Thirty percent of the funds, which are intended to mitigate the effects of the challenging Covid-19 environment, are earmarked for underserved women-empowered businesses.
In addition, the Bank will provide a technical assistance grant of $200,000 through its Affirmative Finance Action for Women in Africa (AFAWA) initiative supported by the Women Entrepreneurship Finance Initiative. The grant will complement the loan by enabling First City Monument Bank to provide non-financial services, including training, and to strengthen its monitoring and reporting functions.
The African Development Bank is pleased to support FCMB’s strategy to become a dominant player in addressing the funding needs of women-empowered and local enterprises
“The African Development Bank is pleased to support FCMB’s strategy to become a dominant player in addressing the funding needs of women-empowered and local enterprises,”said Stefan Nalletamby, the African Development Bank’s Director of Financial Sector Development. “This project will extend valuable resources to critical but underserved segments during the ongoing Covid-19 pandemic, with its adverse macroeconomic impacts.”
Small- and medium-sized firms account for up to 80% of employment in most African countries and women-empowered businesses typically face a considerable financing gap. The Nigerian economy has been hard hit by the Covid-19 pandemic, and falling crude oil prices have had a ripple effect on the wider economy.
FCMB is a Nigerian commercial bank with around 5 million customers. It had total assets of around $5 billion as at the end of 2020.
The project aligns with the objectives of AFAWA, which aims to improve gender inclusivity by improving access to finance for women entrepreneurs. The project also advances the Bank’s Ten-Year Strategy and is consistent with three of its High-5 strategic priorities: Industrialize Africa, Feed Africa, and Improve the Quality of Life for the People of Africa. It also aligns with the Nigeria Country Strategy Paper 2020-2024.
The African Development Bank is an implementing partner of the Women Entrepreneurs Finance Initiative, a groundbreaking partnership housed in the World Bank Group that aims to unlock financing for women-led businesses in developing countries.
July 8, 2021 – Buoyed by significant government investment in the 2021-22 national budget, combined with attractive incentives for private developers, the affordable housing sector in Kenya is well set to provide attractive opportunities to investors. This is according to Vivian Ombwayo, Director of Research and Valuation at Broll Kenya.
“The affordable housing sector in Kenya offers developers an opportunity to diversify their portfolios, especially those concentrating mainly on the commercial-user space. It means they are able to diversify into the residential sector, thanks to attractive government incentives,” comments Jess Cleland, COO Outside of SA, Valuations & Intel at Broll. Ombwayo and Cleland presented a research report on the sector at the eighth annual East Africa Property Investment (EAPI) Summit from 5 to 9 July.
The research report was co-sponsored by API Events. Leading Pan-African professional real-estate services provider Broll Property Group is a long-time sponsor of Africa Property Investment (API) Events, the leading event and thought leadership platform in African real estate. With operations in 13 countries across Africa, Broll is at the forefront of shaping the East African property industry by using the EAPI platform to share insights from its experience across the continent.
Ombwayo highlights that the abundant housing opportunities in Kenya also allow complementary users to be included in affordable housing projects, such as retail, office, institutional and also medical. This means that, at the end of the day, despite having to manage their revenue and cost carefully, private developers are able to achieve a healthy return from comprehensive affordable housing projects.
Another factor to be considered is the social impact of affordable housing, stresses Ombwayo. “We have so many developers, such as those in the private equity space, heavily involved with the social benefits that such projects afford local communities. There are no better projects than affordable housing in this regard.”
She elaborates:“It starts off by elevating the living standards of end-users, especially with the Covid-19 pandemic given that health is associated with housing. It also increases the country’s employment rate, reduces the crime rate from the community receiving social revenue from such projects and facilitates overall community integration. The associated training and development programmes are also highly beneficial to local communities.”
