Competition gradually blighting the Food business.
• Central to the Q2 19 earnings of Nestle and Unilever is the telling impact of increased competition in the food business and improved input cost management. For Nestle, EPS grew 4.3% YoY to N16.90 due to gains from increased local sourcing of raw materials and higher sales. On the flipside, having restated its Q2 18 financials, Unilever reported 30% YoY decline in EPS to N0.35 reflecting increased input and finance cost following exchange rate differentials relative to prior year.
• Over the rest of 2019, we expect normalization in margins for both companies while we expect the competition from other brands to remain drag on sales. However, after adjusting for the improved cost management over H1 19, we raised our NESTLE FVE to N1,447.39 which translates to an OVERWEIGHT rating. Nestle trades at a 2019P/E of 23.01x, relative to Bloomberg MENA peers of 15.49x. Elsewhere slow recovery in revenue guides our downward revision of Unilever FVE to N31.95 (previously: N35.82), which translates to UNDERWEIGHT rating. Unilever trades at a 2019 P/E of 26.1x relative to Bloomberg MENA peers of 16.1x.
• Food business faces increasing challenge: Amidst flat pricing, competition in food business from smaller seasoning brands (Ginomax, Terra cubes, Onga cubes) became more apparent over Q2 19, with both companies recording low to mid-single digit growth in revenue, relative double digit recorded in prior years. To begin, Nestle’s revenue from the food business grew by just 1.6% YoY over the review period. However, support from its beverage business drove the 4.6% YoY expansion in its overall revenue. Elsewhere Unilever’s revenue recovered from a downbeat in Q1 19, with food business expanding by 6.3%, following the measures put in place to drive topline. To clarify, we recall management’s guidance during its Q1 19 conference call to drive sales by partnering with banks to provide liquidity to its distributors. However, persistent struggle in the HPC segment drove overall revenue lower by 1.7% YoY to N23.4 billion.
• We are positive on Nestle: Nestle still posted a modest performance notwithstanding the tensed environment, due to savings from its cost. Elsewhere, exchange loss worth N219.5 million, recorded in Unilever’s finance cost coupled with input cost pressure drove earnings lower. In coming quarters, we expect the competitive environment to remain unchanged, albeit with a normalization in gross margin. That said, gains from improved sales and lower cost is expected to support growth in Nestle FY 19 EPS by 26.5% YoY to N68.7. On other hand, Unilever’s EPS is expected to decline by 22.9% YoY to N1.23 due to struggling sales, impact of currency convergence on its input cost and less shield from its finance income, given its lower cash balance.
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When was the first time anyone paid you money for work?
200-level. I used to sell cooked noodles in the hostel. I wasn’t really keeping track of the numbers, but I just needed extra cash to add to my pocket money from home – the money my dad was giving me wasn’t enough –10k. Then I started looking for what else students needed but couldn’t get. Our school was remote, so I started selling headphones and memory cards because everyone needed it and couldn’t travel far to get it.
This was 2009. I had outlandish dreams of what University was supposed to be; a place where everything was possible and all that. Well, that was the year that dream died. I just focused on the practical courses and coasted through the abstract shit.
First Semester in 300-level, I first saw Photoshop on someone’s computer in an Entrepreneurship class. Not too long after, I went to meet this guy in my hostel and asked for the full Adobe Suite. Next thing, I’m installing. Next thing, I’m looking for tutorials.
By the next morning, I was going round the hostel, showing everyone what I’d just designed; my first logo ever.
By 400-level, I was just about that selling phone life. I sold up to 20 phones then, most of them Blackberries. I tried to pick out fancy Blackberries – the white ones, the purple ones, the red ones. Just the colourful fancy stuff that I knew they’d like. Everyone wanted to stand out.
What came next?
I went for NYSC in the Southeast in late 2012, but I was getting gigs from Twitter, a logo here, a poster there. I even helped a rapper design the cover art for his song. One of your faves. It was a hit too.
How much did he pay?
EX-PO-SURE.
That wasn’t what I asked for though.
Anyway, NYSC was giving me ₦19,800, my place of assignment was giving me ₦10k. Those random gigs were probably giving me ₦5k per month. I remember that time, I’d send the logos and everything to the clients from the really bad Internet on my phone. I lived in a village so ₦10k a month was enough. I saved the rest and bought two budget smartphones – one for myself and one for my mum.
Post-NYSC?
I was jobless for like 6 months, in the true sense. Then one day, my dad came and said his friend wanted someone to take photos and design flyers for his hotel. The man paid me ₦10k, it was also the first time I saw my work in print.
Around that time, my mum was like “why don’t you apply at a bank or something instead of staying at home? What if you never get a job with this your design thing.”
Mummy, I’ll get.
You can’t work in a bank?
I can. But getting hired in a bank back then mostly meant you had to sit all day at the desk attending to deposits and withdrawals. I didn’t want that.
