Remittance Consumers Report Meaningful Increase in Economic Needs of Family Members Abroad Going into Unprecedented Holiday Season

Brand Spur
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Remittance Consumers Report Meaningful Increase in Economic Needs of Family Members Abroad Going into Unprecedented Holiday Season

MoneyGram International, Inc., a global leader in cross-border P2P payments and money transfers, today announced the results of a customer survey that provides notable insights into how consumers are sending money over the holidays this year.

Based on the results of a recent survey of nearly 1,500 United States-based customers who have sent money abroad using MoneyGram this year, the Company found strong consumer sentiment toward remittances going into the 2020 holiday season.

Despite hardships caused by the COVID-19 pandemic, such as job loss and increases in living and healthcare expenses, the survey revealed that nearly 70% of respondents have sent more money in 2020 and that the majority of respondents plan to send at least as much this holiday season as they did last year.

Of those surveyed, 80% of consumers also reported that the pandemic has led to an increase in the needs of family and friends abroad this year. Expenses for food topped the list with 70% of respondents reporting that those abroad have needed more money to feed their families this year. This was followed by expenses for housing (55%) and healthcare (52%).

The survey also provided insights into the acceleration of digital adoption at MoneyGram and across the industry. Nearly 60% of respondents said that as a result of the pandemic they are evolving the way they send money and increasingly utilizing digital tools to send money abroad.

Consumers also reported that the pandemic has led to an increase in family and friends requesting to receive money digitally, such as directly into a bank account or mobile wallet instead of cash.

“These survey results highlight the resilience of our customers, their capacity to navigate through difficult times and their dedication to family and friends around the world.” said Alex Holmes, MoneyGram Chairman and Chief Executive Officer.

“The results of the survey correspond to the strong performance we have reported this year and support our ongoing strategy to deliver a differentiated customer experience and accelerate digital growth across the world. I’m excited that our consumer-centric digital transformation and continued agile management of the business has enabled us to uniquely serve our customers as their needs quickly changed this year.”

Additional key insights from MoneyGram’s customer survey included:

•  Besides increased needs of family and friends abroad, the following factor also impacted consumers’ decisions and ability to send money this year:
ο  Change in income (34%)
ο  Unexpected expenses such as healthcare costs (28%)
•  Looking ahead to next year, 78% of respondents plan to send at least as much money in 2021 as they did this year.

“As we head into a holiday season that looks different than ever before, we are extremely thankful for our incredible customer base that has remained strong and loyal amidst the economic crisis induced by the pandemic,” said Kamila Chytil, MoneyGram Chief Operating Officer and leader of the Company’s digital business.

“We’re also encouraged by the number of customers who report switching to MoneyGram due to the ease of use of our mobile app, the affordability of our service, and our expansive digitally-enabled network across 81 countries. We’re thrilled that we can be the best option to help them support their family and friends during this challenging season.”

MoneyGram recently reported its eleventh consecutive month of triple-digit year-over-year cross-border transaction growth in its direct-to-consumer digital channel in November with 135% year-over-year revenue growth for the month.

80% of Shopify vendors project 2021 sales growth as 12.1% report a revenue increase of more than 100%

Esan Bolaji
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80% of Shopify vendors project 2021 sales growth as 12.1% report a revenue increase of more than 100%

A survey conducted by the HelpCenter app shows that about 74% of Shopify store owners have either recorded a boost in sales or have not experienced any major changes. The survey was conducted between December 1, 2020 – December 10, 2020. The results are based on the answers from 160 Shopify vendors.

12% of Shopify vendors doubled their revenue amid a COVID-19

80% of Shopify vendors project 2021 sales growth as 12.1% report a revenue increase of more than 100% Brandspurng1

From the data, over one-third of all respondents recorded an increase in revenue by at least 40% since the outbreak of COVID-19. On 2021 sales expectations, over 80% of surveyed Shopify vendors project massive growth.

During the pandemic, 22.4% of Shopify vendors recorded increased revenue of up to 60%. Elsewhere, about 5.12% of the vendors experienced no less than 80% revenue growth while 12.1% report an increase of more than 100%.

Following the economic crisis as a result of COVID-19 about 27% of surveyed online business owners admit that 2020 was challenging. They admitted the pandemic has had a negative impact on their Shopify stores.

Almost 5 out of 10 of those who experienced a decline in the revenue report a decrease from 20% to 60%.

