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Investors Scramble for Nigeria’s Bonds Despite Recession



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Investors are lining up to buy dollar bonds Nigeria is expected to issue soon despite the country’s first recession in a quarter of a century, a currency crisis and budget shortfalls driven by low oil prices.

On the face of it, the $1 billion ($A1.3 billion) of bonds Nigeria hopes to sell by the end of March might seem unattractive, especially at a time sentiment towards African debt has soured after Mozambique missed a coupon payment.

But investors hungry for higher returns in a low interest rate environment reckon Nigeria’s benign debt levels, recovering foreign exchange reserves and a potential yield above seven per cent are reasons enough to look beyond the country’s economic woes.

“Nigeria’s starting position is one of low debt so if they price it attractively they will be able to get it done,” said Claudia Calich, who manages an emerging market bond fund at M&G Investments.

Nigeria’s Eurobond has been a long time coming. A year ago, Nigeria appeared to have shelved the idea in favour of a loan from China, but it embarked on an investor roadshow for the bond late last year in the United States and Britain.

Nigeria is Africa’s biggest economy, a member of the Organization of the Petroleum Exporting Countries and vies with Angola for the position of top oil producer, but that also means it is very exposed to fluctuations in the oil market.

The last time Nigeria issued dollar-denominated bonds in July 2013, oil was comfortably above $US100 a barrel but the slump in prices from $US115 in June 2014 to just $US28 a barrel by January 2016 has hurt the West African country’s economy.

Crude oil sales account for two-thirds of government revenue and about 90 per cent of foreign exchange earnings so the price slide, coupled with a resurgence in militant attacks on oil facilities in the Niger Delta, have had a severe impact.

According to the World Bank, Nigeria’s economy probably shrank 1.7 per cent in 2016, underperforming an average growth rate of 1.5 per cent across sub-Saharan Africa and way behind high-flying economies such as Ivory Coast.

Foreign investment has almost ground to a halt, hobbled by a slide in the naira currency – which trades on the black market at about 40 per cent below the official rate of 300 per dollar – and expectations the currency may have to be devalued again.

World Bank data shows net foreign direct investment tumbled to just over $US3 billion in 2015 from nearly $US9 billion in 2011 and the government needs to borrow $US3.5 billion internationally this year to balance a record 2017 budget.

International lenders such as the World Bank and African Development Bank (AfDB) are also holding back on loans until Nigeria comes up with a plan to make its economy more resilient.

Yet, bond investors seem undeterred.

They argue that a Eurobond issued in dollars will shield them from currency risk and, compared to its African peers, Nigeria has a low ratio of public debt to annual economic output, implying that default is not a worry.

The ratio of Nigeria’s total public debt to gross domestic product is 22 per cent compared with 46 per cent in Gabon, 62 per cent in Ghana or 73 per cent in Angola, according to estimates by Bank of America Merrill Lynch.

While businesses in Nigeria are having trouble getting hold of dollars, the country’s foreign exchange reserves are on the rise again. They hit an eight-month high of $US26.6 billion at the start of 2017 and have since climbed to $US28.9 billion.

“The government has access to hard currency even if they are restricting the access of other agents in the economy,” said Kieran Curtis, investment director at Standard Life Investments, who also plans to look at Nigeria’s upcoming bond issue.

Curtis reckons that Nigeria’s low debt ratios will allow it to borrow more cheaply than Ghana. Nigeria’s existing 2023 dollar bond yields about 6.7 per cent, or 170 basis points lower than Ghana’s 2023 bond.

Egypt, which has a credit rating of B-minus/B3/B from the main agencies, was marketing $US4 billion of Eurobonds in three tranches on Tuesday, offering a 10-year bond at 7.5 per cent. Nigeria is rated one to two notches higher at B/B1/B plus.

Nigeria’s last 10-year bond sold in July 2013 had a 6.375 per cent coupon but Exotix Partners head of fixed income research Stuart Culverhouse said a new issue would have to offer a yield of 7.0 per cent to 7.5 per cent.

“(Nigeria) might have to accept that people are charging more for them because of the situation. It could be a reality check,” he said.

If the country were to press ahead with reforms to alleviate pressure on the naira before issuing a bond, it could help lower the cost of borrowing, M&G’s Calich said.

