Dangote Cement’s $1bn factory to start production in Edo State
Africa’s leading cement manufacturer, Dangote Cement Plc, has said that its 6 million metric tonnes per annum factory in Edo State, at an estimated $1 billion is complete and set for commissioning.
The Dangote Group on April 10, 2016, started the construction of the $1 billion cement factory at Okpella Edo State to expand its cement production in Nigeria.
The completion of the 6 million metric tonnes per annum Okpella plant and the 6 million metric tonnes per annum at Itori Ogun state is expected to increase the company’s total local production capacity to 41.25 million metric tonnes per annum.
The disclosure is contained in a statement issued by Dangote Cement, saying that the plant which is sitting on 1,000-hectare land, aligns with Governor Godwin Obaseki-led administration’s plan to diversify the state’s economy and attract investment into its productive sector.
The director, stakeholder management at Dangote Cement Plc, revealed that the local community made an input in the construction of the plant as engineers, technicians and other members of the community worked on it till completion.
He was quoted as saying, “In Nigeria, we have a population of over 200 million people. The per capita consumption of cement in Nigeria is low. We still need to do more to make the cement get to the poorest of the poor.”
The statement by the company pointed out that the plant was built by Sinoma International Engineering Company with 1,500 local workers collaborating with the Chinese engineers on the project.
It also added that the plant is expected to employ at least 6,000 workers when it commences operations.
Poultry Association of Nigeria warns FG of 10 percent job losses
The Lagos Chapter of the Poultry Association of Nigeria (PAN) has warned that Nigeria may likely witness 10 percent job losses if the immediate problems facing the sector including the rising cost of feed are not addressed by the federal government.
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This was disclosed by PAN’s Lagos chapter chairman, Godwin Egbebe, in Lagos on Thursday, according to the News Agency of Nigeria.
Egbebe stated that “If the growing price of poultry feed and a host of other challenges in the sector continue, 10 percent of Nigerians may lose their jobs as poultry farmers continue to shut down across the country. The situation on ground is that the poultry sector is actually at risk because of the growing prices of poultry feed.
The situation has caused a lot of poultry farmers to close shop because of the problems in the sector”.
Egegbe added that some farmers have called it quits and have started advertising to sell their cages off because they want to close their businesses, he urged the FG to take the problems in the poultry sector very seriously.
“It is like they are not taking us serious the way they take the problems in the cattle sector,” he said.
“The kind of employment that the poultry sector gives to Nigeria, the cattle sector cannot give such but the government is not taking the poultry sector seriously. We want the government to do all they can to intervene in the sector so that these poultry farms do not become grounded. This is because if they do, about 10 percent of the population will lose their jobs”, he added.
NBS economy data release calendar for the week ahead
The National Bureau of Statistics economy data release calendar for the coming week indicates the following:
- Monday 26th July 2021 – Crime Statistics: Reported Offences by Type and State (2020),
- Thursday 29th July 2021 – JAMB Admitted Candidates by State and Gender within Faculty (2020).
Gold trades below $1800 as COVID-19 cases decline in the U.S.
Gold was on a downtrend in the London trading sessions as investors increased their risk appetite due to bullish momentum from the U.S dollar bolstered by a decline in the spread of the COVID-19 Delta variant.
Gold futures were down 0.37 percent, trading at $1,804.75 an ounce. Gold is down 1.33 percent from last week’s high of $1,829 an ounce.
The dollar index, which usually moves inversely to gold, was up 0.04 percent, trading at 93.015, a trading zone it has not traded in the last 3 months. Benchmark 10-year U.S. Treasury yields also bounced off five-month lows. Gold depreciated by -0.64 percent while Silver dipped by -1.83 percent week-on-week (W-o-W).
Gold prices are expected to dip in the coming week, amid a stronger dollar and rebounding yields.