HelpCenter’s app researchers commented on the change in consumer behaviour amid the health crisis:

 “Although it is difficult to predict when everything will get back to normal, one thing that has significantly changed during the pandemic and, likely, for good, is consumer habits. Not only that, with an increased demand for online shopping, more time on their hands due to recurring quarantine in some parts of the world, and basically unlimited access to any relevant information, customers are not lowering their expectations for businesses. It is actually the opposite – as the challenges continue to raise, customer expectations follow.”

Read the full story with statistics here: https://www.helpcenterapp.com/blog/survey-over-80-of-shopify-vendors-project-2021-sales-growth/

2021 Macroeconomic Outlook – A break in the clouds

Vetiva Research
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2021 Macroeconomic Outlook – A break in the clouds
What a year 2020 has been! From optimistic expectations of broad-based global growth to conversations around the Sino-US trade tensions and its ability to stall the anticipated positive growth outcome, to the outbreak of a global pandemic that started out as a local outbreak in Wuhan, to civil unrest across many countries as socio-economic pressures mounted, to the debates over the US’ turbulent post-election process, 2020 has indeed morphed into the unthinkable – a year filled with so much turbulence.

However, we can all agree that 2020 has been a year of reforms and remarkable developments, not just for governments around the world, but also for businesses and individuals.

2021 Macroeconomic Outlook - A break in the clouds

As we gradually draw the curtains on this remarkable year, we should remind ourselves that surviving this year is as much an achievement, as collecting trophies. We just lived through the most severe economic downturn in recent history, and that is an achievement worthy of pomp.

Looking ahead, however, we see a break in the clouds. Research breakthroughs on a medical solution to the virus, hold the promise of a growth comeback in 2021. With the base expectation of a vaccine rollout in H1’21, the hope is that normalcy can return to many countries.

In addition, more cordial and diplomatic relations between the US and the rest of the world – especially with respect to trade – could tilt global macroeconomic risks to the upside, putting many countries back on the growth path.

But the road to recovery could be quite arduous. Things could get worse before they get better. Many countries came into the pandemic with pre-existing weaknesses.

Large fiscal and current account deficits (Brazil; South Africa), mono-sector economic structures (Columbia; Russia) and inconsistent macroeconomic policies (Turkey; Mexico) are weaknesses that can magnify vulnerabilities in the near term and weigh on recovery efforts by global policymakers. As such, global economic recovery from the pandemic-induced downturn remains fragile and patchy.

Many countries have seen a deterioration in real sector indices (Nigeria; Venezuela), fiscal slippage (South Africa; India), and external sector volatilities amid the persistence of the virus.

Many are also simultaneously experiencing unprecedented capital reversals, substantial currency depreciation and sharp downgrades to their sovereign debt ratings and/or outlooks – with countries like South Africa, Maldives, and Angola recording double-downgrades in the year. The most vulnerable countries have also been forced to turn to the International Monetary Fund (IMF) for emergency funding or debt relief.

In addition, the risk of a second wave of the virus is real now more than ever. While public health systems are already stretched globally, the advent of winter could see a material increase in new cases – especially in boreal regions.

The global easing of travel and tourism restrictions also raises the risk of cross- border infections, as seen in the first wave, while the return of social interaction could accelerate local transmission. Let us not also rule out the case of a delayed rollout of and/or inequitable access to the vaccines.

As much as we are optimistic about a global economic recovery in 2021, there are still potential risk factors. There always are. But we are betting on a more predictable and somewhat less exciting (compared to 2020) 2021. Recovery in 2021 may, however, be K-shaped – uneven and split between industries and income groups.

Technology-related sectors could record stellar growth, while structural impediments – especially in emerging markets – could constrain manufacturing recovery. The process of re-thinking supply chains could weigh on both domestic and international trade, and delayed recovery in middle-class incomes could cause growth in realty to lag.

Download the 2021 Macroeconomic Outlook – A break in the clouds Report here

Nigeria’s Inflation sustains sprint, rises to 14.89% y/y in November 2020

Vetiva Research
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Nigeria’s Inflation sustains sprint, rises to 14.89% y/y in November 2020

Consumer prices sustained the inflationary pace in November, as headline inflation rose to a new 34-month high of 14.89% y/y (Vetiva: 14.86% y/y). We attribute this to underlying supply-side shocks from the continued closure of land borders, a weaker Naira and higher fuel prices.