“Then they could bring a new deal at tighter spreads. The big question is the currency regime.”

Although oil prices are now expected to stabilise above $US50 following OPEC’s decision to curb output, there are a few more clouds on the horizon.

The budget deficit for 2017 risks ballooning further as the government tries to boost the economy with record spending on roads and power.

Many also see the budget’s oil output projection of 2.2 million barrels per day as optimistic. Oil production, curbed by persistent attacks in the Niger Delta, was just 1.63 million barrels a day in the third quarter and was still below 1.8 million barrels per day in December.

Second, while emerging economies have been tapping the market in near-record numbers in January, sub-Saharan African borrowers have been absent and Mozambique’s coupon miss has not helped.

But Calich said there were no such fears for Nigeria.

“It will take a big shock to get into that kind of distress … we are far from that at this point.”

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TETFund Seeks Increased Annual Research Funding of $1bn



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The Tertiary Education Trust Fund, TETFund, Thursday, urged the federal to increase its yearly funding for Research and Development (R&D) to $1 billion. This was as it hailed President Muhammadu Buhari for his recent increase of the research grant from N5 billion to N7.5 billion.

Prof. Suleiman Bogoro, executive secretary of TETFund, speaking at the inauguration of TETFund’s R&D Standing Committee in Abuja, said massive investment in research would bring about the much-needed development in the country.

Bogoro also said it was time for the promulgation of a law that will bring into full place what he referred to as the “National R&D Foundation (NRDF)” to deepen research in the country.

Hear him:”To galvanize our vision towards making R&D the ace and game changer in our national development agenda, the need for an appropriate law to support the establishment of a National R&D Foundation (NRDF) cannot be overstated.

“We need a robust institutional framework and arrangement for the NRDF. I am recommending a minimum annual budgetary threshold of 1billion dollars as the funding portfolio for this Foundation.

“When we consider the inevitable benefits of R&D and the inevitable benefits of R&D and the socio-economic challenges in Nigeria, this amount begins to look like a drop of water in the ocean-population of 200 million people in 2020 and projected to become double in 10 years for now.”

Prof. Bogoro, who said the TETFund’s R&D Standing Committee is expected to come up with its own recommendation on the required amount that is suitable for efficient research activities in the country, called for a robust collaboration between researchers and the private sector to bring about all-round development in the country.

“It is envisaged that the private sector of the economy should pick the gauntlet to steamroll the lofty initiative by taking ownership of it,” he said.

Prof. Bogoro lauded the recent performance of Nigerian universities in the world’s ranking, saying TETFund intervention projects have continued to encourage such feats.

On his side, Minister of Education, Malam Adamu Adamu, while inaugurating the committee, called on members to put their best to the work he described as ‘national assignment.’

Represented by the Minister of State for Education, Hon. Chukuemeka Nwajuiba, Adamu said that continued investment in research would herald a rebirth of Nigeria.

“Nigeria voted us into power predicated on our being able to transform our national aspirations and make them a national achievement.

“It is in recognition of this direction that the Executive Secretary, TETFund, presented his vision of a research-driven nation and how to finance that ambition through the Board of Trustees (BOT).

“To a large extent, Nigeria’s future depends on you. You have been summoned to a national service that is not available to the rest of the 200 million population. It is a national calling that requires almost all of you,” he said.

On his part, the Chairman, House Committee on Tertiary Education and Services, Hon. Aminu Suleiman said the work of the committee would open the windows of opportunities to tackle various developmental challenges confronting the country.

Suleiman, represented by Hon. Ikenna Elezieanya, lamented the way Nigeria has shown less concern to research, saying that many developed countries invested in research and development and thus helped to improve on their economy.

He said, “Research is the gateway of innovation. It is said that while countries like the USA, Korea, and the like have been investing in research and development, we seem to show less concern.”

He encouraged beneficiaries to take good advantage of the initiative to solve problems for the betterment of the country.

Responding, the Chairman of the over 160-member TETFund’s R & D Committee, Prof. Njidda M. Gadzama, said the epoch-making event will transform the socio-economic sector by ensuring the robust promotion of cutting-edge innovations.

“We promise to carry out our assignment with commitment and diligence and this will result in the R & D Culture and R&D Foundation to drive industrialization of the country,” he said.

