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Brent Advances 11.82% w/w Amidst OPEC+ Cuts

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By VETIVA

What shaped the past week?

Global: – It was a mixed week for global markets, as investor optimism over a potential coronavirus vaccine from drug markers Moderna and AstraZeneca, as well as the easing of the lockdown in the U.S., drove global markets higher. Moderna Inc. announced on Monday, that it is in the early-stage trials of a vaccine development, adding that they expect to begin the final testing stage in July. Meanwhile, U.K. based AstraZeneca announced on Thursday, that it secured its first agreements for 400 million doses of a COVID-19 vaccine it is testing, bolstered by a >$1 billion investment from the U.S. Biomedical Advanced Research and Development Authority vaccine agency. The drug-maker expects to produce and deliver the vaccine, starting fall 2020. Furthermore, White House economic advisor Kevin Hassett, stated that he expects “pretty strong” second half of the year, as U.S. President Donald Trump signed an executive order to help the country’s labor market curb the coronavirus impact and ensure job growth. On the European front, The European Commission and the European Council agreed on a €100 billion unemployment fund, as nations in the region started reopening as well. Retail sales in the U.K. for April plunged 18.1%, as the virus induced lockdown weighed on consumer activity in the period. In addition, employment numbers revealed a 70% increase in unemployment claims by U.K. workers, while construction activity in the Eurozone, plunged 14% in March, driven by a downturn in manufacturing activity in Germany. On the Asian front, Japan announced that it will be lifting the state of emergency in Osaka, Kyoto and Hyogo on Thursday. Meanwhile, the People’s Bank of China (PBOC) held interest rates unchanged at 3.85%, as investors remained focused on the ongoing dispute between the U.S. and China, over how the latter handled the outbreak.

Domestic Economy: With the coronavirus disrupting global trade and economic activity, oil demand fell to its lowest level in 21 years. Crude prices are down 60% y/y, as nations around the world imposed mobility restrictions to contain the spread of COVID-19. Nigeria, whose economy is largely tied to developments in the oil space, saw its Q1’20 oil revenue fall short of target by 11.77% to ₦940.91 billion. This was because the nation slashed prices on its benchmark Bonny Light crude grade, as it struggled to find off takers. The Finance Minister, Zainab Ahmed, who briefed reporters yesterday, highlighted that the shortfall in oil revenue could hinder the nation’s ability to fund critical infrastructure development projects. She also added that a slowdown in economic activity could result in a spike in unemployment, exasperating poverty levels, as the economy could contract by as much as 8.94% without a fiscal stimulus package. However, the National Economic Council (NEC) is working on implementing measures aimed at cushioning the impact of the downturn on the economy. In addition, a rebound in oil prices is expected in the second half of the year, as demand picks up with a gradual re-opening of economies. This should support a moderate recovery in economic growth in Q3’2020, and filter into Q4’2020.

Equities: The bulls dominated trading activity in the equities space this week, as a moderate recovery in oil prices helped improve sentiment in the market. The ASI gained 559bps w/w, driven by gains recorded in the Banking (+724bps w/w) and Industrial goods (+15.45% w/w) sectors. In the banking space, gainers were led by tier-one lenders, ZENITHBANK (+971bps w/w) and UBA (+880bps w/w), while BUACEMENT (+23.42% w/w) led all gainers in the Industrial Goods space. A surge in UNILEVER (+29.53% w/w), saw the Consumer Goods (+89bps w/w) sector close in the green, while gains recorded in MOBIL (+20.92% w/w) also pushed the Oil & Gas index over the green line. Outside of the major indices, the performance of the market was further aided by an uptick in MTNN this week (+502bps w/w). For the week, volume and value trade improved 86.05% and 93.00% respectively.

