Access Bank: A Loss and Life After
Access Corporation, one of Nigeria's largest banks, experienced a significant loss last Friday. This was the unexpected passing of its co-founder and CEO, Herbert Wigwe. Along with his wife and son, Wigwe died in a California helicopter crash on February 9th, 2024.
The crash also claimed the life of Abimbola Ogunbanjo, the former group chairman of Nigerian Exchange Group Plc., who was with the Wigwes in the ill-fated aircraft.
After this tragic event, the company's share price fell by 6.3% from N24.75 on Friday, February 9, to N23.20 on Monday, February 12.
Thankfully, the bank’s market performance began recovery as soon as the announcement of the new Acting CEO, Ms Bolaji Agbede that same day.
By Tuesday, Access's share price rose by 0.43% increasing to N23.30. The next day, Wednesday, the share price rose further by 1.55% to N23.60.
The public's reaction has been a mixture of sorrow and worry. In addition to being a well-liked CEO, Herbert Wigwe was credited with spearheading Access Corporation's strategic efforts.
From November 14, 2023, to February 13, 2024, Access Corporation ranked as the fourth most traded stock on the Nigerian stock exchange. The company exchanged 1.97 billion shares in 32,403 trades, valued at NGN 47.5 billion, averaging 31.2 million shares traded daily.
Notably, the volume reached a high of 117 million on January 10th and a low of 6.07 million on February 13th.
Life After: Lessons from Apple Inc.
The passing of Steve Jobs, an innovative leader who played a crucial role in Apple's success, raised concerns about the company's future direction.
Following his death, Apple's stock experienced a brief drop before rebounding under the leadership of Tim Cook, who was appointed CEO.
Apple's recovery offers valuable lessons for leadership transitions, emphasising the importance of effective succession planning, continuity of vision, strong organisational culture, transparent communication, adaptability to markets, customer loyalty, focus on long-term value, innovation, resilient stock performance, and global brand strength.
As demonstrated by Apple Inc., a CEO's exit can have a significant impact on a company's stock price, and investors may respond cautiously if they are uncertain about the leadership vaccum or the company's strategic direction.
Moving on from the tragic loss, "Access Corporations named executive director Bolaji Agbede as the company's temporary CEO two days after Herbert Wigwe passed away.
The restoration of investor trust is contingent upon the new CEO's capacity to sustain or improve operational performance.
Transparency and good communication are very important and have a beneficial impact on market perception, while prompt and well-received succession planning can minimise negative repercussions.
In the wake of this tragic loss, Access Corporation, its investors, and the Nigerian stock market face a challenging period of loss and adjustment.
The coming days will show how well the company navigates this unfortunate turn of events and its resilience in the face of adversity.
Nigerian Stocks: Profit after Loss
In stark contrast to the unprofitable 2023, January 2024 witnessed a remarkable turnaround in the Nigerian stock market, surpassing previous trade records.
Despite being the fourth least profitable exchange globally in 2023, with a 41% loss, the market experienced a substantial upswing in January 2024.
The market witnessed a significant upswing, with the All-Share Index surging by 35% to exceed 100,000 points and has continued to rise. The market capitalisation also rose by N14.440 trillion, reaching N55.358 trillion by January 31, 2024.
This promising start to the year suggests that the Nigerian stock market may be on the path to recovery.
Further analysis of the stock market activity in January 2024 shows that the All-Share Index increased by 35% from its opening value of 74,773.77 points to 101,154.46 basis points on January 31, 2024
The Nigerian Exchange saw a significant percentage shift of a loss of -41.80% in December of 2023 compared to the same month the previous year, placing it as the fourth least profitable stock exchange operator in the world.
Nigeria's underperformance reflects a difficult environment for investors, placing it with other faltering markets including the Nairobi Securities Exchange, MERJ Exchange Limited, and the Bulgarian Stock Exchange.
With a profit of 3,770% in 2023, Kazakhstan's Astana International Exchange emerged as the most profitable stock exchange operator. Following suit are the stock exchanges in the Budapest, Bucharest, Cyprus, and Armenia, which rank among the top five stock market operators in terms of profit in 2023.