While there is no formal definition of what constitutes affordable housing in the Kenyan property market, according to the Kenya Mortgage Refinance Company Plc (KMRC), the ceiling for a typical three-bedroom unit is four million Kenyan shillings (KES). “However, it is very much dependent on the developers themselves, who often base the definition of affordable housing on not cost alone, but also on the proximity to socioeconomic amenities,” notes Ombwayo.
The demand base of low- to middle-income earners, which accounts for more than half of the economically active urban population, lends a real impetus to the demand for affordable housing. For example, an online affordable housing platform developed by the government, known as Boma Yangu, has clocked up to over 320,000 subscribers to date.
“While private developers are finding it very tight to maintain the ceiling of KES 4 million, we are not really seeing any projects offering anything above the standard typology of three-bedroom apartments,”adds Ombwayo. The cost of land within the major urban centres is increasingly pushing developers to the outskirts, where the main attraction is the ready availability of relatively cheaper land.
“The lion’s share is being taken up by government projects at the moment. This is mainly driven by the availability of land. Land cost is a very important aspect when it comes to affordable housing, coupled with innovative ways of minimising overall projects costs, such as alternative building technologies. The private sector is yet to catch up, but there has been a lot of traction in recent years, especially as the private sector attempts the tricky balance of cost versus the final price of a unit,”explains Ombwayo.
In conclusion, Ombwayo highlights that her outlook for the sector remains “very promising”. This is largely due to the fact that as part of the Affordable Housing Initiative contemplated under the Big 4 Agenda, the Kenyan government has set aside KES 13.9 billion for the Affordable Housing Programme.
“The trying times of the pandemic has opened our eyes to the importance of quality housing as it is linked to health and well-being. The affordable housing sector not only offers scope for developers to add to their revenue base but also to play a significant role in managing the spread of Covid-19,”concludes Ombwayo.
Deutsche Post DHL Group launches a global brand campaign to strengthen its position as the leader in e-commerce.
The leading most international logistics provider supports not only by providing reliable delivery in the growing e-commerce industry but also by advising companies on how to make their business as successful as possible online.
E-commerce trade has become increasingly established and an important area of economic growth over the last decades.
This development has been greatly amplified by the pandemic and companies of all shapes and sizes need to be able to cope with the ever-growing digitally-driven demand.
The global logistics provider with years of experience in e-commerce and the associated logistics processes will “help its customers keep up with the clicks”.
“The pandemic has driven digitalization so far that we have seen the development of almost a decade in just a few months. Existing online shops have grown and at the same time, companies have entered online retailing for the first time. As logistics experts, we can help companies keep up with the growth and benefit from it in the best possible way. In addition, we can help any brand to be a global brand tomorrow.
Especially offering express delivery is beneficial for fast-moving e-commerce and can increase consumer buying activity and consumer loyalty”, says John Pearson, CEO of DHL Express.
DHL Highlights Its Expertise In E-Commerce With Global Brand Campaign-Brand Spur Nigeria
E-commerce is not only part of DHL’s corporate business strategy, but more importantly, it has become a key core growth factor to global trade. DHL can offer the necessary speed of delivery with DHL Express, which operates in over 220 countries and territories, but also advises companies on their online presence, e.g. on improving the website presence with a website health check.
DHL has dealt extensively with the growth of e-commerce in its white paper “The Ultimate B2B E-commerce Guide: Tradition is out. Digital is in.” which also elaborates on the advantages and opportunities of a growing e-commerce sector for B2B sales.
The campaign includes an unusually produced TV spot that attracts attention by using mixed-media techniques which create visual intrigue in combination with a unique voice-over of British actor Tom Hollander – well known for his role in Pirates of the Caribbean -, explaining in a rhyme-like rhythm how e-commerce has grown rapidly over the last few years.
It tells the story of online shopping, from the early days when it was still easy as a retailer and logistics provider to keep track of and meet demand, and how online shopping then became more established an almost routine part of our lives.