Oil market
The OPEC+ ministers, on Sunday, agreed to boost oil supply monthly by 400,000 bpd from August 2021 to cool oil prices which have climbed to almost three years high as the global economy recovers from the coronavirus pandemic.
Read also: Oil gains as markets tighten on robust global demand
The United Arab Emirates saw its baseline production increase to 3.5 million bpd from May 2022 from its present 3.168 million bpd. Saudi and Russia also saw an increase to 11.5 million bpd each from the current 11 million. Iraq and Kuwait got an increase of 150,000 bpd each.
Oil prices fell sharply on Monday after OPEC+ overcame the internal divisions and agreed to boost output, sparking concerns about a crude surplus as COVID-19 infections rise in many countries.
Oil fell further, on Friday, below $74 a barrel but on track to end the week largely unchanged after rebounding from a sharp drop on Monday, on the back of expectations that supply will remain tight as demand recovers. Brent had a weekly growth of 0.16 percent
In the coming week, oil prices are expected to be bullish on expectations of tighter supplies through 2021 as economies recover from the coronavirus crisis.
Currency market
The currency market was flat at the BDC market while it depreciated at the I & E Fx window on a week-on-week (W-o-W) basis.
It remained flat against the US dollar at the BDC to close at US$/N500, against the British pound it appreciated by +0.70 percent to close at £/N705, and against the Euro by +0.83 percent to close at €/N595.
At the I & E FX window, the Naira depreciated W-o-W by -0.07 percent and -0.03 percent at the NAFEX window.
The Naira closed the week at $/N411.50 at the I&E FX window, at the NAFEX (spot market) it closed at $/N411.11.
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
Funding rates continued their single-digit trend last week, due to inflows of N49.4 billion and N37.6 billion from LDR and Repo facilities at the end of the week, hence, causing interbank rates to fall.
However, at the close of the trading session on Friday, funding rates rose significantly. Open Buyback (OBB) closed at 27.50 percent while Overnight (O/N) rates closed at 28.75 percent indicating a W-o-W rise of +511.11 percent for OBB and +505.26 percent for O/N rates.
Funding rates are expected to trade in double digits trend in the coming week in the absence of any maturity.
Treasury bills market
The treasury bill market was quiet for most of the trading session last week.
At the close of the market on Friday, average benchmark yields for T-bills increased by +3.14 percent to 6.90 percent while OMO bills fell more significantly by -7.75 percent W-o-W to close at 8.57 percent, CBN’s Special Bill fell by 0.24 percent to close at 8.35 percent.
We expect activity next week to be dictated by the market liquidity situation.
FGN bond and eurobond market
The Bond market started the previous week on a relatively quiet note as the bulk of the attention was skewed toward the Bond auction.
At the close of the week, the overall market was bullish with selling interest seen across the board. The overall average benchmark yields closed at 9.62 percent for the week which fell W-o-W by -0.70 percent.
Successful bids for the 13.9800 percent FGN FEB 2028, 12.4000 percent FGN MAR 2036 & 12.9800 percent FGN MAR 2050 were allotted at the Marginal Rates of 12.3500 percent, 13.1500 percent, and 13.2500 percent, respectively.
However, the original coupon rates of 13.9800 percent for the 13.9800 percent FGN FEB 2028, 12.4000 percent for the 12.4000 percent FGN MAR 2036, and 12.9800 percent for the 12.9800 percent FGN MAR 2050 will be maintained.
Activity in the Eurobond market maintained its weak trend with minimal volumes traded across the board. Average benchmark yields dipped marginally by -0.18 percent to close at 5.54 percent on a W-o-W basis.
We expect the relatively quiet trend to persist in the near term.
The Nigerian capital market
Last week was a brief trading week as the Federal Government of Nigeria declared Tuesday 20th and Wednesday 21st July 2021 as Public Holidays to commemorate the Eid el-Kabir celebration.
The Nigerian bourse closed the week on a positive note with some cherry-picking and bargain hunting. The NGXASI closed the week on a negative note with a growth of +1.90 percent.
