The Week Ahead

Dangote’s granulated fertilizer plant to start selling products on Monday

The Chairman, Dangote Group, has announced that Dangote Industries Limited’s $2.5 billion three million metric tonnes granulated fertilizer plant will commence the sale of fertiliser on Monday 7th June, 2021. This was disclosed by Dangote in a meeting with the CBN Governor, Mr Godwin Emefiele, at a tour of the facility in Ibeju-Lekki, Lagos.

Recall that Africa’s richest man, Aliko Dangote in March, disclosed that one of his closely held assets, the $2.5 billion granulated fertilizer plant located at the Lekki Free Trade Zone (LFTZ), would soon commence operations in Nigeria. Recall also that President Buhari warned last year against the CBN implementing any plans geared at providing forex for the importation of “food items and fertilizers” into the country.

“We have gotten all licenses from the National Security Adviser, the Ministry of Agriculture, Standard Organisation of Nigeria, NAFDAC and all other authorities. So, our Urea will be in the market from Monday, and by God’s grace, before the end of this month, we will start bringing in dollars from the first line that we have commissioned,” Dangote said.

The CBN Governor added that the existing capacity from Indo Rama, with about 1.5 million metric tonnes, and Notore with about 300 metric tonnes, would give Nigeria close to five million metric tonnes capacity of Urea.
“Nigeria ranks amongst the leading countries in the production of Urea in the world. This, for me, is a story that no one would have believed would happen in Nigeria,” he said.

FIRS new online tax transaction platform to commence on Monday

The Federal Inland Revenue Service (FIRS) has announced the introduction of a new online Tax Administration Solution (TaxPro-Max) to ease tax compliance and modernise tax administration in the country.

The new online platform which is for naira denominated transactions is to enable seamless registration, filing, payment of taxes, automatic credit of withholding tax and other credits to the Taxpayer’s accounts, among other features.

This disclosure was made by the Director, Communications and Liaison Department, FIRS, Dr Abdullahi Ahmad, in a statement issued in Abuja on Saturday, while quoting the Executive Chairman of the FIRS, Mr Muhammad Nami.

Ahmad in his statement said, “The TaxPro-Max also provides a single-view to Taxpayers for all transactions with the Service. The TaxPro-Max platform is accessible at www.taxpromax.firs.gov.ng. From June 7, 2021, the TaxPro-Max becomes the channel for filing Naira-denominated tax returns in the country.”

He said that all taxpayers have been notified that all naira-denominated tax returns are to be filed via the TaxPro-Max Solution in order to generate the obligatory Document Identity Number (DIN).

The FIRS Director added that henceforth, taxpayers would be unable to pay without DIN; as such, taxpayers wanting to submit their tax returns manually must visit the relevant tax offices, noting that FIRS personnel would be on hand to assist them to upload the returns and generate the DIN.

He said, “In view of the time it might take to upload manual returns and generate the DIN, taxpayers are encouraged to bring manual returns for upload, at least, two weeks before the due date. Qualified Personnel of the Service are on hand to assist taxpayers experiencing challenges in filing returns on the TaxPro-Max. They may be reached via email, taxpromax@firs.gov.ng.”

Gold closes the week bearish by 0.39%

Gold spent the week struggling to attain the $1,900 mark. The commodity struggled to post gains for the week despite the NFP (Non-Farm Payroll) report boosting its performance at the start of the New York trading session on Friday.

The NFP report helped gold crawl out of the near mid-$1,800 levels it fell to on Thursday, where it posted a daily loss of 1.92% to trade as low as $1,860. Even with the help of the NFP report, Gold was stopped just shy of attempting to return to the $1,900 trading range, which would have bolstered the confidence of bullish gold investors going into the new week.

Gold tumbled from its $1,900 mark on Thursday after data showing weekly U.S. employment claims at the lowest since the outbreak of the coronavirus pandemic in mid-March 2020. The suggestion of a marked improvement in the labour market sent gold’s rivals U.S. bond yields and the dollar surging instead as the commodity tumbled to a Thursday low of $1,865.49.

Less than 24 hours later, the U.S. jobs picture was looking entirely different. The Labour Department’s non-farm payrolls for all of May showed that the United States added 559,000 new jobs in May and the unemployment rate fell to 5.8%. But economists expressed disappointment with the total jobs growth for last month that came in some 115,00 less than forecasts, showing recovery still had a long way to go.