The message is that DHL can help businesses deal with the high demand and “keep up with the clicks”. In addition to the TV spot, the campaign will be aired in 30+ countries across digital channels, both in the form of digital banners and video as well as print ads. The creative concept was developed by DHLs creative lead agency 180Amsterdam.
Tix Africa, a self-service ticketing platform for event creators in Nigeria, has secured a six-figure pre seed funding.
The funding round was led by HoaQ, with participation from a number of private equity investors, and will enable Tix Africa to build its technology to scale its events apps.
The startup also plans to expand operations to Ghana and East Africa in the coming months.
Tix Africa launched in 2019 to solve the challenges of ticketing live events in Lagos. The founders have successfully run the Eat Drink Lagos Food Festival since 2015 and as a result of encountering challenges of accurately collating guest details, payments and ticketing the events, built Tix to plug the gap in user data readily available to event organizers under the company’s original name of Festival Coins.
The platform currently makes it easy for organizers to create and monetize live or virtual events, enabling the creation of a customizable event page, secure payment collection via Paystack, and giving guests a seamless way to book and attend live events.
The new capital raised will be deployed to expand Tix Africa’s development team, revamping its organizer mobile app, developing additional products, and launching Tix Pro – a paid version of Tix offered on a recurring subscription basis. The company also plans to scale operations to Kenya, Ghana, Uganda, and Egypt in the second half of 2021.
Tix Africa CEO, Folayemi Agusto, said of the pre seed capital raised: “Nigeria has some of the best events you can attend – no one does private gatherings or public events and festivals like us. We want to continue providing the best tech-enabled solution for event organisers and attendees so that each event is a seamless, accessible experience from the moment tickets are booked, right through to arriving and gaining entry to the actual event.
“The new capital will enable us to scale quicker and to integrate the currently separate products and services we offer, including an app offering event attendees a marketplace where they can buy, trade and resell tickets securely. We’re really excited to expand our platform to other markets across the continent, potentially enabling users to attend events they may otherwise not have known about.”
The hospitality and event sector in Sub-Saharan Africa is worth tens of billions of dollars and was one of the sectors significantly impacted by COVID-19 lockdown measures. Since lockdown restrictions began to ease, Tix Africa has also been working on offering virtual events integrated with Zoom.
The company’s revenue grew 90% year-on-year in H1 2021 and the team is working on developing Tix Africa’s own native virtual meeting space for its users. As part of its new development, Tix will also enable users to store balances in a digital wallet and transfer this balance between events for payments on the company’s rfid wristbands.
Joe Kinvi, Managing Partner at HoaQ added: “We are delighted to back a truly enterprising and innovative team. Folayemi and Nosa deeply understand this space and have built Tix.Africa to cater for the markets they will be serving.
We are confident that their vision to adapt their offering and expand their tech team and product offerings will fuel their continued growth and development in the coming years.”
There’s no doubt Coca-Cola is driving digital transformation through its consistent messaging and movement into a more agile and growth-minded work environment.
Technology Services is leading the charge by enabling the broader corporate vision to build scalable capabilities across the system.
Just last month, Dublin entered the mix of strategically located hubs, and the announcement indicated another was in the works. Johannesburg rounds out the list and serves as the latest example of Coca-Cola’s savvy investment in its global digital network.
Like other service centers, this teams’ efforts will focus on using digital insights, business intelligence, analytics, and smart digital marketing to enhance the customer and consumer experience.
Dublin’s digital hub will play a supporting role in Africa’s maturation process until Johannesburg is equipped to take on the local challenges and unique offerings that ultimately yield innovative, scalable solutions.
The initial recruiting focus resides in the data and analytics front, followed by software engineers and developers to fortify the diverse talent landscape.
Each delivery center offers exciting opportunities to learn, grow, and contribute to Coca-Cola’s journey to be a cutting-edge technology leader. Africa brings yet another dimension to the tech scene and complements the diverse, yet focused global initiative.
