2021 – The Year of the Vaccine

Agusto and Co.
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2021 – The Year of the Vaccine

History will define 2020 as the “year of the pandemic” and in an interesting feat of hope, 2021 could turn out to be the “year of the vaccine”.

The record speed of the entire vaccine process – which includes research, testing, production, approvals and administration – was largely driven by the urgency to curb the apocalyptic effects of the pandemic and could eventually redefine the sciences of vaccines in revolutionary ways.

In Nigeria, despite the obvious weaknesses in data management and testing which would have resulted in lower numbers, the second wave is challenging the resilience of the fragile health system especially in Lagos, the country’s commercial capital and the epicentre of the pandemic in the country.

In the absence of reliable research to explain the lower than anticipated infection rates in Nigeria and across sub-Saharan Africa (ex-South Africa) which many have indolently adduced it to serendipity.

Virus Outbreak Vaccine, Mons, Belgium - 17 Dec 2020
Mandatory Credit: Photo by Benoit Doppagne/AP/Shutterstock (11574303c)
Worker holds up a vial of a dummy vaccine during training for how the coronavirus (COVID-19) vaccination will be transported and stored at the Centre Hospitalier Universitaire Ambroise Pare in Mons, Belgium
Virus Outbreak Vaccine, Mons, Belgium – 17 Dec 2020

Unlike South East Asian states and New Zealand which pursued intentional policies to control the spread of the virus with enviable degrees of success, Nigeria’s better-than-expected fate cannot be linked to a policy framework especially in the face of an unreliable contact tracing system.

We hereby examine some of the major macro themes that will help shape the Nigerian economic landscape in 2021.

The Pandemic & the Vaccine

As much of the world battles the second wave of Covid-19, Nigeria’s numbers have also shown some steady increase to reach new daily highs. In December 2020 alone, Nigeria’s numbers surpassed a threshold of over 1,000 cases daily on five occasions and this has become the norm in the first weeks of 2021.

However, Nigeria’s numbers still pale in comparison to much of the United States and western European countries which has led to more stringent lockdowns in these countries especially in the latter.

Despite Nigeria’s lower-than-expected numbers, risks still abound in three significant ways. Firstly, Nigeria remains significantly vulnerable to the economic contagion arising from a weak global environment.

Secondly, weaknesses in the global macro environment pose significant downsides to the crude oil market which further exposes Nigeria’s vulnerabilities.

Thirdly, the discovery of new strains of the virus also portends greater systemic risks to the broader economy and particularly to the health sector as the management of COVID-19 undermines the response to other ailments and the healthcare needs of the populace.

Overall, we believe the geopolitical complexities with sourcing the vaccines places Nigeria and the rest of Africa on the backfoot. We believe a mass vaccination program capable of creating herd immunity may not occur in Nigeria in all of 2021.

Thus, the country will have to eke out effective ways of managing the spread of the virus and care for affected patients while pursuing measures for the vaccination program.

Interest Rates & Inflation

Nigeria’s average inflation rate has ranged between 11% – 12% over the last two decades, which indicates it is a high-inflationary country. In 2021, we project that inflation will even surpass this long-term average to about 14% – 15% further putting the naira under pressure.

Forward guidance from the Central Bank indicates that monetary authorities have an inflation target within the 6% – 9% range. The significant disparity (>600 basis points) between the upper limit of the CBN’s inflation target and the current inflation numbers further reflect the high inflationary trend of the country.

Nigeria’s long-term high inflation is an often overlooked economic indicator with exchange rates enjoying greater prominence in the discourse. This creates a paradox, with Nigeria’s monetary policy strategy unduly focused on the pursuit of a stable currency viewed largely from the prism of foreign exchange and inertia towards inflation.

While Nigerians have long fantasised about a strong currency – often defined as one being at par with major currencies such as the British pound or US dollar – the long term high inflationary trend remains the underbelly of the naira. Agusto & Co. believes Nigeria’s high inflation reflects the country’s weak economic fundamentals and needs to be reined to set the country on the path of long-term prosperity.

2021 – The Year of the Vaccine Brandspurng
Sources: NBS, Agusto & Co.

Exchange Rate  

Outside the management of COVID-19 related disruptions to the economy, the subject of foreign exchange in Nigeria will be the most consequential economic issue in 2021. The pertinent issue will include the management of foreign exchange liquidity.

For now, the Central Bank has resorted to its demand management playbook of 2016 which did create a wide spread between the official market and the parallel market at the time. The outcome of the demand management playbook in this COVID era also mirrors that of 2016.

The naira is currently trading at an unhealthy arbitrage of N80 to N100 to a dollar between the parallel and the official market as monetary authorities struggle to maintain stability in the foreign exchange market.

The odds against the naira in the foreign exchange market are in two folds. First, there are the long-term fundamental issues. With naira inflation projected to be stubbornly stuck above 15% in 2021 and dollar inflation at a benign 2%, the odds against the naira indicate an inflation rate differential of about 14% between the two currencies.

The principle behind the inflation rate differential implies that the erosion in the value of the naira measured by inflation is significantly greater than the dollar. Thus, the 13% inflation differential should result in the naira’s depreciation against the dollar in similar measures. Once again, this reiterates the need to pare back inflation in Nigeria.

