EUR 118.14 For Business Accounts Only

Breakfast Report - 13th June 2016

• According to media reports, Nigeria’s non-oil revenue from FAAC and Value Added Tax in the first quarter of 2016 was N484.6 billion which comes in 43% below the N845.3 billion projected for the quarter in the 2016 budget. This significant discrepancy was credited to declines in VAT and Corporate tax amidst a highly challenging operating environment which has significantly hampered profitability of companies, thus reducing their tax yields. Additionally, with the 0.36% contraction in economic activity and 12.1% rise in unemployment recorded in the quarter, decline in both expenditure and consumption levels has played a significant role in the reduced collection of VAT. Amidst the large variance in actual and projected revenues, budget deficit is expected to widen further as the economic climate remains discouraging for businesses and tax payment defaults rise.

• Africa’s largest communication company, MTN Group, is set to list on the Nigeria Stock Exchange (NSE) following the company’s resolve to settle about one third of the $5.2 billion fine ($1.67billion) it was charged by the Nigerian Communications Commission (NCC) in October 2015. Whilst plans on listing the company have been on ground for a while now, MTN’s Executive Chairman in a statement on Friday ensured the listing would commence as soon as commercially and legally possible.
• The Nigerian equity market continued to trend lower this past week as investors remained wary of the extended delay to the proposed currency framework and weak outlook for the economy at large (World Bank cut its 2016 growth forecast for Nigeria to 0.8%, previous: 4.1%). The market declined 1.5% for the week; year to date return now stands at negative 4.9%.
• With overall market sentiment still appearing weak, we see chances of a bearish start to the week, ahead of the release of May inflation data forecast to reach 15%.