“We are looking for people who want to be part of building something – creating a strong community from the ground up,” said Sue Liderth, Vice President, Regional Delivery for Europe, Middle East, and Africa regions. “That kind of experience instills a lot of pride – not only in one’s work, but also for the company and the communities in which we work, live, and serve.”
With a total of 1,339,080 BMW, MINI and Rolls-Royce vehicles (+39.1%) delivered to customers, the BMW Group ended the first half of 2021 with a new all-time high in sales.
All brands reported higher sales for the first six months of the year and, during the same period, the company grew its sales in all regions of the world.
BMW Group sales for the first half-year were also clearly higher than in the pre-crisis year 2019, with an increase of +7.1 percent.
“We are on course to achieve solid, profitable sales growth,” said Pieter Nota, member of the Board of Management of BMW AG responsible for Customer, Brands and Sales. “Thanks to our strong model line-up, high customer demand worldwide and our excellent operating performance, we were able to achieve a new all-time high in sales in the first half of 2021. It is particularly pleasing that we were able to more than double our sales of electrified vehicles,” continued Nota.
With 153,267 units sold in the first half of 2021, the BMW Group grew its sales of both fully-electric and plug-in hybrid vehicles by 148.5 percent year-on-year – making electromobility a major growth driver for the company in absolute terms as well. Sales of fully electric vehicles increased by 183.9 percent to a total of 36,089 and plug-in hybrid vehicles by 139.4 percent to 117,178 units.
“We are continuing the decisive electrification of our model line-up and expanding our range of fully-electric vehicles with two key innovation flagships: the BMW iX and the BMW i4,” explained Nota. “The iX and the i4 embody a new era of electromobility for BMW and I am looking forward to seeing both on the roads from November. High incoming orders for both models confirm our customers’ strong interest in these highly emotional vehicles.”
BMW Group Posts Strong Sales For First Half-Year-Brand Spur Nigeria
In the coming years, these will be joined by further models, including fully electric versions of the high-volume BMW 5 Series, the BMW 7 Series, the BMW X1 and the successor to the MINI Countryman. Between now and 2025, the company plans to increase its sales of fully-electric models by an average of well over 50 percent per year – to more than ten times the number of units sold in 2020. The BMW Group expects fully electric vehicles to account for at least 50 percent of its global sales in 2030. Over the next ten years or so, the BMW Group plans to release a total of about ten million fully-electric vehicles onto the roads.
Semiconductor situation remains difficult
The BMW Group has made individual adjustments to its production programme to take account of the availability of semiconductor components. The company expects the supply situation for semiconductor components to remain difficult and cannot rule out the possibility of this impacting sales during the rest of the year.
BMW sales up more than a third
In the first half of this year, 1,178,292 BMW vehicles (+39.9%) were delivered to customers worldwide. The top performers included the high-volume BMW 3 Series, with growth of almost 50 percent (+49.1%). This confirms the strong appeal of this model series, which has enjoyed considerable success for more than four decades. With sales growth of 33.3 percent, the BMW 5 Series underlined its strong position in the upper mid-size premium segment. Sales of the BMW X3, which comes with four drive train variants, climbed 43.9 percent in the first six months of the year. The fully electric iX3*, in particular, gave sales a significant boost.
MINI brand grows sales by almost a third in first half-year
In the first six months of 2021, the MINI brand sold a total of 157,799 vehicles worldwide (+32.6%), growing its sales in all regions of the world. The brand’s electrified models proved especially popular with customers. Together, the fully electric MINI SE* and the plug-in hybrid variant of the MINI Countryman* accounted for more than 15 percent of the brand’s total sales volumes for the first half year.
BMW M GmbH posts strong sales for YTD Q2
With year-on-year sales growth of +39.4 percent (83,357 units), BMW M GmbH reported its most successful first half-year ever. The M3 and M4, which have been available since March, as well as the X5 M and X6 M, made a significant contribution to this all-time sales high. In the Performance Segment, the M440i Coupé* is driving growth. The new M440i Convertible* launched in March is another major contributor to this success, along with consistently high volumes for the M340i Sedan* and Touring* models.