The hike in retail PMS pump price to ₦170 contributed to the build-up in headline inflation for the month, which rose by 1.60% m/m (Oct’20: 1.54%), its fastest in 42 months.

The pass-through of higher fuel prices into transport costs elevated food inflation for the fifteenth consecutive month to 18.30% y/y (Oct’20: 17.37%), amid pre-existing border restrictions. On the flip side, core inflation moderated to 11.05% y/y (Oct’20: 11.14%).

Nigeria's Inflation sustains sprint, rises to 14.89% y/y in November 2020

Food inflation propelled by familiar levers

Food prices have been hit on several fronts. With the border closure being a remote cause, dollar restrictions on food imports as well as pandemic-induced disruptions & missed planting seasons were immediate triggers to food inflation.

Since the beginning of the year, both non-alcoholic and alcoholic segments of food inflation have recorded consistent y/y inflationary pressures except May’20 where restrictions on restaurant and bars slightly suppressed demand for alcoholic beverages.

In the month of November, both segments recorded steeper increases with the non-alcoholic pack (Nov’20: 18.20% y/y) ahead of the alcoholic segment (Nov’20: 11.03% y/y) as supply-side shocks and structural changes upset food prices.

Core inflation slides for the second time this year

From the devaluation of the naira to FX restrictions on visible imports and higher PMS prices, non-edible items were not spared from inflationary spikes although core inflation fell slightly by 9bps to 11.05% y/y (Oct’20: 11.14% y/y). Since Mar’20, the health index has been the most pressured core segment, both on a m/m and y/y basis due to pandemic-related expenditures.

In November, health inflation rose by 13.57% y/y (Oct’20: 13.08% y/y), a level last seen nearly a decade ago. Similarly, transport inflation rose to 12.57% y/y (Oct’20: 12.11% y/y), being the next most pressured segment since July’20 as a result of the monthly adjustments to retail pump prices.

Meanwhile, the Housing, Water, Gas, and Other Fuels (HWGS) segment continues to reflect higher energy costs, rising to 8.72% y/y in Nov’20 (Oct’20: 8.47%).

Nigeria's Inflation sustains sprint, rises to 14.89% y/y in November 2020

Could there be a respite to inflationary pressures?

2020 has indeed been a tough year for consumers and producers alike from the spillovers of border closures to VAT hike, COVID-related distortions, short-lived electricity tariff hikes and monthly petrol pump adjustments. For the first time since 2016, consumer prices are set to undergo 12 consecutive months of inflationary pressures in a given year.

In both years, we witnessed adjustment in the exchange rates however, this year has been more peculiar, with the disruptions in the agricultural sector and removal of fuel subsidies.

We believe the recent moves by the Nigeria Labour Congress (NLC) to reduce PMS prices by ₦5 will have a negligible effect on inflation, which will keep fuel prices 13.8% higher y/y post-adjustment.

In addition, the build-up in year-end festive demand informs our inflation expectation of 15.91% for December 2020, translating into an average FY’20 forecast of 13.22% (FY’19: 11.73%).

Recently, the President raised optimism on the possible reopening of land borders. While this could provide some respite for food inflation in 2021, we do not expect any significant impact in the current year, given the existent restrictions on land borders and year-end festivities.

That said, we raise our food inflation forecast to 16.13% y/y for FY’20 (FY’19: 13.73% y/y) as disruptive effects of missed planting seasons persist.

As we approach the end of the year, consumer prices will keep reflecting the impact of structural changes in the economy. In 2021, fundamental shifts in economic policies could alter the path of inflation. For instance, a possible reopening of borders – as hinted by the President – could provide succour to food inflation.

However, insecurity in the north could deter dry season farming, which would be vital in alleviating pressures from the disruptions. Alongside the expected review in electricity tariffs, consumers may continually face pressures on both food and core segments in 2021.

United Bank for Africa – Strong Interest Income Growth in Q3’2020 Lifts Earnings

WSTC Research
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United Bank for Africa – Strong Interest Income Growth in Q3’2020 Lifts Earnings

United Bank for Africa (UBA), in its 9M’2020 financial results, reported an improvement in performance, driven by a solid Q3’2020 earnings growth. Gross earnings grew by 6% YoY from N428.22bn in 9M’2019 to N453.67bn in 9M’2020.

