N85 billion over the 10 year timeline on just this one transaction.
Armed with the letter, the Visionscape Group now began to market the first tranche of its proposed bond issuance, a N27 billion, 17.5 percent, fixed rate 5 year bond due 2022, to high net worth individuals. Ratings agency, Messrs Agusto & Co. rated the debt offer from the relatively unknown SPV an A+ largely on the back of the Lagos State guarantee (no excuse for a possible absence of an alternative rating without a state government guarantee).
The information memorandum (issued in lieu of a prospectus for private placements) sent out to prospective investors and seen by BusinessDay, included an excerpt from Agusto & co that said:
“We estimate that the duly executed ISPO on Lagos State’s revenue account constitutes sufficient security for the issue as the remittances…will be adequate to cover the cumulative obligations (coupon payments and principal repayments) of the Series 1 Note 1.03 times.”
Lagos is Nigeria’s largest city and financial hub with a GDP that is bigger than that of major African countries such as Ethiopia, Kenya and Ghana. With a population estimated by the state at >20 million as at 2015, and growing at an average rate of 3%, over 10,000 tons of waste is produced by residents in Lagos daily.
BusinessDay had numerous interviews for this story with analysts and market operators who preferred to speak anonymously although the common thread was that the State government should have been careful especially in dismantling the former waste management agreements and in appointing a new firm to oversee Waste collection in the state. It is understandable many chose to speak annonymously as Lagos State remains a lucrative partner to do business with.
Take the five firms which brought the N27 billion Visionscape bond to market last year led by lead issuing house and arranger – Eczellon Capital. They earned N967 million in total from the deal or 3.85% of issue size, according to data from the information memorandum.
The big problem though for the State Government and its plan to reform the waste management process in the state is that the coming on board of Visionscape has coincided with a return of trash heaps and dirt across most roads and streets in Lagos. “They have bitten off more than they can chew. This was supposed to be a wholesale change but it has now unravelled,” said Feyi Fawehinmi, accountant and writer based in the U.K.
“The other big challenge now is that the Public Utility Levy (PUL) which was supposed to fund this has not been rolled out and will be a lot more difficult to do given the current tax climate. In the meantime the state Govt is paying Visionscape N1.5bn per month. So we need a lot more transparency around this deal and for the state to treat it as a crisis and find a way to walk some of it back. There appears to be no future for Visionscape to make this work,” Fawehinmi told BusinessDay.
Once ranked as one of the dirtiest cities in the world, Lagos state which had unprecedented piles of waste competing with pedestrians and vehicles in 1999 got a facelift after the Lagos state government carried out various reforms to improve the Private Sector Participants (PSP) in waste management.
A trip to various parts of the state last week, particularly Surulere, Egbeda, Agege, Idumota, Lagos badagry expressway from Alakija to Orile, Alapere, Ikorodu, Jibowu, Iyana-Ipaja, Lagos Island and broad street revealed an overwhelming volume of waste spilling over from bins and open spaces converted to dumpsites. ‘‘Solid waste if not managed will be a breeding ground for rodents and varmints like rats which could spread Lassa fever,’’ said Bayo Onajole, a public health expert at Lagos University Teaching Hospital, LUTH. ‘‘It also allows contamination of water bodies and it can lead to ill-health. People will come down with health defects and economically, it’s a loss of revenue to the state.’’
According to Oladipo Egbeyemi, the chairman of Association of Waste Managers of Nigeria, 80 percent of their work was conceded to a foreign company (Visionscape) risking their N6bn investment and the livelihood of over 35,000 employees. The chairman said after a meeting with Akinwunmi Ambode, the Lagos state governor, PSP operators were told to explore the possibilities of working with Visionscape.
‘‘Immediately after the meeting, we tried to engage with Visionscape. We asked for their terms of engagement and mode of operations, and we did all that was required of us. I and my executives also met with John Irvine, the CEO of Visionscape and he promised us that he has intentions of working with us. We expect that by now negotiations would have been concluded but unfortunately we are yet to see anything in black and white to signify interest,’’ Egbeyemi said. Attempts to get comments from Visionscape proved abortive, as numerous calls put to the Dubai listed number on the firms website went unanswered.