Thanks to strong global demand for all its models, Rolls-Royce Motor Cars was able to sell 2,989 (+91.6%) vehicles in the first half of 2021, almost double the figure for the previous year. The introduction of the successor to the Ghost in late 2020 also contributed greatly to sales growth in the first six months of this year. The company remains optimistic for the rest of the year.
BMW Motorrad: Best-ever first half-year confirms brand’s successful growth strategy
In the first six months of 2021, BMW Motorrad delivered 107,610 motorcycles and scooters to customers (+40,3%). With its best-ever sales result for a first half-year, BMW Motorrad impressively underpinned its successful growth strategy by continuing to build on the all-time sales high of the first quarter. This success relies on a strong product offering with a wide range of different models, including no fewer than eight new models released onto the market in the first six months of the year. With today’s world premiere of the all-new fully electric BMW CE 04, BMW Motorrad is expanding its product portfolio to offer entirely new options for urban emission-free mobility.
BMW & MINI sales in the regions/markets
The BMW Group continued its strong performance in China, growing its sales by 41.9 percent to 467,064 units in the first half of the year. A total of 42,502 vehicles were sold in the key Asian market of South Korea in the first six months of the year – an increase of +34.6 percent compared to the same period of 2020.
In the US, the company was able to build on the sales success of the first quarter and, with a total of 183,619 units sold in the first six months, sales of BMW and MINI vehicles climbed by more than 50 percent year-on-year (+51.8%).
Europe also had a successful first half-year, with sales increasing by a third (+35.3%). Total BMW and MINI sales for the region reached 504,327 vehicles.
With 141,983 new vehicle registrations in its domestic market of Germany, BMW Group sales were 22.1 percent higher year-on-year. The percentage of electrified vehicles continues to climb and nearly one in four BMWs in Germany is now electrified. The fully electric MINI SE* represented more than 19 percent of total MINI sales in the first half of 2021. This means almost 30 percent of newly registered MINI models in Germany are electrified.
BMW Group sales in Q2/YTD June 2021 at a glance
2nd Quarter 2021
Compared with previous year %
1st Half 2021
Compared with previous year %
BMW Group Automotive
702,474
+44.6%
1,339,080
+39.1%
BMW
617,749
+43.5%
1,178,292
+39.9%
MINI
83,116
+52.2%
157,799
+32.6%
BMW Group electrified*
83,060
+166.9%
153,267
+148.5%
Rolls-Royce
1,609
+127.6%
2,989
+91.6%
BMW Motorrad
65,018
+55.1%
107,610
+40.3%
*BEVs and PHEVs
BMW & MINI sales in the regions/markets
2nd Quarter 2021
Compared with previous year %
1st Half 2021
Compared with previous year %
Europe
265,566
+74.9%
504,327
+35.3%
Germany*
74,044
+53.3%
141,983
+22.1%
Asia
291,891
+15.1%
578,859
+39.1%
China
237,316
+11.6%
467,064
+41.9%
Americas
128,264
+82.4%
224,225
+47.4%
USA
105,901
+88.3%
183,619
+51.8%
*Provisional registration figures
The delivery figures reported in this press release are provisional and may change up until the Half-Year Report to 30 June 2021 is published. Information on the preparation of the delivery figures can be found in the BMW Group Report 2020 from p.128.
FIFA Ultimate Team has been the franchise’s most popular game mode for years and is a lucrative source of extra content sales for Electronic Arts(EA). According to data presented by Safe Betting Sites, FIFA’s ultimate team generated $1.62B in revenue for 2021 accounting for 53% of EA’s total extra content revenue for the year.
FUT Most Lucrative ‘Ultimate Mode’ – $1.62B In Extra Content Revenue
FIFA Ultimate Team (FUT) was first introduced in the FIFA 09 version when it was offered as a paid game mode. Since FIFA 11, however, FUT became a free game mode and its popularity increased since then. Although a free to play game mode, there are a number of in-game purchases that can be done through the game mode, making it also one of EA’s most lucrative sources of extra content revenue.
