Company Intelligence Report
PRES / INSIGHTS & ANALYSIS REPORT
FOR
WEEK 1: 14th – 19th of January, 2018
1
EXECUTIVE SUMMARY
The most significant development in the political space, during the week, was the threat made by the Niger Delta
Avengers (NDA) to restart its attacks on oil installations across Nigeria’s oil rich region. Meanwhile, on the
regulatory side, the National Food and Drugs Administration and Control (NAFDAC) and Standards Organization of
Nigeria (SON) agencies have intensified their partnership in the fight against substandard products. In terms of the
economy, the National Bureau of Statistics (NBS) released its monthly inflationary trend report which indicated
that inflation for December 2017 was at 15.37%. Lastly, the Ministry for the Federal Capital Territory (FCT) has
stated plans to host (in 2018) a conference focusing on evaluating the implementation of the Abuja master plan.
POLITICAL DEVELOPMENTS
Stakeholder
Development
Analysis and Recommendations
th
Niger Delta
Lagos State
National
Assembly
On January 17 , 2018 the Niger Delta Avengers
(NDA) militant group in a press statement called for
Nigeria’s restructuring. As part of the group’s
demands, the government is expected to transfer
ownership of Nigeria’s oil resources to the NigerDelta people as well as free all its detained
members. NDA threatened to resume its attacks on
oil installation in the region if its demands are not
met. Click to view
Lagos State’s Governor, Akinwunmi Ambode,
recently approved the appointment of Idowu
Ajanaku as his Special Adviser on Information and
Strategy. Mr. Ajanaku is a journalist and political
strategist who once served as Senior Special
Assistant to the Governor on Media and Strategy.
Click to view
The House of Representatives, this week, passed
the Petroleum Industry Governance Bill (PIGB) to
provide a modified legislative framework for the oil
and gas sector. The bill, passed by the Senate in
May 2017 (but yet to be approved by the
President), is expected to unbundle the Nigerian
National Petroleum Corporation (NNPC) and
establish the Nigeria Petroleum Regulatory
Commission (NPRC). The Department of Petroleum
Resources (DPR) and Petroleum Products Pricing
Regulatory Agency (PPPRA) will replaced by NPRC.
Click to view
2
A resurgence of militancy may lead to a reduction in oil
output and further instability in the region. Both
expected results have negative implications for NBC and
Coca Cola Nigeria in terms of their investment plans for
the Niger Delta and their access to FOREX which is
dependent on Nigeria’s petroleum sales .
Mr. Ajanaku should be targeted as a key stakeholder for
engagement, in the near term, in order for NBC to gain
in-depth insights on issues that are of immediate
interest to the State Government.
Although this political development has no direct
implications for NBC, its impact on the oil and gas sector
(which accounts for 75% to 90% of Nigeria’s public
revenue) will trickle down to other sectors that are
highly dependent on energy for their business activities.
REGULATORY DEVELOPMENTS
Stakeholder
Regulators
(NAFDAC and
SON)
Development
Analysis and Recommendations
During a courtesy visit made by the NAFDAC
Director General (Professor Moji Christiana
Adeyeye) to the SON Director General (Osita
Aboloma) it was disclosed that both organizations
intend to intensify their partnership in the fight
against substandard products in Nigeria. Click to
view
Based on their overlapping functions, NBC can engage
both regulators simultaneously during the World Health
Day (April 2018) to indicate its support for commodity
standardization which has positive implications in terms
of health.
ECONOMIC DEVELOPMENTS
Stakeholder
NBS
Kano State
Lagos State
Multilaterals
Development
Analysis and Recommendations
After 11 months of a continued fall in Nigeria’s
Consumer Price Index (CPI), the NBS has released
the December 2017 CPI Report which shows
inflation rate dropped by 0.53 percentage points to
15.37% by 2017 year end. Click to view
This positive development can be attributed to the
Central Bank of Nigeria’s (CBN) decision to keep
Monetary Policy Rates (MPR) at 14% since July 2016, as
well as adopt alternative fiscal policies aimed at aligning
exchange rates in both the parallel and official markets.
Despite this progress, some analysts have predicted that
with the coming of the 2019 election there will be an
increase in inflation. This has two-sided implications for
NBC, as the firm’s revenue may go up due to increased
purchasing power amongst consumers (if wages
experience a simultaneous increase to inflation), while it
could lead to an increase in fixed costs incurred on
energy and logistics.