The second major issue is the demand-supply dynamics in the foreign exchange market. Nigeria has entered a period of low oil and gas export revenues. In 2021, we project about $30 billion in oil & gas exports, down 20% from about $36 billion in 2020.

With net foreign investment also likely to be in negative in 2021 due to the demand management strategy of the Central Bank, there will be significant pressure on reserves and the naira/US dollar exchange rates. With foreign reserves stubbornly stuck below the $40 billion thresholds since mid-November 2019, and currently, around the $35 billion marks, the CBN has the less dry powder to defend the naira at N390/$.

In 2021, the CBN will have to make a big call on devaluation with very little leeway to this decision. The cost of indecision on this issue in 2016 led to the recession. The 2021 scenario is even more complex as Nigeria is now caught between a rock –the pandemic– and a hard place – the foreign exchange illiquidity – and the cost of indecision this time around will come with greater consequences than in 2016.

On the other end, we note that there are three significant upsides inherent in the unification of the exchange rates in the market. The first of these upsides is that the unification of exchange rates will pare back currency speculation as more high net worth investors (HNIs) are divesting from the naira while increasing FCY exposures.

Secondly, the currency unification will stimulate investor confidence and shore up foreign direct investment and foreign portfolio investment once again. Nigeria’s FDI position fell to less than a billion dollars in 2020 reaching a decade low as the currency arbitrage hurts investor confidence.

Thirdly, businesses operating in the country are subjected to increased operational difficulties owing to the currency situation. As more businesses are unable to meet FCY demands on the official market, they resort to the parallel market and then pass on the higher exchange rate costs to consumers thus stoking inflation.

Despite this grim foreign exchange position, we note that Nigeria is not overleveraged in foreign currency terms especially when compared to other key economies in sub-Saharan African peers. While Nigeria has a foreign currency debt position of 56% to its current account receipts, Kenya and Ghana have positions of over 180% and 70% respectively.

However, with local currency debts, especially the short-term treasuries, being raised at less than 3% – thus leaving investors with over 10% in negative real interest rates – the federal government is quite incentivised to raise more local currency debt than FCY debt.

Overall, the big question for followers of the foreign exchange market will be “if the CBN will cave in and devalue the naira in 2021?”.

Nigeria’s Fiscal Position

The federal government has budgeted fiscal spending of about ₦13.6 trillion in 2021. However, Agusto & Co. projects aggregate spending of about ₦10 trillion, while fiscal revenues will be about ₦3.5 trillion, indicating a record deficit of over ₦6 trillion.

Despite the worsening fiscal position of the sovereign, the federal government can access credit at lower yields. In addition, the federal government’s increased borrowing from the Central Bank that has risen by more than 500% in five years will likely continue in 2021, thus reducing the dependency of the government on financial markets in a period of higher demand for government securities.

With naira yields on government debt securities at about the same levels with dollar yields, the incentives for the carry trade have been effectively nullified, thus making Nigeria an unattractive destination for foreign portfolio investors. Our outlook for 2021 is that real interest rates will remain negative, thus enabling the government to cheaply finance its deficits.

Will the Central Government embark on Macro Reforms in 2021?

Modern-day diction is replete with clichés that draw a nexus between crisis and opportunity. Thus, economic historians have always argued that it is much easier to drive macro reforms in periods of downturns than in more prosperous times.

This truism is quite valid even amongst a reform sceptical citizenry in a nation like Nigeria. For instance, the current administration has been able to push for Nigeria’s boldest reform in decades in the pricing strategy of petrol riding on the back of the COVID-19 economic downturn by implementing a new pricing plan that seeks to wean the country off the long-term subsidy regime.

Reforms have also been enacted in the electricity markets where the government has also allowed price increases to help market operators absorb more costs albeit with some subsidised tariffs for poor consumers.

The COVID induced economic crisis creates a perfect storm to implement market-friendly reforms that have long been in the books of this government. We believe the government should expend some of its political capital on full deregulation of the downstream petroleum industry beyond the current reforms on pricing it has currently implemented.

We also believe that the government should seek bolder actions on asset reforms by reducing its exposures to moribund state-owned enterprises such as the refineries. While funds earned from such divestments can then be channelled into other high-impact assets such as critical infrastructure.

Sector Watch – Where are the bright spots?

The pandemic increases global economic risks and the contagion effect of this raises Nigeria’s risk profile in 2021. However, even amidst the slew of risks, opportunities abound.

The telecommunication sector particularly the data segment will continue to show significant upsides in 2021 as work-from-home (WFH) trends continue into the year. We project double-digit growth of about 10% in the telecommunications sector GDP in 2021.

Beyond, the remote working trend, other growth drivers that will drive the telecommunications sector’s performance include the increased adoption of virtual engagements for business meetings and conferences, schooling, and even social gatherings, in addition to increased social media consumption.

The pandemic has also created an upside in the fintech space as more consumers take to digital payment solutions due to the social distance protocols. We project that in 2021, the value of e-payment transactions will surpass the ₦100 trillion mark thus becoming larger than the country’s GDP.

The growth drivers will be the increased adoption of fintech solutions, especially on mobile devices.