In EA’s financial year ending in March 2021, FUT generated $1.62B in extra content revenue compared to just $1.5B in 2020 – an almost 9% YoY increase. Extra content revenue generated by FUT accounts for 53% of EA’s total extra content revenue from its games.
Extra content revenue from EA’s games amounted to $3.07B in 2021 compared to just $2.83B in 2020. Since 2018, extra content revenue has grown by more than a billion dollars and experienced a compound annual growth rate of 14.7% in the three year period from 2018-2021.
Live Services Segment Worth More Than $4B
EA’s total net revenue in 2021 amounted to $5.63B, a large portion of which was contributed by its Live Services and other composition. EA’s Live services segment is hugely significant to its business, so much so that it actually influenced the way EA reported its revenue by composition data.
In 2021, Live Services and others, which includes; revenue from sales of extra content on all platforms, licensing revenue, subscriptions, advertising and non-software licensing, amounted to an estimated $4.02B. More than three-quarters of this total can be attributed to extra content sales on EA’s games.
Rex Pascual, eSports editor at Safe Betting Sites, commented:
“FIFA’s Ultimate Team game mode had a tumultuous 2020 in which it had to deal with both a global pandemic and a controversy around its paid FIFA points which courts around Europe started to declare as a form of gambling. Nevertheless, FUT still managed to haul in its highest revenue from extra content, signifying the strength of the popular game mode.”
7 July 2021 – GCR Ratings (GCR) has affirmed African Export-Import Bank’s (Afreximbank) international scale long term and short term issuer ratings of A- and A2, respectively, with the outlook placed on Positive. GCR has also affirmed the international scale long term issue rating on the Bank’s USD5bln GMTN programme of A-, with a Positive Outlook.
At the same time, the following national scale long term and short-term issuer ratings have been affirmed:
Botswanan National Scale at AAA(BW)/A1+(BW), with outlook accorded as Stable.
Cote’ D’Ivoire National Scale at AAA(CI)/A1+(CI), with outlook accorded as Stable.
Egyptian National Scale at AAA(EG)/A1+(EG), with outlook accorded as Stable.
Ghanaian National Scale at AAA(GH)/A1+(GH), with outlook accorded as Stable.
Kenyan National Scale at AAA(KE)/A1+(KE), with outlook accorded as Stable.
Mauritian National Scale at AAA(MU)/A1+(MU), with outlook accorded as Stable.
Namibian National Scale at AAA(NA)/A1+(NA), with outlook accorded as Stable.
Tanzanian National Scale at AAA(TZ)/A1+(TZ), with outlook accorded as Stable.
Ugandan National Scale at AAA(UG)/A1+(UG), with outlook accorded as Stable.
Rating Rationale
The ratings on African Export-Import Bank (Afreximbank) reflects the diverse regional membership, strong mandate and track record, demonstrated preferential creditor treatment, beyond adequate capitalisation, strong risk position, diverse funding and robust liquidity.
The positive outlook factors in our expectation for the status of the Bank as one of the most influential Africa focused Multilateral Development Bank (‘MDBs’) to strengthen, cemented by its development impact on the African continent (measured by the loan book) now closing in on the USD20bln mark.
The outlook also considers the anticipated capital increase of USD1.5bln by shareholders over the next 2 years. The ratings are however constrained by the exposure to high risk operating environments and the relatively weak creditworthiness of its member states.
With development-related exposures of about USD16bln on 31 Dec. 2020, Afreximbank is one of the largest MDBs operating in the African region. The Bank’s geographical mandate exposes the balance sheet to the high and rising operating environment risks of the African continent. We believe these risks continue to rise, reflecting the direct and indirect impact of the COVID-19 pandemic and other exogenous risks.