Gold was trading at $1,894.05 per ounce, up 1.11% representing a daily close on Friday, after an intraday peak at $1,896.19 for the day. This close represented a 0.39% decline in weekly performance. Gold eased by -0.39% while Silver also dipped by -0.29% W-o-W.

Outlook

Gold prices are expected to rebound in the coming week, as dollar declines after news of U.S. adding 559,000 jobs in May, missing expectation.

Oil price outlook

OPEC’s Joint Technical Committee on Monday revised its oil demand upwards following the progress in COVID-19 vaccination campaigns globally. OPEC Secretary-General, Mohammad Barkindo, said world oil demand is expected to increase by 6 million barrels per day in 2021 to average 96.5 million barrels per day.

The Energy Information Administration reported on Thursday that U.S. crude inventories fell by 5.1 million barrels for the week ended May 28.

Also on Thursday, the world’s top oil exporter, Saudi Arabia, raised its official selling prices to Asia for July shipments in the midst of international oil prices rally and expected strong outlook for oil demand most likely to recoup June discounts.

Oil prices recouped early losses and steadied on Friday as concerns about the patchy roll-out of COVID-19 vaccinations around the globe tempered optimism over recovering fuel demand. Brent had a weekly growth of 2.67%.

Outlook

In the coming week, oil prices are expected to be bullish as OPEC+ supply discipline and recovering demand continues to counter concerns about patchy COVID-19 vaccination rollout around the globe.

NBS release calendar for the week ahead

The NBS release calendar for the coming week indicates the following:
• Monday 7th June, 2021: Statistical Report on Women and Men in Nigeria 2020.
• Thursday 10th June, 2021: Rail Transportation Annual Data 2020.
• Friday 11th June, 2021: Annual Postal Services Data 2020.

ABCON threatens street trading ban as exchange rate depreciates at the parallel market

The Association of Bureau De Change Operators of Nigeria (ABCON) revealed that they will be commencing, what they called “Operation No Street Trading” to stop the hawking of foreign exchange by BDC operators.

This represents part of the measures aimed at bringing down the exchange rate which has been on the rise recently, especially after the adoption of the NAFEX rate as the new official rate by the Central Bank of Nigeria.

The bears continued their run in the currency market last week at the BDC window, majorly driven by speculators. It depreciated against the US dollar, British Pound and Euro by -1.02%, -2.17% and -1.68% respectively closing at $1/N499, £1/N705 and €1/N605 at the BDC window.

At the I & E FX window, the Naira appreciated marginally week-on-week by +0.30% and +0.02% at the NAFEX window. The Naira closed the week at $/N412.0 at the I&E FX window, at the NAFEX (spot market) it closed at $/N411.00.

Outlook

More of the same is expected in the week ahead as the Naira is anticipated to continue to hover around N406/$1-N412/$1 threshold in the NAFEX window.

Money Market Outlook

Funding rates are expected to trend in double digits in the coming week. System liquidity opened the previous week in a deficit of N193.60bn and funding rates continued their double-digit trend this week.

Funding rates declined at the close of the week. Open Buyback (OBB) closed at 15.00% while Overnight (O/N) rates closed at 15.25% indicating a Week-on-Week (W-o-W) fall of -19.66% for OBB and -20.45% for O/N rates.

Treasury Bills Market Outlook

Activity in the treasury bills market is expected to remain subdued in the coming week as system liquidity remains relatively tight. The Treasury bills market started the past week on a bearish note which was also maintained for most of the trading session, however, the market ended on a bullish note.

At the close of the week, the average benchmark yield for T-bills was rose by +2.65% to close at 6.26% while OMO bills rose by +3.84% W-o-W to close at 9.96%.

The CBN offered N50 billion worth of OMO notes but sold N41.00 billion at its this week. The offer was over-subscribed. The 96-day, 180-day & 348-day notes were allotted at 7.00%, 8.50%, & 10.10% respectively.

FMDQ Securities Exchange Limited approved the quotation of the Fidson Healthcare PLC N4.50 billion Series 1 Commercial Paper under its N10.00 billion Commercial Paper Issuance Programme on the Exchange.

Also, FMDQ approved the Quotation of the Union Bank of Nigeria PLC N2.58 billion Series 8 and N32.38 billion Series 9 Commercial Papers (the “CPs”) under its N100.00 billion Commercial Paper Issuance Programme on the Exchange platform.