The risk-free yield is a major benchmark for pricing corporate debt instruments. With risk-free yields of treasuries currently at low levels of less than 3%, we project significant growth in debt market offerings by corporates at both the short end of the market (in commercial papers) and in long-term maturities via corporate bonds.

We believe the corporate debt markets will become more attractive especially for firms that can issue investment-grade debt instruments. Overall, we project that over ₦1 trillion will be raised in corporate debt instruments in 2021, representing a 10% increase from the ₦910 billion raised in the prior year (see Figure 2).

The Central Bank’s reforms in the foreign exchange market which now permits recipients of diaspora remittances to access their funds in foreign currency represents the brightest spot in the FX market. We believe this reform policy will increase the competitiveness of the official foreign exchange market against the parallel market.

2021 – The Year of the Vaccine Brandspurng1

Winning in 2021

We project a GDP growth of a measly 2% in 2021. A second recession in just five years, a slow post-recession recovery characterised by economic growth (around 2%) that is weaker than the country’s population growth (>2.5%), and the policy inactions to respond to these challenges will test the resilience of many Nigerians in 2021. This portends greater risks for the country that could result in increased social fissures.

The rapid and seismic evolutions in consumer behaviour will prove to be the major driver of corporate performance in this new year. Thus, the winners in 2021 will be those who are able to understand the consumer trends in their industries and make the necessary adjustments to meet the needs or shape consumer behaviour in their favour.

For instance, in the FMCG space, the recession leaves consumers poorer and thus there will be greater demand for products in smaller retail packs. While in the financial sector, weaker spending even by the segment of the middle class and upper class that are still economically buoyant will lead to an increase in savings.

This will lead to higher demand for unique investment offerings that can create value for this class of savers. In 2021, we see fintech solutions offering greater competition to the traditional savings products, especially amongst the tech-savvy millennials.

Overall, the winners in 2021 will be firms and individuals who learn to navigate volatility with greater stability. We believe the year will throw up significant volatility that will require resilience to withstand the shocks and on the other end, the foresight to help create paths to success even amidst uncertainty. Nigerians who have long been inured to instability may find their resilience coming under trial this year.

BIC Joins more than 1,500 CEOs Pledging to Advance Diversity and Inclusion in the Workplace

Esan Bolaji
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BIC Joins more than 1,500 CEOs Pledging to Advance Diversity and Inclusion in the Workplace

BIC, a world leader in stationery, lighters and shavers, advances its commitment to diversity and inclusion (D&I) in the workplace as Gonzalve Bich, BIC’s CEO, joins CEO Action for Diversity and Inclusion™ (CEO Action), the largest CEO-driven business commitment of its kind.

By taking this pledge, Bich is committing to take action to ensure the company’s culture celebrates and welcomes diverse perspectives and experiences and encourages open conversations about D&I.

“Joining CEO Action is in line with the great pride we take in honouring the diversity of the communities we serve and fostering a culture of belonging that encourages our team members to be curious about, understand and welcome different cultures, religions, and ethnicities,” said Bich.

BIC Joins more than 1,500 CEOs Pledging to Advance Diversity and Inclusion in the Workplace

“As a global brand, it is our responsibility to make a positive impact on the world beyond the products we offer. Change starts at a local level, and we must all work together to create a world that is welcoming and supportive of everyone, where deep-rooted inequities are challenged, and everyone is seen, supported and treated fairly.”

Led by PwC and a steering committee of cross-industry CEOs, the CEO Action pledge outlines specific actions CEOs will take to cultivate a trusting environment where all ideas are welcomed, with the goal of addressing racial and ethnic tensions and promoting diversity at the core of workplace culture.

The values outlined in the commitment align with BIC’s ongoing efforts to promote a culture where people of all backgrounds can thrive and will add an additional level of accountability.

Most recently BIC launched its new Allyship Program that connects team members throughout the organization to celebrate diversity, foster inclusion and showcase the beauty of the many cultures, religions, languages, colours, ages, backgrounds and experiences that make up BIC.

Joining more than 1,500 other CEOs and Presidents who have taken the CEO Action for Diversity and Inclusion™ pledge, Bich is committing to the following actions:

  • Having complex, and sometimes difficult conversations about diversity and inclusion to
    make its workplaces a more trusting environment
  • Implementing and expanding unconscious bias training
  • Sharing best, as well as unsuccessful, practices
  • Creating and sharing strategic D&I plans with the board of directors on a continuous
    basis.

BIC is a world leader in stationery, lighters, and shavers. For more than 75 years, the Company has honoured the tradition of providing high-quality, affordable products to consumers everywhere. Through this unwavering dedication, BIC has become one of the most recognized brands and is a trademark registered worldwide.

Traders’ Voice… “Highway”

Comercio
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Traders’ Voice… “Highway”

Inflation Highway…  (DJ Kaywise Ft Phyno – High Way) 

I visited a supermarket over the weekend, and I was beyond stunned when I got my bill as it just wasn’t adding up. I kept looking at my receipt and asking the cashier to double-check to ensure there were no errors. After much back and forth, it turned out that there were no errors; prices of food items had just gone up.

I think it is safe to say that the purchasing power for a lot of Nigerians has weakened significantly and shows very little signs of slowing down. Like me, I think many Nigerians will be anxiously waiting to see how the fiscal and monetary authorities intend to find solutions to reverse this trend.