The Group’s gross earnings growth was driven by an 8% YoY interest income growth. Non-interest income growth was relatively weak, as it grew by just 1% YoY from N107.08bn in 9M’2019 to N107.76bn in 9M’2020.

United Bank for Africa’s cost-to-income ratio rose materially from 62% in 9M’2019 to 68% in 9M’2020, majorly induced by higher staff-related cost. Consequently, profit before tax declined by 8% YoY from N98.23bn in 9M’2019 to N90.37bn in 9M’2020.

United Bank for Africa - Strong Interest Income Growth in Q3’2020 Lifts Earnings

Steepened Yield Curve Boost Net Interest Income

United Bank for Africa interest income grew by 8% YoY to N317.14bn in 9M’2020, spurred by a 20% YoY interest income growth in Q3’2020. We attribute the significant Q3’2020 interest income growth to a steepening of the Group’s asset yield curve.

Based on our analysis of the Group’s numbers, we note that the Group strategically optimises earnings by borrowing for short-term, and lending in the long-term. We believe that the model resulted in an expansion of net interest margin for the Group, thus enhancing earnings.

Additionally, the 27% YoY growth in interest-yielding assets from an average of N4.03trn in 9M’2019 to an average of N5.10trn in 9M’2020, contributed to total interest income growth despite the low-yield environment.

United Bank for Africa’s interest expense declined by 6% YoY from N138.99bn in 9M’2019 to N131.12bn in 9M’2020. The decline in interest expense reflected a change in the composition of the Group’s deposits from customers, which constitutes the bulk of the Group’s interest-bearing liabilities (c.80% of total interest-bearing liabilities).

Term deposits’ portion rose from 24% of total deposits in 9M’2019 to 25% of deposits in 9M’2020. Current deposits’ portion declined from 54% of total deposits in 9M’2019 to 51% of total deposits in 9M’2020. Savings deposits’ portion grew from 22% of total deposits in 9M’2019 to 24% of total deposits in 9M’2020.

Generally, the low-yield environment resulted in the repricing of various financial assets, thus we maintain that these deposits were repriced lower. Also, we posit that the higher portion of savings deposits, relative to others, further resulted in the lower interest expense incurred in 9M’2020.

A simultaneous effect of a 6% growth in interest income and a 6% decline in interest expense, resulted in a 17% YoY growth in net interest income from N158.92bn in 9M’2019 to N186.02bn in 9M’2020. Meanwhile, a significantly high impairment loss on loans and receivables (+72% YoY from N6.66bn in 9M’2019 to N11.48bn in 9M’2020) limited the net interest income upside to 15%.

Non-Interest Income Growth Weakened by Poor Fee and Commission Inflows.

United Bank for Africa fee and commission income declined by 2% YoY from N86.53bn in 9M’2019 to 85.01bn in 9M’2020. On the other hand, fee and commission expense rose by 24% YoY, thus resulting in an 11% YoY decline in net fee and commission income from N63.29bn in 9M’2019 to N56.25bn in 9M’2020.

‘Other operating income’ also declined by 28% YoY from N8.07bn in 9M’2019 to N5.79bn in 9M’2020. The decline in net fee and commission income and ‘other operating income’ were, however, offset by a 28% YoY spike in net trading and FX income from N35.72bn in 9M’2019 to N45.72bn in 9M’2020.

Overall, United Bank for Africa non-interest income grew by 1% YoY from N107.08bn in 9M’2019 to N107.76bn in 9M’2020. Operating income, thus, advanced by 9% YoY from N259.33bn in 9M’2019 to N282.31bn in 9M’2020.

Operating expense grew by 19% YoY from N161.62bn in 9M’2019 to N192.66bn in 9M’2020, driven by higher personnel cost (+21% YoY from N55.20bn to N66.62bn).

Owing to the higher operating expense incurred, relative to the operating income earned, the Group’s profit before tax dipped by 8% YoY from N98.23bn in 9M’2019 to N90.37bn in 9M’2020. Profit after tax declined by 6% YoY (from N81.63bn to N77.13bn) due to a lower effective tax rate during the period.

Financial Statement Summary

United Bank for Africa - Strong Interest Income Growth in Q3’2020 Lifts Earnings
Source: Company Accounts, WSTC Research

Outcome and Valuation

We revised our FY’2020 EPS forecast to N2.73 (previous: N2.39), on the back of higher expected net interest income in Q4’2020. We also expect to see a recovery in fee and commission income, on the back improved economic activities. In addition, we expect earnings to improve due to a low-base in Q4’2019.

