The Lagos Chamber of Commerce and Industry (LCCI) has projected a high cost of doing business in 2020.
Its Director-General, Dr Muda Yusuf, made the projection in the LCCI 2019 Economic Review and Outlook For 2020 made available to newsmen on Thursday in Lagos.
He attributed the projected high cost to poor infrastructure, multiplicity of levies, excessive regulations, among others.
Yusuf said that while the nation may have recorded improvement on the Ease of Doing Business Ranking due to some recent policy measures, realities on ground would continue to differ if the highlighted challenges were not properly addressed.
He said that the performance of the trade sector in 2020 would be shaped by the direction of government policies.
Yusuf anticipated that the manufacturing sector would continue to benefit from the Central Bank of Nigeria’s aggressive credit push.
He, however, predicted that competition between foreign and local producers would fade on prolonged closure of land borders.
The director general said that headline inflation was expected to trend higher in 2020.
He said this would be driven by implementation of new minimum wage and continued closure of the land border.
Yusuf said that higher Value Added Tax rate of 7.5 per cent and the early disbursement of funds for budget implementation following the return of the budget cycle would also be contributory factors.
“We expect economic growth to remain subdued at around 2 per cent by 2020 as consumer demand, as well as private sector investment, will most likely remain weak.
“We are of the view that failure by government to fix structural constraints with regards to fixing power challenges and rehabilitating deplorable road networks, will perpetuate the poor productivity and performance of the sector.
“In our opinion, continued protectionist measures of government will most likely limit growth in 2020.
“Elsewhere, the level of the country’s engagement in Africa Continental Free Trade Area (AfCFTA) scheduled to kick-off July 1, 2020, will also impact the performance of trade sector.
“As a sustainable solution, it is imperative to fix the fundamental issues of high cost of domestic production, the prohibitive cost of cargo clearing at the Lagos ports, prohibitive import tariffs, high cost of logistics within the economy, and border policy capacity,” he said.
On the performance of the agricultural sector, the Director-General projected improved credit flow to agriculture on the back of proposed increase in deposit money banks’ loan to deposit ratio to 70 per cent.
Yusuf expressed the view that prolonging closure of the land borders would further add impetus to agricultural output in 2020.
“The monetary value of agriculture output has been on the upward trajectory, rising 40 per cent quarter-on-quarter to N5.41 trillion between July and September from N3.86 trillion between April and June, compared with N3.60 trillion in the first quarter.
“The CBN, like it did in 2019, will maintain status quo by not relenting in supporting the sector with much-needed funds in ensuring that the wide gap between local demand for food and supply is bridged.
“However, risk factors to our prognosis include security challenges in the North-east zone; a major food producing region in the country, resurgence in herders-farmers clash in the North-central region.
“Overall, we expect the sector to sustain its upward growth trajectory in 2020,” he stated.
Nigeria’s largest company by market capitalisation, Dangote Cement PLC, has announced its plan to repurchase up to 10% of its issued share capital.
The decision is subject to shareholders approval at the forthcoming Extraordinary General Meeting (EGM) scheduled to hold on 22nd January 2019.
This and other relevant details are contained in the company’s notice to the Nigerian Stock Exchange (NSE), posted on the latter’s website today.
Share buyback refers to a transaction whereby a company buys back its own shares from the marketplace. The company may buy shares directly from the market or offer its shareholders the option of tendering their shares to the company at a fixed price. A share buyback reduces the number of a company’s outstanding shares, thereby increasing both the demand for the shares and price.
The board of the cement manufacturing giant had on 29th October 2019 mooted the idea of embarking on a share repurchase and stock consolidation programme, subject to obtaining detailed advice and regulatory approvals after which shareholders endorsement would be sought.
The EGM seeks among other things to amend the Articles of Association of the Company by incorporating new Clauses 10, 11 and 12 into the Article, all of which will confer on the company the power to undertake alteration of its share capital and the purchase of its own shares.
Lagos-headquartered Dangote Cement is Africa’s leading cement producer with presence in ten African countries. With 17,040,507,405 current issued shares valued at around N2.386 trillion, the firm is currently the most capitalised stock on the NSE.
The proposed share buyback seeks to repurchase up to 1,704,050,741 of Dangote Cement’s shares. The programme is anticipated to be completed in the twelve months from the receipt of the approval of shareholders for the programme.
The programme will be executed through open market and/or self-tender offer.
The statement cites the reasons for embarking on the share buyback programme to include its potential of increasing long term shareholder value, being valuable tool for managing capital structure and balance sheet efficiency and being a window to return cash to shareholders.
The programme is to be funded from the company’s reserves.
Oil prices rose on Friday, hitting three-month highs after data showed record online spending by U.S. consumers, stoking faith in the world’s no. 1 economy even before the hoped-for end to the trade war between Washington and Beijing.
Brent crude futures were up 6 cents, or 0.1%, at $67.98 a barrel at 0612 GMT, after rising to as high as $68.10, the highest since September. The West Texas Intermediate contract was up 11 cents, or 0.2%, at $61.79 a barrel.
A survey on Thursday showed that online holiday purchases by U.S. consumers reached a record, beating analysts’ expectations and sending U.S. stocks higher.
U.S. consumers are “showing few signs of tightening their purse strings, which is positive for oil also,” said Stephen Innes chief Asia market strategist at AxiTrader.
Oil prices have also been buoyed by robust hopes that the New Year will usher in an end to the long-running U.S.-China trade tariff war, a dispute that has overshadowed global economic growth prospects and left question marks over future demand for crude.
The lingering ripple effect of the trade row showed up again in data from Japan, the world’s third-biggest economy, as industrial output shrank for a second month in November.
Still, the price of Brent has jumped more than a quarter in 2019, while WTI is up around 35%, boosted by moves by the Organization of the Petroleum Exporting Countries (OPEC) and other producers, including Russia, to curb production.
Earlier this month OPEC and its allies agreed to extend and deepen those cuts.
“The short-term momentum remains positive although I expect Asia to content itself with remaining on the sidelines today,” said Jeffrey Halley, senior market analyst, at OANDA.