Furthermore, these same exogenous risks have lowered shareholder creditworthiness. Positively, the sovereign membership base is diverse (on a regional basis) and growing. Our assessment of membership strength is moderated by the Bank’s private sector shareholding. The proven track record of preferred creditor treatment is a rating positive, reflecting the relevance and importance of this institution to its shareholders.
Afreximbank has a very strong status as a trade finance-focused MDB, supported by its size, franchise and impact. Benefiting its status is the track record of countercyclical lending and more recently being the key implementation partner of the African Continental Free Trade Agreement (‘AfCTA’).
With the implementation of AfCTA, Afreximbank is mandated by the African Union (‘AU’) to rollout an Adjustment Facility (USD8bln in value) that is meant to help member countries adjust to the loss of revenue from tariffs. We believe this, alongside the many other initiatives the Bank has undertaken over the last couple of years, will continue to be strong underpin of relevance and importance of this institution to its shareholders.
Capitalisation is ratings positive. The GCR leverage ratio was c.16% at Dec. 2020, down from 19% the prior year driven by the rapid growth of assets. We expect the ratio to bounce back close to 20% over the next 12-18 months, balancing the moderating growth of the loan book and the piecemeal capital increases summing USD1.5bln expected over the next 2 years.
Firm growth in earnings in the region of 24% will also remain supportive of a stronger equity base. We provide uplift for the credit enhancement of the Bank’s capital of USD1bln which mitigates the adverse risks fuelling loan book impairments beyond the threshold deemed unsustainable.
The loan loss reserve coverage was down to c.55%% at Dec. 2020 although over 70% of the loan book is secured with high-quality collateral comprising cash, insurance with at least “A” rated international insurers, and sovereign backed securities.
Asset quality is strong despite strained operating environments. Credit losses were slightly lower at 1% as of Dec. 2020 and compare favourably to rated peers. The pandemic continues to have a marginal impact on loan book performance with recent stress tests reflecting less than 6% of total facilities as vulnerable.
Asset quality benefits from the strong recovery fundamentals of the loan book. Trade finance facilities are ring-fenced to protect cash flows due to the Bank and the repayment risk profile is low given the transfer of risk to counterparties that have better credit quality and usually are domiciled in developed countries such as the OECD.
Loan concentrations are relatively better in comparison to rated MDBs, with the top 20 exposures accounting for c.66% of the total loan book and c. 3x equity as of Dec 2020. Interest rate risk is adequately managed and any downside risk will likely have contained market impact on the Bank’s profitability as it is hedged. FX lending is moderately low at 12%.
Funding and liquidity factors in a stronger funding structure in comparison to rated peers and strong liquidity profile. Funding sources are well diversified to include regional and global bond issuances, syndicated loans, and central and non-central bank deposits.
Deposits from banks provide a growing source of funds, contributing c.37% of total funding at 31 Dec. 2020. Although fairly short term (6-12 months), these deposits are considered to be stable funding sources due to their behavioural stickiness and the majority of them are asset-backed limiting refinancing risks. Liquidity is strong, reflected by a coverage ratio of 122% as of Dec 2020.
Further liquidity support is derived from the low-risk cash flows from self-liquidating trade finance facilities that have a fairly good amount of cash cover sitting in offshore banks. Due to the shorter weighted average term to maturity of the loan portfolio vs long-term debt profile, a positive asset/liability gap is maintained which is liquidity positive.
We expect the funding and liquidity profile of the Bank to benefit from regular issuance of competitively priced global benchmark bonds in large sizes and longer maturities (as the recently issued) we believe will improve access and stability of funding sources.
We have not factored in callable capital into the ratings because the coverage of debt by A-rated members and insurers was below the required benchmark of 25% (at FY20 it was c.12%).
Outlook Statement
The outlook is positive reflecting our expectation for the status of the Bank to strengthen, cemented by its development impact on the African continent (measured by the loan book) now closing in on the USD20bln mark.