In the medium to long term, we lowered our growth expectations for the Group. Our lower growth expectations were informed by regulatory risks, increased competition, and weak macroeconomic fundamentals.

We estimate a fair value of N13.80 for the Group, which effectively implies a justified P/E of 5.26x. The stock currently trades at a forward P/E of 2.92x. Therefore, we believe that the stock is grossly undervalued at current market price.

Based on our expected dividend yield of 13%, we posit that the stock offers a dividend return that is significantly higher than other opportunity costs.

Hence, we recommend a BUY.

Zenith Bank Plc – Resilient Earnings Profile Amid Macroeconomic Headwinds

WSTC Research
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Zenith Bank Plc – Resilient Earnings Profile Amid Macroeconomic Headwinds

Zenith Bank Plc reported a 4% topline growth in gross earnings in its 9M 2020 result driven by an 11% increase in non-interest income. The group’s net interest income rose YoY by 5% due to a faster decline in interest expense in 9M 2020.

Zenith Bank’s operating expenses grew YoY by 11% in 9M 2020. Profit before tax (PBT) rose by 1%, and profit after tax (PAT) increased by 6% in 9M 2020. The group’s EPS stood at N5.10k in 9M 2020 (9M 2019: N4.80k).

Net interest income grew but margin contracts due to declining yield environment

Interest income decreased YoY by 1% from N321.94bn to N318.82bn in 9M 2020 due to a profound decline in interest from treasury bills. While interest on loans and advances as well as other investment in financial assets were up for the period, revenue from treasury bills declined remarkedly by 46% from N74.27bn in 9M 2019 to N40.39bn in 9M 2020.

The significant decline was due to the decrease in treasury bills rates, which saw the Zenith Bank’s effective yield on treasury bills investment contract by 466bps from 9% in 9M 2019 to 4% in 9M 2020.

Elsewhere, interest expense declined YoY by 13% from N107.31bn to N93.64bn in 9M 2020 as a result of the group’s effort in the rebalancing of deposit mix as well as the declining yield environment. Expressly, interest on borrowed funds declined YoY by 32% from N49.15bn to N33.31bn in 9M 2020.

Also, while Zenith Bank’s deposits grew year-to-date by 23%, interest on current accounts as well as savings account was flat for the period. As a result, the group’s cost of funds declined YoY from 3% to 2% in 9M 2020. Consequently, net interest income grew YoY by 5% from N225.18b to N214.63bn in 9M 2020.

However, the group’s net interest margin contracted by 40bps to 8% in 9M 2020 due to the declining yield environment, as well as regulatory headwinds (such as the discretionary CRR debits by the central bank).

Sustained growth in non-interest income anchored by trading income and FX revaluation gains

Non-interest income grew YoY by 11% from N156.76bn to N173.49bn in 9M 2020 driven by trading income and other operating income, which grew YoY by 34% and 53%, respectively. Trading income increased from N66.86bn to N89.82bn in 9M 2020 buoyed by gains from treasury bills trading.

The group’s treasury bills trading income increased YoY by 15% from N79.73bn to N91.52bn in 9M 2020 as the group took advantage of the declining yield environment to ride the yield curve.

Also, the significant growth in other operating income was informed by FX revaluation gains, which grew by 53% from N13.47bn to N20.57bn in 9M 2020 due to naira devaluation as the group had a net long exposure to USD.

Total operating expenses continued to rise due to inflationary pressure and FX rate movement

Total expenses increased YoY by 11% from N176.94bn to N196.28bn in 9M 2020 pressured by general price increases as well as movement in FX rate, which impacted foreign currency denominated expenses.

For instance, information technology expenses (FX denominated) significantly increase YoY by 104% from N7.29bn to N14.88bn in 9M 2020. Also, fuel and maintenance cost grew YoY by 48% from N8.26bn to N12.03bn in 9M 2020 due to adjustment in energy tariffs. And personnel cost also increased by 5% from N57.07bn to N59.93bn in 9M 2020.

As a result, Zenith Bank’s cost-to-income ratio increased to 53% in 9M 2020 from 50% in 9M 2019.

Consequent to the sharp increase in expense compared to income, PBT grew YoY at a slower pace of 1% from N176.18bn to N177.28bn in 9M 2020. Similarly, PAT rose by 6% from N150.72bn to N159.32bn in 9M 2020 due to a lower effective tax rate. Overall, the group’s ROE stood at 22% in 9M 2020 (9M 2019: 24%).

