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ThinkBusiness Today - August 4th

ThinkBusiness Today - August 4th

New UK Visa Centre in Portharcourt

Ogho Okiti
August 04, 2023

E kaaro o, Ututu Oma, Barka da Safiya - Good morning, and a warm welcome to ThinkBusiness Nigeria, your Monday – Friday dose of commentary, contexts, and insights on business and economic news that matter to you.

TGIF

After over 50 years, GlaxoSmithKline Consumer Nigeria Plc has announced it will leave Nigeria. Though this has been part of the plans of the company for few years, the decision has been made easy by weak operating environment – competition, worsening economic conditions, and reducing purchasing power.

It is another reminder that Nigeria currently experiencing a stampede out of the country. We have been here before in 1980s and 1990s. It takes courageous and skillful leadership to reverse the trend.

I hope Bola Ahmed Tinubu succeeds.

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Markets

The market sustained the positive sentiment on Thursday as the benchmark NGX All-Share Index (ASI) increased by 995.70 (1.55%) points to close at 65,263.06, representing a 1-week loss of 0.34%, a 4-week gain of 5.23%, and an overall year-to-date gain of 27.34%. Nigerian Breweries led gainers with 10% share price appreciation closing at NGN 41.80 per share, followed by PZ Cussons Nigeria (+10%), Sterling Bank (+10%) and Chellarams (+9.96%).
Oil prices rose over 2% on Thursday as Saudi Arabia and Russia took steps to keep supplies tight into September and possibly beyond. Brent futures rose US $1.94, or 2.3%, to settle at US $85.14 a barrel, while U.S. West Texas Intermediate crude rose US $2.06, or 2.6%, to settle at US $81.55.
At the I&E window, Naira depreciated by 4.71% to close at N776.5 against the US dollar. However, on the streets, Naira largely stayed flat at N865 against the US dollar.
US natural gas futures rose to over US $2.55/MMBtu, rebounding from the seven-week low of US $2.48 amid prospects of robust demand and evidence of lower supply.

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National Headlines

GlaxoSmithKline to close Nigeria operations – GlaxoSmithKline Consumer Nigeria Plc has announced plans to shut down its operations and appoint a third party for the distribution of its products in Nigeria. Operating in Nigeria since 1971, listed on the stock exchange since 1977 the company have Panadol, Augmentin, Otrivin, and Sensodyne as some of its pharmaceutical and healthcare products in the country. The share price is currently trading below N10 at about N8.10, down from the peak of over N40 in 2014, making capitalization of just under N10 billion. Besides competition, the close of GlaxoSmithKline in Nigeria also align with the company’s joint venture with Pfizer since 2019 forming two different companies of global pharmaceutical and vaccines, and a world leading healthcare company.
New UK Visa Centre in Portharcourt – The UK has announced a new visa centre in PortHarcourt, started operations yesterday. The PortHacourt addition means there are now four centres in Nigeria – Abuja, Lagos Ikeja, Lagos Victoria Island, and PortHarcourt. The Portharcourt centre will help alleviate the suffering of those that apply for UK visa in the South South and South East and costs of logistics and hotel accommodation for their biometric capture. It is symptomatic of the rising emigration demand in the country. Recently, Canada has extended invitation to skilled workers in the construction industry – carpenters, plumbers, and welders to support housing development in the country. Average house price has risen by 7% in Canada in 12 months.
Sukuk on the NGX and FMDQ – The Debt Management Office (DMO) has announced the listing of N130 billion sovereign sukuk on the Nigerian Exchange and FMDQ starting on August 8, 2023. The listing of this security follows the successful oversubscription of the N100 billion opened in November 2022.

Global Headlines

Is US Jobs Market weakening? – The number of Americans filing new claims for unemployment benefits rose slightly last week, but layoffs dropped to an 11-month low in July showing labor market conditions remain tight. Data also shows improvement in labour productivity. Combined with declining inflation rate, though above target, it leaves the US Fed a big decision to make in the remaining meetings of this year whether to raise rate once again. Current US fed rate is 5.25% - 5.50%.
Bank of England raised rates to 15 year high – As expected, the Bank of England raised its key interest rate by 25 basis points to a 15-year peak of 5.25% on Thursday. Though at different inflation cycles, this means that the Bank of England has followed the US Fed and the European Central Bank to raise rates by 25 basis points in their last meetings. Inflation remains elevated at 7.3% y/y, but has suggested its nearing the peak of its rate hikes.