The outlook also considers the anticipated capital increase of USD1.5bln by shareholders over the next 2 years. Alongside the above, our opinion is that the Bank has the capacity to carry out its mandate in light of the pandemic, assisted by a strong balance sheet and support from shareholders which we think remains high.
Furthermore, we expect credit losses to be sustained at low levels, coupled with capital and liquidity managed within adequate to strong levels.
The 2021 budget implementation report reported that the federal government spent a total of N1.8tn on debt servicing in the first five months of the year representing about 98% of the total revenue generated in the same period.
A look at the data revealed that the total aggregate revenue generated by the federal government between January and May 2021 stood at N1.84tn, representing a shortfall of N1.4 8tn compared to the expected revenue of N3.32tn.
DEBT/GDP (2015-2020)
Source: Debt Management Office, United Capital Research
A Debt Management Office (DMO) report in Mar-21 revealed that the country’s debt increased by 0.61% to N33.1tn from N32.9t n in Dec-20. This means Nigeria grew its debt burden by N191bn in the first three months of the year loan amidst dwindling revenue and devaluations in the Nigerian economy.
The cut in Nigeria’s oil production quota has also significantly affected Nigeria’s revenue. The nation currently maintains a crude oil production of 1.4mbpd despite a production capacity of 2.5mbpd.
The Nigerian government’s increase in debt service to revenue ratio at Circa 9 8% indicates that the country is spending practically all its revenue on servicing debts. This could potentially lead to a deepening crisis considering the need for the country to service its CAPEX projects to solve its infrastructure needs.
The recent positive rally in the global oil market has not yielded substantial growth in government revenue due to Nigeria’s reduced production quota.
Notably, according to the foreign trade report by the NBS, the value of crude oil export reduced to N1.9t n in Q1-21 from N2.52t n recorded in the previous quarter.
According to the latest research from Strategy Analytics, the global smartphone memory market clocked a total revenue of $11.4 billion in Q1 2021.
The research states that Samsung Memory led the smartphone memory market with 49 percent (DRAM & NAND) followed by SK Hynix and Micron in Q1 2021 as per Strategy Analytics Handset Component Technologies research report, “ Smartphone Memory Market Share Q1 2021: Samsung Memory Captures Top Spot.”
Samsung Memory, SK Hynix and Micron captured more than 80 percent revenue share in the global smartphone memory market in Q1 2021.
In Q1 2021, the smartphone NAND flash market witnessed 18 percent year-over-year growth in revenues driven by the adoption of UFS NAND flash chips, especially in mid and high-tier devices. Samsung Memory claimed the top spot with a revenue share of 42 percent followed by SK Hynix with 20 percent and Kioxia with 19 percent share in the smartphone NAND market in Q1 2021.
DRAM Market
The smartphone DRAM memory chip revenue observed an annual revenue growth of 21 percent in the quarter owing to the increase in new 5G device launches by smartphone customers. Samsung Memory led in terms of market share, capturing a revenue share of 54 percent followed by SK Hynix and Micron each having 25 percent and 20 percent respectively in the smartphone DRAM market in Q1 2021.
“The recovery in the smartphone end-market resulted in early customer orders for memory vendors who shipped high-density memory chips to some of the key smartphone models.
Samsung Memory, SK Hynix and Micron all gained share aided by the shipment of high capacity Multi Chip Package (MCP) based memory solutions. We note that UFS Multi Chip Package (uMCP) unit share reached nearly 30 percent driven by the shipment 128GB NAND and 6GB DRAM memory configurations in the quarter.”
According to Stephen Entwistle, Vice President of the Strategy Analytics Strategic Technologies Practice,
“The strong demand for 5G smartphones creates a tailwind for the smartphone memory market growth. Memory vendors are expected to cater to the 5G demand with the introduction of high capacity UFS 3.1 and LPDDR5 Multi-Chip Package memory solutions. However, the ongoing non-memory component shortages could dampen the memory market prospects.”
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