Historical Performance

Zenith Bank Plc - Resilient Earnings Profile Amid Macroeconomic Headwinds Brandspurng1
Source: Company accounts, WSTC Research

Recommendation

We note Zenith Bank’s attractive earnings profile, supported by a robust revenue base. While interest income came under pressure due to the low yield environment, non-interest income has continued to support topline growth.

As we advance, however, we expect a normalisation of trading gains as well as FX revaluation gains

(the key drivers of non-interest revenue). Nonetheless, we expect the group to leverage its low-cost deposits to deliver competitive pricing for its risk assets, thereby boosting net interest income. Also, we expect the recent securitisation of the group’s CRR debits by CBN to support margins.

Overall, we have a fair value estimate of N38.34k on the stock. At the current market price of N22.60k, the stock trades at a 70% discount to our fair value estimate. Thus, we uphold our buy recommendation.

Financial Statement Summary

Zenith Bank Plc - Resilient Earnings Profile Amid Macroeconomic Headwinds Brandspurng2
Source: Company accounts, WSTC Research estimate

Credit Creation Garners Pace in Q3 2020

United Capital Research
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Credit Creation Garners Pace in Q3 2020

According to the selected banking data released by the National Bureau of Statistics (NBS), the pace of credit creation garnered momentum in Q3 2020 as total credit to the economy grew by 5.6% q/q to N19.9tn in Q3 2020 from N18.8tn at the end of Q2 2020.

We recall that the pace of growth in credit creation slowed in Q2 2020 to 1.8% largely reflective of Covid-19pressures on banking operations as well as banks’ unwillingness to extend credit.

Credit creation garners pace in Q3 2020 Brandspurng
Sources: NSE, United Capital Research

However, with the gradual re-opening of the economy, banks appeared to be increasingly willing to create more credit in Q3 2020. We also note that the increase in loan creation may have been supported by a magnifying naira devaluation effect on USD denominated loans.

Furthermore, the amount of Non-Performing Loans (NPLs) declined 3.5% q/q to N1.2tn in Q3 2020 while NPL ratio declined 55bps to 5.9% in Q3 2020 despite the expanding loan book. We think the decline in NPLs is reflective of the headroom Deposit Money Banks (DMBs) have gotten from the CBN to restructure some non-performing loans by extending tenor in the face of pressures from Covid-19 on businesses.

In terms of loan exposure, DMBs remain hugely exposed to the Oil & Gas sector with loans to that sector printing at 25.8% of total credit as at Q3 2020 followed by Manufacturing at 15.3%.

We think the rate of growth in loan creation is considerably impressive particularly as part of an attempt to support growth in strategic sectors.

However, we remain concerned about macroeconomic fragilities as well as vulnerabilities of businesses to a hostile operating environment. Thus, we think the significant surge in credit creation over the past five quarters could lead to a subsequent build-up of NPLs.

Q3’20 GDP Numbers: Glimpse of Hope Amidst the Inevitable?

GTI
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Q3’20 GDP Numbers: Glimpse of Hope Amidst the Inevitable?

Official data published by the National Bureau of Statistics (NBS) last week shows that Nigeria has formally moved into a technical recession, following its second successive quarterly Gross Domestic Product (GDP) contraction of -3.63% in the third quarter (July to September) of 2020.

Recall that in Q2 (April – June) 2020, Nigeria’s GDP had earlier contracted by -6.10%, owing mainly to the negative spill-over effect of the Coronavirus pandemic on human health, global supply and demand value chain, and investment appetite.

The latest GDP figure came in slightly higher than our projected range of -2.8 to -3.5% for the period, against this backdrop, we have taken our time to analyse the Q3 GDP data to establish the dynamics of the GDP components in the period, vis-a-vis our expectation in Q4 and beyond.

Q3’20 GDP Numbers Brandspurng Glimpse of Hope Amidst the Inevitable

Oil & Non-Oil GDP: How the components fared

Nigeria’s GDP is mainly divided into two components – The Oil and Non-oil. The oil component of the GDP contracted -13.89% in Q3, and this is more than twice the size of the contraction recorded in Q2’20 (i.e. -6.63%).