Fixed Income: On Wednesday, the Debt Management Office (DMO), conducted a bond auction where it offered ₦60 billion and sold ₦296 billion across the three maturities at stop rates of 9.20%, 11.70% and 12.60% Meanwhile, trading activity in the secondary market remained mixed this week, as market participants continue to patronize OMO notes in lieu of alternative investment opportunities. In the OMO space, average yield eased 255bps w/w driven by buying interest at the mid-long end of the curve. On the other hand, a moderate recovery in crude prices was enough to spark increased interest in the bond space, where the average yield on benchmark bonds eased 18bps w/w. Furthermore, despite the low yield environment persisting in the NTB space, trading activity was positive this week, as yields moderated 13bps on average.

Currency: The Naira appreciated ₦0.39 w/w at the I&E FX Window to settle at ₦385.94 and depreciated ₦10.00 w/w to close at ₦455.00 against the dollar in the parallel market.

What will shape markets in the coming week?
Equity market: Just as expected, we saw a mixed trading session on Friday, as investors continued to take advantage of some cheap counters while taking profit on some other tickers that has gained substantially in recent times. However, taking a cue from the improving events in the global space as well as the positive market breadth posted (1.80x), we expect the market to continue on its upward trend (though at a slower rate) upon resumption from the holiday on Wednesday.
Fixed Income market: We expect sentiment in the crude space, to turn bearish this week, following China’s plan to not issue a guidance on its GDP target for 2020 as it battles the economic shocks of the pandemic. As such, we expect to see limited interest in the bond space. However, the level of system liquidity and incoming maturities will continue to support buy-side activity in the OMO space.
Currency: We expect the naira to remain largely stable across the various windows of the currency space as the CBN maintains interventions in the FX market.

Focus for the week
April 2020 Inflation – Inflation accelerates amid pandemic risk, Ramadan arrival

In the latest report from the National Bureau of Statistics (NBS), the overall consumer price index – a measure of the average change in prices over time of goods and services purchased by consumers – was up 12.34% y/y in Apr’20 from 12.26% y/y in Mar’20. Retail inflation inched higher on the back of a faster rise in both food and core prices. Annual food inflation accelerated to 15.03% y/y in Apr’20 (Mar’20: 14.98% y/y) while core inflation printed at 9.98% y/y (Mar’20: 9.73% y/y). Prices of food items like bread, fish, tubers, vegetables & fruits and bread & cereals were the main drivers of inflation in Apr’20.

COVID-19 price premiums inflate core prices y/y
Save for the Housing, water, electricity, gas and other fuel sub-index, all the other sub-indices recorded a faster rise in prices compared to Mar’20. However, core prices rose y/y at a faster pace (+25bps) than food prices (5bps). This was due to a faster rise in prices in some COVID-19 prone sectors (health, transport and restaurant & hotels) compared to food prices. The faster rise in prices in the vulnerable sectors reflects price premiums for services, amid steady demand, due to increased risk associated with rendering those services. Specifically, we note that the prices of health and transport services rose 23bps and 22bps m/m respectively in Apr’20.

Ramadan arrival, lockdown pressure m/m food inflation
On a monthly basis, inflation rose by 18bps to 1.02% m/m (Vetiva estimate: 0.82% m/m) on a faster rise in food prices – compared to core prices. Food inflation rose by 24bps to 1.18% m/m (Mar’20: 0.94% m/m) as the demand for essential food products increased with the arrival of Ramadan. Across sub-nationals, states that implemented some form of mobility restriction (including Lagos, Kaduna, Akwa Ibom and Ondo) early in the month recorded steeper rises in food inflation – above the national average-, reflecting disruption to food supply chains and its attendant impact on food prices.