The standing committee whose membership is drawn from the academic, industry, and private sector, has the President of the Manufacturers Association of Nigeria, MAN, Mansur Ahmed, as one of the three Vice Presidents.

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UNWTO, Google Host First Tourism Acceleration Program in Sub-Saharan Africa



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The COVID-19 crisis has disproportionately affected tourism, a sector that accounts for millions of jobs around the globe.


While no one can say with certainty when the sector will recover, people are starting to dream of getaways again – whether closer to home or to remote destinations.


As more and more people go online to search where and when they can travel, accelerating the digitisation of the tourism sector will be key to helping it adapt and recover.


This is why the United Nations World Tourism Organisation (UNWTO) and Google have partnered to create and host an online Acceleration Program for UNWTO Member States’ tourism ministers, top travel associations and tourism boards to further develop innovation and digital transformation skills.


Today, ahead of World Tourism Day, the organisations hosted the first UNWTO & Google Tourism Acceleration Program focused on insights from Nigeria, Kenya and South Africa.


Tourism is the backbone of many economies around the world. As data from UNWTO shows, tourism represents 9% of global trade for Africa and 1 in 10 jobs directly and indirectly. Moreover, the sector drives inclusive growth, as women make up 54% of the workforce.


Natalia Bayona, UNWTO director of Innovation, Digital Transformation and Investments, said “UNWTO is committed to helping Africa grow back stronger,”


“With the right policies, training and management in place, innovation and technology have the potential to foster new and better jobs and business opportunities for tourism in Africa while improving the overall wellbeing and prosperity of the region”.


Africa is home to 30% of the world’s population, adding hundreds of millions of new online users every year.


Google Search is one of the places Africans go when researching and booking travel.


Doron Avni, Google’s Director of Government Affairs and Public Policy for Emerging Markets, said “We’re here to help the tourism sector recover from this unprecedented crisis and emerge stronger.


“Our travel data insights and tools can help tourism authorities identify and understand the barriers and drivers to visit travel destinations for better tourism planning.”


Below are some of the Nigeria travel data insights shared with participants in today’s session:


Since Nigeria announced its intention to reopen its borders to international travel on August 29th, search interest for travel has grown.

This slowdown presents an opportunity to rethink tourism, innovate and further develop the digital transformation of the sector so it can build the foundations for future sustainable growth.


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MultiChoice in collaboration with Celestial Tiger Entertainment Launches KIX on DStv



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Celestial Tiger Entertainment (CTE), the operator of the largest bouquet of pan-Asian channels dedicated to Asian entertainment, and MultiChoice Group, Africa’s leading entertainment company, has launched action movie channel KIX, on DStv.

KIX will launch on Premium, Compact Plus and Compact packages in Nigeria from 1st October 2020 at 6:00 pm WAT.

The launch of KIX marks CTE’s first foray into Africa.

Ofanny Choi, president of Celestial Tiger Entertainment, said, “We are very excited to be launching KIX on DStv in Africa with MultiChoice.

“Asian action entertainment has always resonated well with the audience worldwide, and we are proud to work with MultiChoice to bring this popular genre to viewers in Africa.

“With KIX’s proven success in Asia, we are confident we can deliver the best of action movies to our African audience.”

John Ugbe, Chief Executive Officer, MultiChoice Nigeria, said, “We at MultiChoice are delighted to announce the launch of this brand-new channel KIX, a channel that will expand our viewers content slate, giving them more variety and entertainment.

“Our customers are at the heart of everything we do and new collaborations such as this, help us expand their viewing experience”.

Action fans can enjoy a high-octane blend of martial arts, action and thriller movies from the East and West on KIX, all presented in English.

Apart from the latest star-studded blockbuster premieres, KIX will also showcase never-seen-before movies from the various action genres, including kung fu classics from the legendary Shaw Brothers library, action comedies, adventure and fantasy action franchises, and action thrillers.

While fans of Asian action movies will see the legendary Jackie Chan, Jet Li, Donnie Yen and Bruce Lee in action, KIX also aims to present and delight viewers with movies featuring all other Asian action stars.

With all genres of action movies spanning from the 1960s to the present day, KIX is a one-stop-shop for all action movies entertainment throughout the years, with something for everyone. Viewers can now watch KIX and its catch-up programming anytime, anywhere, on DStv and DStv App!



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