FGN bond and Eurobond market outlook

The bullish sentiment in the Bond market persisted at the start of the previous week as short covering was seen across the board particularly on the mid to long end of the curve which was maintained throughout the week. At the close of the week, the market was bullish with buying interest seen majorly across the curve. The overall average benchmark yields closed at 9.74% for the week which fell W-o-W by -2.60%.

Activity in the FGN Eurobond market was subdued at the beginning of the previous week, this was propelled by the public holiday which was observed in the UK and US. At the mid and end of the week, the market closed bullish which was largely supported by improvement in crude oil prices. The average benchmark yield closed at 5.82% at the end of the week declining W-o-W by -4.34%.

Outlook

We expect market sentiment to remain soft in the near term in the absence of any trigger.

Nigerian Capital Market Outlook

The Nigerian bourse closed the week on a positive note with a growth of +1.23%. The Nigerian Stock Exchange gained N244.51bn thus, year-to-date return moderated to -3.84%, while the market capitalization settled at N20.18 trillion. The volume and value of stocks traded on the exchange last week dipped by -12.95% and -56.66% respectively.

Sectoral performance across sectors tracked was significantly bullish last week as the NSE-IND was the highest gainer for the week with +2.60% while NSE Oil and Gas recorded the highest decline with
-0.79%. NSE-30, NSE Insurance and NSE Banking closed positive with +1.35%, +1.25% and +0.04% respectively while NSE Oil and Gas and NSE Consumer Goods closed the week negative with -0.79% and -0.37% respectively.

Outlook

In the coming week, we expect the bearish sentiment in the market to persist however, press releases from listed companies and other macroeconomic developments is likely to impact investors decisions.

In addition, we expect investors to monitor the movement of yields in the fixed income market.

The Nigerian economy in retrospect

Nigeria’s Foreign Portfolio Investment increased by +1635% Q-o-Q in the first quarter and this can be attributed to the low base effect as well as improvements in foreign investor confidence and optimism. However, Year on year, FPI saw a decline of about -77.4% from $4.31 b in Q1 2020 to $974.1m in Q1 2021.

The Nigerian Ports Authority has said it is making significant progress in decongesting the ports in Lagos with the e-call up system. The NPA states that 11,796 trucks gained access to the ports via the e-call up platform in the period between May, 24- May, 30.

According to the Ministry of Works, 75 companies have submitted bids for 12 federal roads under the Highway Development and Management Initiative HDMI.

Federal Government plans to concession four airports for up to 30 years. The Airports up for concession include Lagos, Port-Harcourt, and Kano Airports.

Thirty-six states are to get $20m each from the World Bank’s $750m grant under the National covid-19 action recovery and economic stimulus, NGCARES.
RMAFC stated that a total of N1.54tn was remitted into the federation account in Q1 2021, of this amount, the Federal Inland Revenue Service paid N759,857,249,035.40 as Corporate Income Tax and N496, 390,010,655.56 as Value Added Tax, while the Ministry of Mines and Steel Development accounted for the rest. The remittance by FIRS surpassed the targeted tax revenue by more than N36, 803,760.80 representing 108.01% for the quarter.
The Central Bank governor has stated that in order to achieve double-digit growth there is a need for N35trillion investment in infrastructure, an amount too large for the government alone to provide.

The number of food-insecure citizens in Nigeria rose from about 25 million to 50 million due to insecurity across the country and the impact of the COVID-19 pandemic, the Nigerian Economic Summit Group said on Wednesday.

Nigeria failed to meet its National Financial Inclusion Strategy target for 2020 to include 80% of its adult population into the financial system. EFInA Data shows that only 64.1% were financially included by the end of 2020.

The NNPC on Monday said it is currently considering equity participation in six private refineries across the country in line with the Federal Government policy directive which stipulated mandatory participation of the corporation in any privately-owned refinery that exceeded 50,000 barrels per day capacity.

The Federal Government on Monday through the Department of Petroleum Resources on Monday disclosed that out of the 7,000 discovered oil reservoirs in the country, only 1,700 of the reserves are currently producing crude oil. The DPR said it has also issued letters of award to investors who emerged successful in the marginal field bid round that was launched a year ago.

The Federal Government through the Senior Special Assistant to the President on Niger Delta Affairs, Senator Eta Enang, on Wednesday said a policy on the operations of artisanal refineries in the country would soon be unveiled.