Inflationary pressures mount on supply disruptions
In the current month, we expect the headline inflation to print at 12.43% y/y, due to an anticipated rise in both food and core inflation. We expect food inflation to rise further to 15.09% y/y, as mobility restrictions persisted in May with more states involved from the start of the month. We also expect core inflation to inch higher to 10.07% y/y, as we anticipate that the pressure on transport and health service prices will persist through the month. In 2020, we expect the average inflation to inch higher to 11.86% y/y (2019: 11.39% y/y), on the back of a faster rise in both food and core prices. This is stronger than our previous estimate of 11.44%, as inflationary pressures continue to mount on pandemic-induced supply disruptions and impending price increases. We expect food inflation to come in higher at 14.10% y/y (2019: 13.73% y/y) as mobility restrictions – aimed at containing the spread of the virus – continue to disrupt food distribution, resulting in artificial scarcity and pressuring food prices. Also, we expect core inflation to average 9.86% y/y in 2020, higher than 9.16% y/y recorded in 2019. Core price pressures could stem from the continued pressure on health and transport service prices, as the local outbreak persists. Also, a much stronger recovery in oil prices could prompt an upward review of the pump price of Premium Motor Spirit (PMS), contributing to inflationary pressure across a number of other sectors. There are also indications that electricity subsidy will be removed by Jul’20, further adding to our expectation of accelerating core inflation in 2020. Taking the build-up in inflationary pressure into consideration, we expect the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) to maintain its current monetary policy stance, amid a rise in external and fiscal risks. A rate cut could be counterproductive for inflation, amid a souring economic outlook, while a hike could undermine ongoing efforts to stimulate growth. We believe the CBN will be more focused on the transmission of its unconventional policies to the economy, rather than taking action.
Whilst reasonable care has been taken in preparing this document to ensure the accuracy of facts stated herein and that the ratings, forecasts, estimates and opinions also contained herein are objective, reasonable and fair, no responsibility or liability is accepted either by Vetiva Capital Management Limited or any of its employees for any error of fact or opinion expressed herein.

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Airtel Performs Groundbreaking Ceremony for its NXTRA Data Centre, Promises 1000 Jobs

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By Eric Elezuo

Prominent Nigerians were present as network communications service provider, Airtel Africa, performed the ground-breaking ceremony for the establishment of its NXTRA data centre project in Nigeria, at the prestigious Eko Atlantic City, in Victoria Island, Lagos, informing that the project is programmed to create over 1000 jobs for Nigerians.

The company noted that the facility, nicknamed the Nitra frontier, and reported as the first of five hyperscale data centres to be developed by Airtel Africa on the continent, will deliver 38 megawatts of total power and host high-density racks that integrate the latest best practice construction to achieve 1.3 power usage effectiveness (PUE).

It was also revealed that the data centres at full capacity will offer 180-megawatt capacity, distributed across 13 major data centres, and over 48 edge data centres.

Speaking at the event, the Group Chief Executive Officer of the Airtel, Segun Ogunsanya, who informed that the project is expected to go live by the first quarter of 2026, further stated that out of the 1000 jobs expectedto be created, 250 will be permanent once the project is deployed and at capacity.

He praised the project as marking a significant milestone in the company’s journey and is a cornerstone of the organization’s growth strategy, with a particular focus on Nigeria, which unarguably is its largest market.

He added that the project will enhance data sovereignty, security, and preservation within the continent, as well as reflect the group’s commitment to make Nigeria a major hub for access to digital services as it propel Africa towards a sustainable and inclusive digital age.

“This mega project will provide over 1000 jobs. More significantly, once deployed and at capacity, it will create over 250 permanent jobs for Nigerians whilst supporting companies in manufacturing, financial services, and health care as they move their data and computing into third-party data centers like ours.

“Ultimately, we have to store data and content closer to where it is being consumed,” Ogunsanya said.
Boost for digital economy

Ogunsanya was also of the opinion that with Airtel Africa’s extensive fibre footprint, NXTRA “offers secure and scalable integrated solutions to global hyper-scalers, large African enterprises, startups, SMEs and governments.

“Through locally available data centre capacity, speed to access digital services will improve and the cost of managing data will be reduced, thus helping power increased innovation, while supporting a new generation of African tech talent,” he said.

In his remarks at the event, that also has the governor of Lagos State, Babajide Sanwo-Olu, in attendance, the Minister of Communications, Innovation and Digital Economy, Dr Bosun Tijani laud the creativity attached the innovation, saying it is in tandem with technology revolution that is fast engulfing the universe, with Artificial Intelligence (AI) as a main point of reference.

“Data is a key driver in our economy. Not only do we need to connect our people, we also must invest in the digital economy, and through the investment that companies like Airtel have made in our economy, we are fully able to participate in the digital economy,” he said.