Nevertheless, we will be looking at the inflation figures that came out last week and some of the plans that the federal government has highlighted in the 2021 budget to help curb the rising inflation rate.   

Nigeria’s annual inflation rate soared for a 16th straight month to 15.75 percent in December of 2020. At this point, it is safe to say inflation is on the “highway.” Food Inflation grew by 1.26% to 19.56% in December as the insecurity in the north coupled with the festive season added further inflation pressure to food prices.

BIC Joins more than 1,500 CEOs Pledging to Advance Diversity and Inclusion in the Workplace

Core inflation also picked up in December 2020, increasing by 0.32% to 11.37% in December 2020.

The highest increases were recorded in prices of Passenger transport by air, Medical services, Hospital services, Shoes, and other footwear, Passenger transport by road, Hairdressing salons and personal grooming establishments, Repair of furniture, Vehicle spare parts, Pharmaceutical products, Motor cars, Maintenance and repair of personal transport equipment, Paramedical services, Motorcycle, Dental services, and Bicycles.  

The Great Conflict… 

With FX illiquidity remaining concern in 2021, Energy price, which has a strong correlation with the crude oil price, is expected to sustain its upward trajectory on the back of the global recovery and continuous vaccine rollout.

That means the higher oil prices get, the higher the price of PMS which is a major component in transport costs locally. Which leaves us with a question for you, “rise in oil prices (improves dollar inflow and revenue but increases the price of PMS) or a decline in oil prices (Dampens dollar inflow and revenue but reduces the price of PMS), which do you prefer?” 

The Fiscal play… 

The Minister for Finance, Budget, and National Planning, Dr. Zainab Ahmed disclosed during a virtual presentation of the breakdown of the 2021 FGN Budget that the federal government will be using spending on transportation as a fiscal tool to curb inflation.

She stated that the improvement in the transportation sector will help ease the cost of food prices, therefore easing the overall pressure on food inflation. The Ministry of Transport is expected to spend N209.73 billion, out of which N71.14 billion accrues to numerous railway counterpart payments and the Nigerian Railway Modernisation Project (Lagos-Ibadan section which is expected to gulp N129bn).

The federal government also implemented a reduction in the importation of transportation vehicles. Reduction of import duty on tractors from 35% to 5%, mass transit vehicles for the transport of more than 10 persons and trucks from 35% to 10%, and reduction of import levy on cars from 30%to 5%.  

We expect this development to improve activity in the transportation sector, as well as have a ripple effect on the broader-based economy. 

America is Blue again! 

A distant observer of the events that played out in the United States over the past weeks could easily mistake the happenings in the World’s largest economy for the cinematic plot of an upcoming blockbuster movie.

The Capitol Building was invaded by rioters, which led to the death and injury of several people. Bombs were found at the headquarters of the Democratic National Committee and the Republican National Committee, and the President of the United States was impeached by the House – AGAIN!  

While a reference to the 2016 drama series “Designated Survivor” might seem hyperbolical given the absence of international terrorist attacks on the Capitol Building, this is still the closest we can get (I hope) in a realistic context in modern times.

On the 13th of January 2021, the U.S. House of Representatives passed a single article of impeachment, charging President Trump with “incitement of insurrection.” Of the 429 members of the House that voted on the impeachment article, 232 voted for impeachment, including 10 republicans.  

BIC Joins more than 1,500 CEOs Pledging to Advance Diversity and Inclusion in the Workplace

The series of events that culminated into the impeachment was quite simple – The U.S. had a Presidential election; Trump lost the election to Biden; Trump alleged that the election was stolen through widespread voter fraud; Trump failed to prove these allegations in court; Trump encouraged his supporters to go on a protest at the Capitol house where the Congress was meeting to certify the election results in favour of Biden; and finally, some supporters went “Viking” on the Capitol (Literally! someone was dressed as a Viking, and another held a pitchfork).

Sure, you cannot blame the forest fire on a lit matchstick if there was already so much dry wood, but it would be very helpful if no one lit the matchstick at all.

The impeachment was not the only backlash President Trump received because of the riot, as several social media outlets banned Trump and his allies from using their platforms, including – Twitter, Facebook, Instagram, YouTube, Reddit, and Snapchat, to mention a few.

Despite all these, the U.S. stock market proved to be impervious to the ongoing threat to Democracy, as the Dow Jones industrial average flirted momentarily with the record 31,000 marks the day after the riot at the Capitol.  

Currently, all attention is on the upcoming inauguration of President-elect, Joe Biden, on Wednesday, January 20th, 2021, as there are security concerns about the event.

Nevertheless, this will be a historic moment in the U.S., as the country would have her first African American and Asian-American Vice President. Expectations are locked on further government spending by the incoming Biden administration, which would weaken the greenback.

We got a glimpse of this last week when Biden unveiled his US$1.9 trillion COVID-19 relief package. So, grab your popcorn, and watch as the U.S. spirals into debates as to whether the benefits of more government spending are worth bloating the national deficit. It would be dramatic, but nothing compared to the events of the past weeks. 

Where is the money? 