The contraction of the oil GDP, on one hand, could be attributed to the reduced crude output by the country in the period as a result of the enforcement of the OPEC+ output quota of 1.40MBPD on Nigeria since the turn of Q3’20, as against its budgeted output size of 1.85MBPD for the period.

This, in addition to the low crude oil price in the global market (which averaged $39.20pbl in Q3), accounted for Nigeria’s low earnings from crude oil sales during the period.

Q3’20 GDP Numbers: Glimpse of Hope Amidst the Inevitable?

With the current move by the OPEC+ cartel to extend the output cut policy till the end of Q1’2021 and the expected improvement in the global demand for crude oil in the near term (buoyed by the progress recorded on COVID-19 vaccines), we expect Nigeria’s Oil GDP to improve and settle within the range of -4.8% to -6% in Q4’20, based on an estimated daily output of 1.40MBPD and per barrel price of $46/bl.

On the other hand, the Non-oil GDP which accounts for more than 91% of the total GDP size contracted by -2.51% in Q3’20, a significant improvement when compared to the -6.05% contraction reported in Q2’20.

This we believe was in reflection of the re-opening of more economic activities such as the commence of international flights, hotels and restaurants, schools, and religious centres in the period, in addition to some positive gains from the monetary and fiscal stimulus programmes such as the free CAC registration for 200,000 new MSMEs, and the N75bn SMEs Survival funds.

Disaggregated analysis of the Non-oil sectors

Despite re-opening of the entire economic activities since mid of August 2020 and the numerous stimulus packages announced by both the fiscal and monetary authorities, the recovery pace of most of the sectors that made up the Non-oil GDP came in disappointing in Q3’20.

Precisely, only Seven out of the Nineteen component sectors of the Non-oil GDP recorded positive growth in Q3; just one addition (Construction sector) to the Six that grew in Q2.

Besides, save for Water Supply, Sewage & Waste Management and Remediation sector (grew 7.10% vs 5.71%), Public Administration sector (3.58% vs 2.02%), and Human Health & Social Services sector (2.82% vs 1.89%) which grew faster than the performance in Q2’20, the remaining three sectors with positive growth, Agriculture sector (1.39% vs 1.58%), Information and Communication sector (14.56% vs 16.52%), and Financial & Insurance sector (3.21% vs 18.49%) grew at a weaker pace compared to Q2’20.

Leading indicator and expectation for Q4

Our expectation of the performance of the economy in Q4 remains modest. We expect the GDP to remain in the contraction region, albeit, more reduced than that of Q2 and Q3.

Specifically, we project a GDP contraction of about -1.75% in Q4, driven by improved fundamentals such as the positive spill-over-effect of the strong recovery of the equity market in October and November (up by 30.6%), the return of the Purchasing Managers’ Index (PMI) to expansion region in November after nine months, and stability of crude oil price above $40/bl in most of October and November.

However, downside risk factors such as the huge destruction and looting of properties by hoodlums who hijacked the End SARs protest in October, the weak purchasing power of consumer as a result of the sustained rise in the Inflation rate (especially Food price inflation), and exchange rate depreciation due to dollar scarcity, (we believe) will weigh on the recovery potential of the GDP in Q4’20 thereby keeping it in the contraction region.

PwC Holds Annual Walk for Charity; Donates N5m to 5 Selected Charities

Esan Bolaji
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PwC Holds Annual Walk for Charity; Donates N5m to 5 Selected Charities

12 December 2020: Staff and alumni of PricewaterhouseCoopers (PwC) Nigeria have held the fourth edition of their annual Walk for Charity on Saturday 12 December 2020. The walk tagged “5for5” covers five kilometres and is aimed at raising funds for five selected charities.

PwC Holds Annual Walk for Charity; Donates N5m to 5 Selected Charities Brandspurng

This year, however, due to COVID-19 and the restrictions to large gatherings, the Walk took a slightly different format with staff, partners and alumni of the firm walking in small groups around their own neighbourhoods.

In a statement released by the firm, ObiomaUbah, Partner and Corporate Responsibility leader noted that the annual walk is an initiative that gives the firm’s staff and alumni an opportunity to give back to the community while promoting healthy living lifestyle.

PwC Holds Annual Walk for Charity; Donates N5m to 5 Selected Charities Brandspurng

“This is one of the ways we are making a greater societal impact in line with our Africa societal purpose strategy.  This year the walk is happening simultaneously in small groups across the country, wherever our people reside because of the pandemic and shows our resilience and ability to find new ways of doing the things that really matter”

The charities who receive financial support of one million naira each are nominated and voted for by the staff and the funds are raised through voluntary donations by both staff and alumni of the firm.