Top performers in January 2024 included Dangote Cement, gaining 139%, and BUA Cement with a 90.7% surge. Wema Bank, Japaul Gold, Universal Insurance, Transcorp Hotels, BUA Foods, Geregu Power, and Unity Bank also contributed to a vibrant market, reflecting positive investor sentiment and potential economic growth.
Despite challenges like rising inflation and currency market instability, Nigeria's stock market thrived, buoyed by stable investor confidence. Strong earnings, particularly from banks, and reduced reliance on foreign involvement contributed to the market's resilience.
Expected policies attracting foreign investment and fund manager portfolio rebalancing further boosted confidence.
The market's dynamics were driven by various sectors like industrial products, utilities, consumer goods, conglomerates, construction/real estate, oil and gas, ICT, investments, financial services, healthcare, and natural resources.
Nigeria's stock market thrived despite challenges like rising inflation and currency market instability, thanks to stable investor confidence.
The market's resilience was further supported by strong earnings, particularly from banks, and reduced reliance on foreign involvement. Confidence was further boosted by expected policies aimed at attracting foreign investment and fund manager portfolio rebalancing.
According to a report by Nairametrics, analysts predict continuous improvement in 2024, driven by potential listings, public offerings, and positive economic policies.
Bitcoin Bounces Back
The price of Bitcoin has increased to $48,189 as of 12 February 2024, the highest since it experienced a dip in April 2022.
Bitcoin's resilience is mirrored by the global adoption of cryptocurrencies. Nigeria ranks fourth in cryptocurrency ownership globally and boasts over 22 million users, constituting 9.5% of the country's population.
In 2023, the nation engaged in bitcoin transactions, sending $151.12 million and receiving $109.05 million, with a 5.23% ownership stake.
The market's strength defied expert predictions of Bitcoin prices ranging from $10,000 to $28,000 in 2022 and beyond.
Bitcoin's actual performance in 2024 has surpassed these forecasts. As the digital currency landscape evolves, investors and enthusiasts are left to speculate on Bitcoin's future and its impact on the broader cryptocurrency ecosystem.
Import Duty: Nine Steps High
The Central Bank of Nigeria recently increased the import customs duty rate from N1,444.56 per dollar to N1,481.482 per dollar.
This increase is the fifth review since the beginning of 2024 and the ninth review since the beginning of President Bola Tinubu’s administration.
Import tariffs are benchmarked against the dollar, and maritime experts have contended that Nigerians will pay extra to clear their goods at the port as a result of the upward reassessment.
Nine revisions to the customs import duty rate since the beginning of the Tinubu administration demonstrate how frequently the country's currency value is changing due to exchange rate fluctuations and governmental responses.
The dollar tariff was reviewed nine times from the initial N422.30 per dollar before the Tinubu administration to N1481.482 as of Feb 14, 2024.
A maritime business expert, Dr Muda Yusuf, in an interview with Leadership Newspapers, maintained that "The currency rate presents enough of a challenge. We are currently bearing an additional cost due to the import duty hike because it is essentially a general increase in import duties of perhaps another 15% or more.”
Raising import duties is a multifaceted economic policy tool, with benefits and drawbacks depending on specific contexts and government objectives. This approach encompasses both advantages and disadvantages.
Firstly, higher import duties act as a shield, safeguarding domestic industries from foreign competition by elevating the cost of imported goods.
Secondly, increased import duties contribute significantly to government revenue. These additional funds can be strategically allocated to public infrastructure projects, social programs, and deficit reduction, thereby promoting overall economic growth and stability.
Thirdly, a rise in import duties can positively impact a country's balance of payments by potentially reducing imports.
Furthermore, higher import duties incentivise consumers to opt for locally produced alternatives by making imported goods comparatively expensive.
This encouragement of domestic consumption stimulates local production, fosters employment opportunities, and contributes to overall economic growth.
Importantly, increasing import duties aids in controlling inflation by reducing consumer demand for imported goods. This proves particularly useful in addressing inflationary pressures within a country.
However, where a country lacks the industrial capacity to produce alternatives to the imported materials, higher import duties would only result in increased prices of the imported goods.
This directly impacts consumers who have no local substitute for the imported goods. It reduces their purchasing power.
Thanks for Reading this edition of Marina and Maitama. See you next week!
This edition of Marina and Maitama was composed by Khadijat Kareem.