With Climate change at the top of Biden’s policy agenda, we expect renewable energy stocks to continue to gain traction in near-term. The U.S. Banking sector is also expected to remain resilient as stimulus packages continue to filter into the market

uLesson Secures $7.5mn Series A Funding

Esan Bolaji
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uLesson Secures $7.5mn Series A Funding

Owl Ventures leads round with TLcom Capital, Founder Collective and LocalGlobe to scale digital access to education to millions across Africa

Lagos, Nigeria. 19 January 2021: uLesson, the African learning technology platform, has closed a $7.5mn Series A round led by Owl Ventures, with inclusion from existing investors, TLcom Capital and Founder Collective and participation from new investor LocalGlobe.

Sim Shagaya - CEO & Founder - uLesson Brandspurng uLesson Secures $7.5mn Series A Funding
Sim Shagaya – CEO & Founder – uLesson | www.brandspurng.com

Tory Patterson, Managing Director of Owl Ventures, joins the uLesson board, further strengthening the education startup’s push to deliver affordable, high-quality and accessible education across Africa using technology.

Having scaled quickly to 1mn app downloads since its launch in March 2020, the funding will be deployed to power uLesson’s expansion into Eastern & Southern Africa, as well as secure new talent and build its product development and production infrastructure.

Founded by serial entrepreneur, Sim Shagaya, uLesson curates personalised, curriculum-relevant content via mobile and PC devices for students in the K-7 to K-12 segment across the continent. Students can access the lessons via streaming and SD cards, where they can download and store the content, allowing them to study remotely, removing challenges around internet access limitations and costs.

uLesson app brandspurng uLesson Secures $7.5mn Series A Funding
uLesson app | www.brandspurng.com

uLesson’s content is originally tailored for Nigeria, Ghana, Sierra Leone, Liberia and Gambia within the K-12 segment and now includes IGCSE curriculum which is relevant for the other markets. The team has to-date produced over 5,000 richly animated video lessons, 30,000 quizzes and tests across senior and junior classes on its Android app that support each country’s curriculum.

Discussing Series A, uLesson Founder and CEO, Sim Shagaya says,

“Africa is not one place. Different needs, cultures and curricula mean that uLesson has to carefully and deliberately think about how to design products and distribution channels to serve such a vast market. Almost daily we receive emails from families across the continent asking us to make services available to them. And in 2021, we will.” 

“The appreciation of the importance of education has always been there; the means of delivering digital, relevant education has previously been lacking. We are now witnessing an increased availability of data networks in Africa and with more affordable smartphones and the change in attitudes towards online learning accelerated by COVID-19, the foundations are now in place for an education revolution.

At uLesson, we know we have a critical role to play in this ‘new normal’ and this funding will be crucial in our drive to fill the major gaps in Africa’s education system through tech.”

Alongside uLesson’s expansion into Eastern & Southern Africa, the startup is set to launch a host of new products including a new pan-African primary school library, 1:1 tutoring sessions and Challenge – its new app feature that allows learners to challenge friends to a quiz. The platform has also set its sights on launching an iOS app in the near future.

uLesson Learning app Launches, commits to helping African students be the very best they can be brandspurng2

Tory Patterson, Managing Director of Owl Ventures, the world’s largest education-focused VC firm and an investor in leading edtech players such as Byjus, MasterClass, Whitehat Jr and Quizlet, adds

“Owl Ventures is honoured to be partnering with uLesson for their Series A. The company has quickly grown into the premier platform supporting students in Africa and we are excited to support their global expansion, as they seek to empower students around the world.”

“As an investor, it’s rare to find a massive, under-served market being addressed by an entrepreneur whose skills are tailor-made for the opportunity,” says David Frankel, Managing Partner at Founder Collective and an investor in PillPack, Olo and Coupang.

“Sim Shagaya is assembling a world-class team to help realize his vision of a modernized education system for one of the highest potential places in the world today, and we’re thrilled to be a part of it.”

The raise follows uLesson’s initial $3.1mn seed round in November 2019, led by TLcom Capital with participation from the company’s Founder and CEO, Sim Shagaya. Ido Sum, Partner at TLcom Capital adds,

“Since we partnered with Sim in 2019, uLesson has shown exceptional growth and fully validated our belief in its huge potential. We welcome Owl Ventures and LocalGlobe, as combining their domain expertise from other markets with our local presence and expertise, we can together further support the company to become a world class EdTech platform.”

Suzanne Ashman, Partner at LocalGlobe, also states,

“We are thrilled to add uLesson to our emerging portfolio of Africa-based companies. We, like many investors and entrepreneurs, are excited by Africa’s future and the potential for a wave of category-defining tech companies to emerge in the region.

We were hugely impressed by the foundational DNA of uLesson’s team in Nigeria. The team has purpose-built the product to make the learning experience significantly more engaging and effective than a large classroom experience. We are delighted to be part of uLesson’s journey.” 

GSK and Novartis announce collaboration to support scientific research into genetic diversity in Africa

Esan Bolaji
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GSK and Novartis announce collaboration to support scientific research into genetic diversity in Africa

Combined funding commitment of GBP 2.8 million (USD 3.6 million) over five years

January 19, 2021 – Project Africa GRADIENT calls on local researchers to submit proposals exploring the link between genetic diversity and response to malaria and tuberculosis drugs in African patients; combined funding commitment of GBP 2.8 million (USD 3.6 million) over five years; researchers based at universities, science councils and other public research organizations across Africa are invited to express ‘intent to submit’ by March 1, 2021.