PwC Holds Annual Walk for Charity; Donates N5m to 5 Selected Charities Brandspurng

The five beneficiaries for this year include Executives Helping Initiatives (Anti Suicide and Depression Squad), Lagos Food Bank Initiative, Mentally Aware Nigeria Initiative, Slum2School and Sponsor a Child through School.

In his comment during the presentation of cheques, UyiAkpata, Country Senior Partner, PwC Nigeria who was represented by Cyril Azobu, Advisory Leader PwC Nigeria, indicated that though it has been a challenging year, the firm has pushed on with the initiative in furtherance of her commitment to society.

PwC Holds Annual Walk for Charity; Donates N5m to 5 Selected Charities Brandspurng

He commended the partners, staff and alumni for their commitment to the initiative and assured of the firm’s resolve to continue making a difference in the society through the walk and other similar initiatives.

“It’s been a challenging year no doubt with COVID-19 disrupting our lives in ways we never previously imagined. As a business with a deliberate strategy of making a greater societal impact, earlier in the year, we launched an initiative tagged PwC Cares to support businesses, governments and individuals in responding to the impacts of the pandemic and build resilience.

Today’s walk and presentation of cheques to the charities is an extension of that commitment to society and an exhibition of our resolve to do this consistently into the near future.”

Representatives of the five charities expressed their appreciation to the firm for the donation, indicating that the support would go a long way in helping them achieve their various objectives.

Global Gaming PC Shipments to Jump by 25% and Hit 62 Million in 2024

Esan Bolaji
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Global Gaming PC Shipments to Jump by 25% and Hit 62 Million in 2024
As one of the few sectors that have been booming amid the coronavirus outbreak, the video games industry has witnessed a significant jump in gaming equipment sales this year. With millions of people spending more time indoors and online amid the COVID-19 pandemic, global gaming PC shipments are expected to hit almost 50 million in 2020.

According to data presented by Safe Betting Sites, the increasing trend is set to continue in the following years, with global gaming PC shipments rising by 25% to 62 million in 2024.

Global Gaming PC Shipments to Jump by 25% and Hit 62 Million in 2024 Brandspurng

Gaming Laptops to Hit 30.2 Million Sold Units in 2024, a 35% Jump in Four Years

Although the gaming PC industry witnessed supply chain issues in the first half of 2020, global shipments of gaming laptops, desktop PCs, and monitors are expected to jump 16.2% YoY to 49.6 million units in 2020, revealed the International Data Corporation (IDC) Worldwide Quarterly Gaming Tracker.

Statistics show that gaming notebooks represent the market’s largest segment, with 22.3 million sold units and a 44.9% market share in 2020. By 2024, this segment is expected to reach almost 50% market share and 30.2 million sold units globally, a 35% jump in four years.

Gaming desktop PCs are forecast to account for nearly 30% of shipments in the global gaming PC market this year, with 14.8 million sold units. Statistics show the market share of this segment is expected to drop to 25.5% in 2024, although shipments will rise to 15.8 million units.

Global gaming monitors sales are set to witness an almost 30% jump in this period, rising from 12.4 million sold units in 2020 to 16 million in 2024.

IDC predicts 2021 to witness a real surge in gaming PCs as new graphics processing units from Nvidia, AMD and Intel are expected to drive prices down and performance up.

Global Gaming PC Sales Revenue Jumped 60% in Five Years

Recent SafeBettingSites report also showed the global gaming PC sales revenue increased significantly over the years.

In 2015, the global gaming PC market hit $24.6bn in revenue. High-end PC sales accounted for 45% of that value, followed by mid-range and entry-level gaming PCs with 30% and 25% market share, respectively.

Over the next twelve months, this figure rose to $30.2bn and has continued growing ever since. Statistics show that global gaming PC sales revenue is expected to hit $39.2bn in 2020, a 60% jump in five years.

High-end gaming computers represent the largest revenue stream of the global gaming PC market, expected to generate $18.5bn profit or 47% of combined profits in 2020.

Mid-range gaming PC sales are forecast to reach 34% market share this year, a 4% increase since 2015, and make $13.4bn in revenue. Entry-level gaming computer sales are expected to generate $7.3bn in revenue this year.

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