The Nigerian Stock Exchange gained N375.50bn, year-to-date return moderated to -3.98 percent, while the market capitalization settled at N20.15 trillion.
The volume and value of stocks traded on the exchange this week advanced by +13.36 percent and +34.04 percent respectively.
Sectoral performance across sectors tracked was broadly positive this week as the NGX Oil and Gas was the highest gainer for the week with +7.53 percent while NGX Insurance recorded the highest decline with -0.74 percent.
NGX IND, NGX-30, NGX Consumer Goods, and NGX Banking closed the week with +4.06 percent, +1.94 percent, +0.57 percent and +0.44 percent respectively.
Market breadth for the week closed positive with 43 gainers led by CUTIX and TOTAL as against 16 losers led by SMURFIT and SOVRENINS.
In the coming week, we expect the possibility of sustained bargain hunting as investors look to take advantage of good bargains 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
In its recent report titled: ‘Of Roads Less Travelled: Assessing the Potential for Migration to Provide Overseas Jobs for Nigeria’s Youth’, the World Bank noted that Nigeria is experiencing its worst unemployment crisis as the unemployment rate rose five-fold, from 6.4 percent in 2010 to 33.3 percent in 2020. The report identified the two recessions suffered by the economy has resulted in high unemployment rates in the country forcing many to seek refugee status in other countries.
President Muhammadu Buhari inaugurated a 15-member Board of the Nigeria Extractive Industries Transparency Initiative.
Speaking at the event, the President stated that the NEITI is essential for achieving the country’s economic goals, while at the same time ensuring transparency in the management of the nation’s natural resources as well as in oil, gas, and mining industries.
According to the Nigeria Inter-Bank Settlement System (NIBSS), POS transactions in Nigeria increased to N3.01 trillion in 462.11million transactions as of June 2021, this represents a +50 percent increase compared to the N2.03trn recorded in the corresponding period of 2020. In comparison to the value of POS transactions in H2 2020, the current figure (N2.72 trillion) represents a +10.3 percent increase.
According to the Chairman, Nigerians in Diaspora Commission, Abike Dabiri-Erewa, the COVID-19 pandemic has resulted in a -20 percent reduction in annual diaspora remittances from $25bn to $20bn in 2020. The Chairman disclosed that several programmes are being undertaken by the government to shore up the deficit.
Meanwhile, the World Bank had earlier said remittances by Nigerians in the Diaspora fell by -27.7 percent from $21.45bn in 2019 to $15.5bn in 2020. Remittances represent over 83 percent of the national budget and 6.1 percent of the Gross Domestic Product.
The Central bank of Nigeria has announced October 1 as the date for the launch of the E-Naira, in a webinar with the fintech community the CBN noted that the digital currency would promote cross border trade, the efficiency of monetary policy, financial inclusion and targeted social intervention.
The price of Liquefied Petroleum Gas, also known as cooking gas, has surged by +60 percent to a record high of N500 per kilogramme, on the back of the devaluation1 of the naira and lingering inadequate domestic supply of the fuel.
In addition to unemployment and an already high poverty level, increases in prices of essential products such as LPG is bound to increase the country’s misery index.
Read also: NGX to host institutional client engagement session
Economic Outlook
Despite oil prices rising above $70/barrel, optimism about greater fiscal space is being dampened by the emergence of the new strand of covid 19 virus questioning once again the revenue diversification efforts of the government.
Asides from oil proceeds, the government plans to fund critical infrastructure by raising the tax rate but economists recommend as a counter-cyclical policy that the government embarks on a large-scale public-private partnership.
The MPC meeting scheduled for next week would likely see the MPC hold parameters given that recent inflation figure (17.75%) suggests that prices would continue to fall although it is expected to still remain high.
The MPC would also consider positive developments in the external sector as current account deficits reduced in June to less than 2 percent of GDP from 3 percent GDP last year.