GSK and Novartis announce collaboration to support scientific research into genetic diversity in Africa Brandspurng

GSK and Novartis today announced the launch of a collaboration to support high-quality scientific research investigating the link between genetic diversity across different regions in Africa and its potential impact on response to drug therapeutics.

The Project Africa Genomic Research Approach for Diversity and Optimising Therapeutics (GRADIENT), with a combined funding commitment of GBP 2.8m (USD 3.6 million) over five years, calls on African researchers to submit robust research proposals on the relevance of African genetic diversity to the treatment of malaria and tuberculosis.

Pauline Williams, Senior Vice President Global Health Pharma at GSK said:

“At GSK, human genetics is a core pillar of our R&D strategy. Genetic diversity is greater in Africa than in any other continental population resulting in some African patients having a varying response to treatments. We are excited to launch Project Africa GRADIENT which aims to catalyse the best science in the continent to optimize treatment responses for malaria and tuberculosis, two infectious diseases that disproportionately affect African populations.”

Lutz Hegemann, M.D., Chief Operating Officer for Global Health at Novartis said:

“Novartis has a long-standing commitment to improving and extending the lives of patients around the world. Our efforts include seeking innovative ways to improve the standard of care where possible.

This is why we are excited by this important collaboration on scientific research on genetic diversity in Africa. It has the potential to improve the efficacy and tolerability of current and future medicines, starting with two of the most deadly diseases, malaria and tuberculosis.

In alignment with our ongoing efforts to strengthen scientific capabilities in lower-resource settings, this project also provides opportunities for training young African scientists in the use of advanced research methodologies and mentoring on drug development.”

Project Africa GRADIENT comprises three funding mechanisms to support:

  1. Fellowships: A limited number of fellowships in academic institutions with a reputation for global excellence to collect and analyse data on determinants of drug response.
  2. Investigator-sponsored research: Hypothesis-driven research focused on understanding genetic regional variation in drug response.
  3. Seed-Fund: A limited number of projects to enable the exploration of new research goals, depending on the results from 1 and 2.

Within the scope of the agreement, the South African Medical Research Council (SAMRC) will administer the project, and a Joint Steering Committee will oversee the review of submitted proposals.

Priority will be given to research aimed at collecting data from currently under-represented regions and improving the scientific robustness of inconsistent data. All datasets collated are planned to be released in a public database to catalyse a positive change in approach to understanding variations in treatment efficacy and safety for patients across the continent.

Prof. Glenda Gray, SAMRC President and CEO, said: “It is exciting to see more and more global partners taking interest in the challenges of Africa. We are delighted that partners are now seeking to address the challenges of Africa by their quest to understand the fundamental differences between the genetics of Africa and the rest of the world.”

As a first step, researchers based at universities, science councils and other public research organizations across Africa are invited to express their ‘intent to submit’ through the SAMRC website. Final award recipients are expected to be announced by end of 2021.

Nigerian GDP better than thought

Coronation Merchant Bank
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Nigerian GDP better than thought

The World Bank recently published its Global Economic Prospects for January 2021, and we were surprised to find an estimate that Nigerian GDP had declined by 4.1%, year-on-year, during 2020. We think that this is too pessimistic. Recent data suggests that the Nigerian economy is stronger than this.

One factor that impresses us is the reduction in the rate of economic decline during Q3 2020. The headline GDP rate slowed to a negative 3.62% y/y in Q3 from 6.10% y/y in Q2.

Nigeria's negative GDP improves to -3.6% Brandspurng
Civic Centre Road, Lagos, Nigeria | www.brandspurng.com

And the rate of contraction in the non-oil economy slowed to a negative 2.51% in Q3 from 6.05% in Q2. In fact, the headline rate improved despite the inclusion of the Oil & Gas sector whose development worsened from negative 6.63% y/y in Q2 to negative 13.89% in Q3.

The rate of contraction was lower in Q3 than they had been for Q2 in the following three sectors (among the major sectors): Trade; Manufacturing; Real Estates. These account for 28.4% of GDP.

Two large sectors were still growing (and in fact did not go into recession last year). These were Agriculture (30.8% of GDP) and Telecoms (11.2% of GDP). They were not growing quite as quickly as they had been in Q2 but were growing nevertheless (Telecoms by 17.4% y/y/).

Gross Domestic Product 2016 – 2020

Nigerian GDP better than thought
Source: National Bureau of Statistics (NBS), Coronation Research, Q4 2020e is estimated by Coronation Research

In our model of Nigerian Q4 2020e GDP growth, we have made estimates for the top six sectors (Agriculture, Trade, Telecoms, Manufacturing, Oil & Gas and Real Estate) which together account for 79.1% of GDP. In essence, we expect the year-on-year performance of the economy in Q4 (NB 27.0% of annual economic activity takes place in Q4) to be close to that achieved in Q3.

The implied full-year performance of the economy in 2020 then comes to 2.9% lower than in 2019. A recession of 2.9% (or, at least, close to 3.0%) seems a reasonable outcome for 2020.