Other personalities that graced that event include traditional rulers and stakeholders in the telecoms sector.

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Customers Applaud As Glo MoneyMaster PSB Mobile App Enhances Banking Experience

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The mobile banking app recently launched by MoneyMaster Payment Service Bank Limited (MMPSB), Nigeria’s leading payment service bank, has been enriching the banking experience of the bank’s customers.

The app, which was unveiled by MMPSB for the convenience of its existing and new customers provides a seamless banking experience to its customers thereby reaffirming the bank’s commitment to deliver faster and secure banking services to its growing customer base.

Apart from allowing customers to perform many services without stress from their comfort zone, the mobile banking app has a robust suite of functionalities. Customers using Android phones can download the mobile banking app from the Google Play Store, while iPhone users can also download from the Apple App Store.

The mobile banking app enables MMPSB customers to manage multiple accounts. Wallets, savings, and current accounts can all be managed from the mobile banking app. Customers can also upgrade the KYC (Know Your Customer) requirements for higher transaction limits and open additional accounts via the app. It is an invaluable tool for all existing and potential mobile wallet, savings, and current account holders of MoneyMaster PSB.

The mobile banking app is also fast and secure for all intra-bank and interbank transactions and allows customers to set transaction limits, manage beneficiaries, view transaction history, and download and share transaction receipts, among other exciting features. They can also request their account statement and receive it via e-mail.

It also features both biometric and password authorization to login and authorize transactions and allows customers to also buy airtime recharge and data bundles from all networks directly for themselves and others via the app. In addition, customers can pay for their DSTV and GOTV subscriptions, buy electricity units from all major DisCos and pay utility bills from the app.

Customers of the bank have also attested to the robust nature of the app. Some of them who commented on the effectiveness of the app include Uche Nwoye who said, “It has not been long that I downloaded the app, but from all indications, the features and design are easy to navigate.”

Also Henry Omosimua describes it as a “nicely built app. The UI is good and smooth. Kudos to Moneymaster PSB. It would be nice to add app notification for incoming and outgoing transactions”, he noted.

For Agunbiade Abiola, “this app is the definition of evolution”, while Michael Sanamo said the app is “fast in carrying out transactions.”

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Globacom Targets SMEs’ Growth with Launch of “Glo Outsource Pro”

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Leading telecommunications company, Globacom, has launched an outsourcing product aimed at helping small and medium scale companies as well as corporate organisations focus on their core operations thereby enhancing their productivity.
The company explained in a press statement that the service tagged “Glo Outsource Pro”, is a strategic business solution that aids companies and businesses to outsource some of their non-core operations.
Such businesses including banking, energy, oil and gas, FMCG, manufacturing, distribution, utility, internet service providers (ISPs), logistics companies, MSME, etc. will be able to  focus on their core competencies, leading to improved efficiency, cost savings, and enhanced customer experiences.
“Glo Outsource Pro enables companies to delegate specific operational activities, such as customer support, finance and accounting, IT services, human resources, and supply chain management to Globacom which leverages its expertise, technology, and economies of scale to optimize processes and deliver high-quality results that will impact positively on their operations”, the telecommunications giant said.
The company added that “with Glo Outsource Pro, organizations are able to contract out their inbound and outbound call centre activities, inbound technical helpdesk, social media management, data mining for planning purposes and general back office support. It will also help them in the areas of teleprospecting, customer campaigns/onboarding, retention campaigns, collections, sales campaigns, etc”.
It also confirmed that the service will assist companies to maximize cost-effectiveness, boost productivity, and improve effectiveness in the marketplace by helping them look after some non-core sections of their businesses so they can focus on their core activities.
The new business management proposition is meant to further boost Globacom’s image as the ultimate value and innovative solutions provider for businesses at varying levels while unlocking their full potentials as well as enabling cost savings, operational excellence and unmatched customer satisfaction.
Aside from these, “Glo Outsource Pro” will equally enhance technology upgrade, competitive advantage and improved effectiveness in the marketplace.

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