When BusinessDay contacted, Segun Adeniji, the managing director of Lagos State Waste Management Agency, LAWMA, he said the agency, Visionscape and some local governments are collaborating to evacuate the trash. ‘‘We are working night and day to ensure that the refuse are removed. This is a transition period and these problems will be there while we are transiting but I assure you that very soon all these will be over,’’ Adeniji said.
The Visionscape group projected in the information memorandum that about N16.3 billion of the bond proceeds will be used to acquire fleet for the transfer loading stations, strategic acquisitions and related infrastructure, expected by September 30, 2017. Containers and operational equipment is to cost N3.13 billion, and waste facilities upgrade N2.58 billion, while working capital would gulp N2.5 billion. Also embedded in the Information Memorandum documents is a disclosure that the Visionscape SPV is expected to incur management fees of N406.2 million for 2017, which moves up 101 percent to N820 million in 2018, while projecting an operating loss of N508.4 million for 2017.
BusinessDay digging into the ownership structure of Visionscape shows that ABC Sanitations Solutions Limited accounts for a 15 percent stake in the Visionscape SPV and is in a strategic partnership with CSH Environmental. CSH environmental is a UK based company that is a family owned British waste disposal business. On the board of Visionscape is a Nigerian Niyi Makanjuola a founding director of Caverton Offshore Support Group, information from the company website shows.
“Lagos has gotten progressively less transparent today, they don’t even bother,” said Tunde Leye, Consulting Partner at SBM Intelligence. “Under the previous Governor Fashola for example, even though the budget was not detailed, you could find procurement information on the LASG website (that’s how we knew how much he spent on the website or boreholes for example). We know exactly the cost of building the Lekki Ikoyi Bridge. Compare to Ambode where we do not know how much he spent to build the Ajah flyover or anything else. Civil society has tried to invoke the freedom of information (FOI) act repeatedly but they have either been ignored or blown off. Lagos is very opaque now.”
By Zedcrest Capital
*** Nigeria Raises April Qua Iboe Selling Price to 19-Month High***
The Bond market closed the week on a relatively calm note with very little in the way of flows, except for slight buys on the 2034s, consequently reversing some of the selloff witnessed on the bond in the previous session. Yields however declined by c.10bps on average, as market players re-adjusted from the intense bearish pressures witnessed in the previous session. We expect renewed buy sentiments in the coming week as market players would be looking to take some positions ahead of next week’s bond auction, coupled with expectations of c.N86bn in bond coupon payments on the 2027 and 2036 bonds on Monday. We however note that support for yields seem to be largely around the 13.50% area and we do not see yields trending significantly below this level in the near term, unless there is a significant change in the CBN’s liquidity management approach in terms of its regular OMO issuances.
The T-bills market traded on a relatively flat note on the back of a further squeeze in net system liquidity, following outflows for retail FX bids by banks. We however noticed some client demand especially on the recently issued OMO bill, as the CBN did not conduct an OMO auction. We expect yields to be relatively calm in the coming week, barring a significant shift in OMO issuance by the CBN.
The OBB and OVN rates rose to 11.83% and 12.92% respectively on the back of outflows estimated at N300bn for retail FX funding by banks. System liquidity is consequently estimated to close at c.N167bn positive, from a positive opening figure of N467bn. We expect rates to be relatively stable on Monday, with inflows from bond coupon payments, expected to offset outflows for Wholesale FX sales by the CBN. This is however barring a significant OMO sale by the CBN.
The Interbank rate remained stable at its previous rate of N305.75/$, with the CBN’s external reserves also recorded to have improved by 1.59% to $44.47bn as of 15 March. The NAFEX rate depreciated by 0.14% to close at N360.57/$. Rates in the Unofficial market remained stable at N361.20/$.
The NGN Sovereigns traded on a relatively flat note in today’s session. We witnessed buying interests on the 27s, 32s and 47s, while investors were bearish on the 30s and 38s. The yield curve consequently inched slightly higher by 1bp on average.
The Nigerian Banks were slightly active with some buys on the FBNNL 20s, Zenith 19s, GRTBNL 18s and FIDBAN 22s. We however witnessed slight sell on the Zenith 22s and FBNNL 21s.
In the coming week, we expect some buying interest on the shorter end of the NGN Curve.