This would contrast with the International Monetary Fund’s estimate of negative 4.3% y/y (though this estimate was published back in October) and the current World Bank’s estimate of 4.1%. Both institutions have an excellent track record of forecasting Nigerian GDP but, on this occasion, we believe they may be too gloomy.

Oil GDP: Nigeria Records Average Oil Production of 1.81 million barrels per day in Q2 2020 - Agusto & Co.
Source: Shutterstock

Monetary & Interest Rate Policy in 2021: Going for growth

United Capital Research
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Monetary & Interest Rate Policy in 2021: Going for growth

Monetary policy remained broadly accommodative in 2020. The monetary policy committee (MPC) during the year, voted to reduce the MPR twice; in its May meeting and its September meeting, following a CRR hike in its January meeting.

As such, the MPR was slashed by 200bps to 11.5% and the asymmetric corridor around the MPR was revised to +100/-700bps. The Cash Reserves Ratio (CRR) was hiked to 27.5% while the liquidity ratio was retained at 30.0%.

Monetary & Interest Rate Policy in 2021 Brandspurng Going for growth
Sources: CBN, NBS, United Capital Research

Notably, the committee insisted that rising inflation was driven by structural rather than monetary factors. Hence, the committee favoured supply-side policies of the CBN and lauded the Apex bank’s intervention funding & FX management in the wake of the negative impact of the lockdown triggered by Covid19.

Overall, the impact of the MPC’s monetary policy stance can be observed in the net OMO inflow of close to N4.0trn into the system in 2020, compared to net OMO mop-ups over the last five years.

In view of the first policy meeting of the MPC by midweek, we think monetary policy in 2021 will be driven by the need to urgently stimulate growth in the face of a recession. As such, the MPC/CBN will sustain its accommodative stance to ensure a V-shaped recovery and avoid a W-shape.

Also we opine that the CBN can still make use of a number of policy tools within its disposal to guide its accommodative tone. For instance, the CBN retains discretion over the rollover of the N4.1tn special bills which it could use to bolster liquidity should it intend to remain accommodative.

That said, we think the CBN may revert to a hawkish tone later in the year should economic activities recover considerably considering galloping inflation and weak FX inflows from FPIs.

CBN Releases Circular on the Issuance of the Framework for the Regulatory Sandbox Operations

Esan Bolaji
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CBN Releases Circular on the Issuance of the Framework for the Regulatory Sandbox Operations

The Central Bank of Nigeria (CBN) is committed to building a financial services sector that promotes stability, fosters innovation and deepen financial inclusion. In this regard, the CBN has implemented several reform initiatives towards the achievement of these objectives.

In continuation of these efforts, the CBN hereby issues the framework for Regulatory Sandbox Operations in Nigeria. The framework details the requirements for the conduct of live tests on innovative products, services and other solutions in a controlled environment.

To this end, the CBN shall review the products and solutions of applicants (Licensed institutions, Fintechs, Innovators and Researchers) during its implementation.

All stakeholders in the Regulatory Sandbox are required to ensure strict compliance with the requirements of the framework and all other payments system regulations, as the CBN continues to monitor developments and issue guidance as may be appropriate.

2021: A Year Of Effectiveness And Strategic Thinking To Transform Agri-Food Systems

Esan Bolaji
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2021: A Year Of Effectiveness And Strategic Thinking To Transform Agri-Food Systems

The FAO Director-General QU Dongyu today held a meeting with all senior managers of the UN agency, including FAO representatives (FAORs) to about 130 countries, to present the Organization’s priorities for 2021.

Opening the fourth meeting of its kind, with almost 200 participants, Qu highlighted that all the strategic decisions, transformative actions and priorities that he had introduced since his arrival at FAO followed a clear, coherent and transparent philosophy of change.

He added that his Manifesto contains concrete action plans that are based on numerous consultations with Members and experts.

2021 Brandspurng A Year Of Effectiveness And Strategic Thinking To Transform Agri-Food Systems

“From this clarity of vision comes our strength. A strength that allowed us in 2020, despite the pandemic, to introduce the most significant reform and reorganization of FAO since its creation,” said the Director-General, alluding to the various transformational efforts implemented in 2020, including the new organizational structure.

“2021 will see a continued reform in Rome, and regional harvesting of its results on the ground,” he added, stressing the importance of strengthening FAO’s engagement with its Members and different communities – FAO’s ‘customers’, as he said – at national and local levels.

Efficiency and effectiveness

Qu had declared 2020 as the FAO Year of Efficiency, at a meeting with all senior managers a year ago. Today he praised the achievements and good performance of FAO in this regard, stating that he was “pleased to state that as an Organization we have taken big steps in this direction, by breaking down silos, removing administrative layers and innovating many processes of daily activities,”.

He stated that the organization will “continue on this path, seeking ways to achieve more tangible results and better delivery with the innovation of business model which can produce more with fewer inputs”.

For 2021, the Director-General stressed the need for FAO to aim bigger and improve not only efficiency but also effectiveness.

“We need to ask ourselves: How effective is our crisis management? How effective are our operations, our administrative processes and, ultimately, our deliverables to Members and donors?” he said, urging managers to “walk the talk” and fulfil FAO’s potential with concrete measures.