NBC is advised to align its investment strategy for Kano
with the focus areas under the state’s 2018 budget, as
this is the most efficient means of engaging any State
Government.
The Kano House of Assembly passed into law the
state's 2018 budget of over N246 billion; 5.6%
higher than Governor Abdullahi Umar Ganduje's
proposition of N233 billion. According to a member
of the House Committee on Appropriations, Tasiu
Panisau, some of the key areas the increase will be
allocated to include education, health, information,
agriculture, works / water resources and rural
development. Click to view
The state's Commissioner for Tourism, Arts and
Culture, Steve Ayorinde, upon assumption of his
new position has stated Lagos State's keenness to
market its tourism features to the rest of the
world. The Commissioner also disclosed that in
2018 the Lagos economy will be largely driven by
its tourism sector. Click to view
Similar to the International Monetary Fund’s (IMF)
estimates, the African Development Bank (AfDB)
recently forecasted that Nigeria will grow by 2.1%
in 2018; which is lower than the 2.2% projection
for 2017. The forecast was made in the African
Economic Outlook 2018, and it is based on higher
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Governor Ambode’s interest in tourism and
entertainment aligns with NBC’s youth empowerment
goals. Thus far in his administration, the Governor has
invested significantly in events such AFRIMA and the
Lagos @ 50; which proves his interest in the
aforementioned industries.
Nigeria’s positive growth forecast, from the AfDB, is an
indication that the economy’s recovery (despite being
slow) can be sustained into the long-term; while having
positive impacts on consumer spending and ultimately
NBC’s revenue.
Oil and Gas
Infrastructure
oil prices and output, as well as stronger
agricultural performance. However, AfDB has also
indicated that Nigeria may still face significant
challenges that include foreign exchange
shortages, fuel supply disruptions, power
shortages, and insecurity in some parts of the
country. Click to view
The price of crude oil hovered over US$70 per
barrel at the start of the week meanwhile the CBN
indicated last week that the economy’s foreign
reserves are over US$39 billion; after witnessing an
increase
for
three
consecutive
months.
Furthermore, the Ministry of Petroleum stated oil
production increased from 1.93 million barrels in
September to 2.057 million barrels at the 2017
year end. Click to view stories – Punch; Guardian;
and Reuters
The Federal Ministry of Power, Works and Housing
has disclosed (through its Director of Highways,
Planning and Development, Chukwunwike Uzo)
that the government will fund specific segments of
25 road projects across the country with proceeds
from the N100 billion Sukuk bond issued in 2017.
Across the 6 geo-political zones, the North-central
and South-south zones should account for the
highest number of all segments of the road
projects while the South-west has the lowest
number of the segments. Click to view stories –
Herald and Premium Times
Simultaneous increases in global oil prices, local oil
output and foreign reserves all have positive implications
for manufacturing firms (such as NBC) which require
adequate access to dollars for importation of some
production input. This is proven by the CBN’s ability to
recently inject US$100 million into the interbank foreign
exchange market for use by just wholesale businesses
which include NBC.
Adequate public investments made in transport
infrastructure will definitely reduce NBC’s costs incurred
on vehicle maintenance. However, NBC is advised to
focus its planned logistic investments on the Northcentral and South-south regions, based on the significant
road project allocations targeted by the government
towards both regions.
SOCIAL DEVELOPMENTS
Stakeholder
FCT
FCT
Development
Analysis and Recommendations
According to the FCT Ministry, the Federal Capital
Territory Administration will host a stakeholders’
conference aimed at discussing issues experienced,
thus far, in the implementation of the FCT master
plan. The conference themed “Repositioning Abuja
for the Development of a Sustainable City” is set to
hold during the first half of 2018. Click to view
The Nigerian Super Eagles, during the forerunning
phase of the 2018 World Cup, will play the Federal
th
Republic of Congo’s team in Abuja on May 28 .
Click to view
NBC is advised to actively participate in this event in
order to begin building the desired relationship it seeks
to have with the FCT Ministry, and ultimately the
Presidency.
4
While the Nigerian Football Federation (NFF) and CocaCola Nigeria Limited recently established a partnership
that makes the beverage the official soft drink and cosponsor of the national soccer team, NBC can leverage
on this envisaged match in Abuja for further positioning.