Why you need to plan your retirement ahead

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Retirement is a must for every individual irrespective of his or her work status as an employee or self-employed. As a matter of fact, working each day is a day closer to your retirement, no matter how far it may seem at present. Like the English saying ‘Failing to plan tantamount to planning to fail”,…

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Leveraging savings, investment instruments in financial market

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There are lots of savings and investment instruments in the Nigerian financial market that can enable prospective investors to fulfil their wealth creation and developmental goals. The investment products include the Federal Government of Nigeria Bond (FGN Bond), FGN Savings Bond (FGNSB), Nigerian Treasury Bills (NTBs), Commercial Papers (CPs), Mutual Funds, Real Estate Investment Trusts…

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Tax credit masks Seplat’s weak operating performance

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Earnings after tax surged by 59.0 percent Year-on-year to $32.7 million, largely due to a $13.3 million tax credit that masked significant weakness in core operating performance in the review period.

 

 

Revenue contracted by 11.7percent Year-on-year to $159.5 million, dragged by a 16.5percent Year-on-year decline in oil revenue which concealed the impact of price-induced increase in gas revenue (+5.6 percent Year-on-year).

We attribute the weakness in oil revenue to a 19.9percent Year-on-year decline in oil production to 21,885 barrels of oil per day (bopd) and a 6.2percent Year-on-year moderation in realised crude price to $61.7/bbl. In our view, the decline in oil production may be slightly connected to Nigeria’s compliance to the OPEC production cut deal, which, according to the Minister of State for Petroleum, was kick-started in February 2019.

We also believe that oil price is yet to fully recover from the impact of the supply glut that saw crude oil price crash by 38.0percent to $52.2/bbl between October and December 2018. This lack of full recovery likely explains the lower realised oil price reported in Seplat’s Q1 2019 numbers. Going forward, management is optimistic that on-going capital expenditure (Capex) on drilling, which was ramped up in H2’18, would have a positive impact on crude volumes and revenue in the second half of 2019.

Therefore, the company retains FY’19 guidance of $200 million in capex, between 24,000 to 27,000 bopd in liquid production, and 146 to 164 Million standard cubic feet per day in gas production

 

EBITDA margin plunged to 35.1 percent in Q1’19 from 64.5 percent in Q1’18, predominantly due to $15.8 million overlift revaluation loss (vs. $8.6 million underlift revaluation gain in Q1’18), $7.0 million unrealized loss on derivatives (vs. nil in Q1’18), and $5.2 million cost of … Read More...

Structural Challenges will limit Impact of Higher Minimum Wage

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On 18 April, President Muhammadu Buhari signed into law the Minimum Wage Repeal and Re-Enactment Act 2019, which prescribes an upward adjustment in national minimum wage to N30,000/month (US$83.3)from N18,000 (US$50.0).

The 67 percent increase in minimum wage follows months of agitation by the labour union which, in our view, is not misplaced, considering the purchasing power of the previous minimum wage more than halved between 2011 and 2018.

Nigeria’s labour productivity barely grew within the period, with data from the National Bureau of Statistics (NBS) showing per unit labour productivity (real output of employed population per hour) grew in real terms at a rather underwhelming Compound annual growth rate of 1.2 percent between 2011 and 2016.

However, our analysis reveals labour unit cost (real compensation of employed population per hour) fell at an annual rate of 4.2 percent within the same period. This implies that unit labour cost has not kept up with the modest growth in productivity since the previous minimum wage was passed in 2011.

 

Impact on medium term growth limited by slack labour market and weak fiscal revenues

Although we expect the increase in minimum wage to have a positive knock-on impact on consumption expenditure-which has stagnated in recent years -the policy falls short of deeper fiscal and economic reforms required to lift medium growth outlook above 3 percent level.

Our conclusion rests on two arguments. First, the capacity of the Federal Government (FG) and sub-nationals to fund higher personnel costs without reducing public investment in human and physical capital is limited.

This is against the backdrop of unresolved revenue challenges, reflected in limited fiscal space to raise aggregate expenditure or significantly increase deficit spending. Secondly, the private sector will struggle to implement the new minimum wage in the interim, … Read More...