Qu also underscored that transparency and accountability will remain cornerstones of FAO’s work. He encouraged managers to follow the example of the Core Leadership Team, he had established at headquarters, as it is applying the new approach of collaboration on a daily basis.

He stressed the importance for senior managers to promote informal consultations, share information and suggestions with colleagues, be accountable and responsible for their acts and apply a holistic lens to their work.

Thinking strategically

“2021 is also the year of enhanced strategic thinking”, said the Director-General.

In the first half of 2021, FAO management and Members will continue to develop the Programme of Work and Budget for 2022-23 and the Strategic Framework 2022-2031, which will be presented to the biennial FAO Conference next summer for approval.

Qu noted the importance of ensuring that FAO’s global mandates and normative strengths are well embedded in these strategic documents, as well as incorporating the needs of Members and other customers, including civil society and farmers associations.

In this regard, the Director-General encouraged FAO representatives to enhance communication with national governments to better understand their priorities. Such an initiative will enable FAO to better assist its Members in achieving the Sustainable Development Goals (SDGs).

A decisive year for agri-food systems transformation

The Director-General reminded the senior managers that 2021 will be a key year to move forward the transformation of agri-food systems, considering the big events ahead, particularly the UN Food Systems Summit in New York, the Pre-Summit in Rome, and FAO’s Youth World Food Forum.

“The Forum will be dedicated to the future of our agri-food systems, bringing together major youth groups, top influencers, companies, startups, academic institutions, civil society organizations, governments, media, the general public to drive awareness, engagement, and resources,” he said, adding that “it is with fresh ideas and dynamic spirit that we will pursue this major goal for FAO: leading global efforts towards the transformation of agri-food systems.”

Qu also noted the important role that FAORs need to play to advance the transformative agenda. He pointed out three key activities:

i) to liaise with Ministers of Agriculture and other relevant national authorities to ensure that solid and modern agricultural policies are put in place;

ii) to present good examples of best practices from other countries in similar agri-zoning that face comparable challenges, making use of FAO’s global network; and

iii) to build a platform to support Members attract investment, particularly by promoting commodities that have comparative advantages or particular relevance abroad.

Similarly, the Director-General invited the Regional Offices to build platforms for specific topics of relevance, where their region can lead the way. He gave the example of the Regional Office in Bangkok focusing on digital innovation and aquaculture, and the Regional Office in Santiago sharing the continent’s knowledge and best practices on family farming.

“Ultimately, we will be in a position to establish much-needed Centres of Excellency with our Members for different products and areas of work – making sure that all our experience and knowledge is at the full disposal of the world,” Qu said.

He concluded by stating that FAO was entering the historic year of 2021 with ambition and energy, calling upon all colleagues to roll up their sleeves and get to work efficiently and effectively.

Managers’ engagement

During the meeting, the five FAO Regional Representatives delivered each a presentation on the challenges and priorities of their respective regions for 2021. All of them expressed gratitude for the opportunity to have such a fruitful and relevant exchange and underscored the impacts of the COVID-19 pandemic on food and agriculture and the necessity to support recovery measures at the regional and national level.

Climate change, biodiversity and agri-food systems transformation were also highlighted. A number of colleagues managing Liaison Offices and FAO Representatives intervened as well, thanking the Director-General for the meeting and for him providing such clear guidance and sharing their views.

BAT announces succession for Director, Operations

Esan Bolaji
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BAT announces succession for Director, Operations

Alan Davy, Director, Operations will step down from the Management Board on 31st January 2021 and will leave the British American Tobacco (BAT) Group on 31st May 2021 to pursue new challenges and spend more time with his family. Alan joined BAT in 1988 and has been with the Group for 32 years, 8 years of which as a member of the Management Board.

Zafar Khan, currently Group Head of New Categories Operations, will succeed Alan as Director, Operations and will be appointed to the Management Board effective 1st February 2021.

BAT announces succession for Director, Operations Brandspurng
Alan Davy, Director, Operations | www.brandspurng.com

Zafar started with BAT in his home country of Pakistan 24 years ago. Through his career, he has acquired extensive global operations and supply chain experience, including Regional Operations Director, Asia Pacific and the Middle East and Group Head of Plan, Service & Logistics.  

Commenting on the changes, Chief Executive, Jack Bowles, said: 

“I would like to thank Alan for the enormous contribution he has made to the Group throughout his 32-year career at BAT. Alan’s transformation of Operations into a dynamic, multi-category function has been a key component of our A Better Tomorrow strategy.

Most recently, the Group’s ability to navigate the challenges presented by COVID-19 is testament to the efficient, agile and globally integrated supply chain he has created. We wish him and his family all the very best for the future. 

BAT has around 13 million consumers of our non-combustible products and Zafar’s experience of expanding our capabilities and embedding an end-to-end supply chain for our New Category products makes him the natural choice as Director, Operations to accelerate the delivery of our A Better Tomorrow strategy. 

We are very proud of the depth and breadth of our management talent at BAT. By carefully developing careers on a global stage, we are, once again, able to ensure a well thought through and orderly internal succession to a key leadership role. Alan and I are confident that Zafar is the right leader, at the right time for the opportunities ahead. I wish Zafar the very best in his new role.”

British American Tobacco resumes sales in South Africa

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