I had one more cousin staying with us who was also unemployed, so that kind of took away some of the pressure. One some days, I was focused on becoming a better designer and not staying idle. On other days, I was sleeping for the entire day.
To be honest, I was purposely not applying for jobs that she wanted me to apply for. I was looking for advertising agencies. Since Uni, I was really obsessed with having my work on a billboard one day.
So, your first full time gig?
Late 2013. I applied to this music blog, and the owner offered ₦40k in the first month. By the second month, he told me “guy, I honestly can’t afford to pay you. These ads don’t seem to be coming. I’m sorry.”
And that one ended. He was a nice guy though.
After that, I was jobless again for a few months. Then a friend introduced me to this small agency that needed a graphic designer. I took the test, got in, and they started me at ₦50k. About four months into that gig, I went to a small Ad school, and in our final branding task, an agency saw my work and they made me an offer.
So I joined this new agency in late 2014, for ₦150k a month. Payroll issues and they had to shut down business after about 6 months of joining, while still owing two months of salary.
Did they pay up?
They did, a year and a half later. In the time being, I was back to just random freelance gigs after they couldn’t pay, but that lasted for about 2 months. Another friend called and said a Food Processing Company was looking for a Graphic Designer. He told me the offer was ₦200k. I jumped on it straight up.
I went to the interview with my deadbeat laptop, and these guys needed to see my work. The question was, how quickly can I show them all my work before this laptop goes off like a TV. The laptop managed to come on, and you know what they were most interested in?
What?
My personal experiments. I knew I’d gotten that gig the moment they saw those. Oh, and just as we were wrapping up, my laptop tripped off. Hahaha.
Sha, they made an offer of ₦150k for my probation period. I said I wanted ₦170k at least, but they told me I’d get a 200k bump after probation.
First of all, HR delayed, and when my raise finally came, it was ₦170k I received. And I’m like what’s this nonsense?
That’s when I learned the difference between net and gross salary.
Anyway, I’d already gotten into the job, designing all kinds of things for cartons, to buses, and even the one I’d always wanted, billboards.
One year into the gig, I asked for another raise. I legit wrote a list of everything I’d been doing:
When the brand manager left the company, I had to stand in as Brand manager, working with them to create jingles and all that.
I got that raise. ₦250k, net. Can’t fool me twice.
This was 2016. All this while, I was still doing freelance gigs, but they weren’t as intense, because I was putting everything into the work at the time. So there wasn’t really time for me to actually do them.
Still, freelancing was bringing in another ₦50k every other month.
By 2017, I started learning animation. Besides that, the year was pretty meh workwise. Also, I started learning how to shoot properly in 2017. I actually picked up shooting at work the previous year, but 2017 was when I was experimenting in the wild. I interned on the set of a movie – it never got released though
2018?
I got another raise towards the end of the year – ₦300k. Worked on another film set. I really just wanted to learn. Then I directed a short film. I actually planned to shoot two short films, but I didn’t have the time – work, relationship. Generally, I think relationships are emotionally, physically, and financially expensive.
Fast forward to 2019, I started getting better at animation and getting more freelance gigs. So to get better, I started an internship. One class a week. Add Youtube tutorials to that. Add two other online courses. 2019, I’m also going to learn code, because if you’re going to animate for web, you need to learn code.
What’s your most important perspective on money, between 2009 and now?
Money is the bread and butter of this world, and there’s no living without it. People are in denial of how important money is. People will tell you to follow your passion, but they won’t teach you how to make money. We go to school to learn about everything, everything but money, which is like the most important thing, post-school. They teach Entrepreneurship, but they should also be teaching personal finance. It’s why we’re all so shit with money.
People shouldn’t be shy talking about money. If you need help on how to make money, say it.
How much do you feel like you should be earning every month?
₦700k, at least. That’s the value I’ve put on my diverse skills at this point in this market.
Let’s breakdown that monthly income.
My monthly income is at about ₦450k if you add side hustles. This is what an ideal month looks like:
We haven’t accounted for ₦36k.
Eh ehn? Wait, what am I using this money for? Omo, I dunno o. Maybe that’s my own lau-lau.
When was the first time you sent money to my parents?
I used to send money to my mum, but you see my dad, he’s a very proud man. I assumed he was getting his pension, then my mum told me “he hasn’t started receiving his pension. They keep postponing and postponing, but really, nothing is coming in.”
So I sent him money. ₦30k. He was so emotional and thankful, and told me how it was going to go a long way with some family stuff. This was in 2017, and since then, I’ve made it a duty. It’s been everything from car trouble to school fees. I’m just thankful that I don’t have any other responsibility.
Then there’s the random ₦30k’s to people who are really in a tight spot. Whenever I’m in a position to help, I just step up.
Explain this savings things for me please.
My ₦250k first lands in my savings. I tend to save for stuff I need to pay for, or stuff I need to get. Like rent, or a laptop. My rent is actually fair, ₦300k. So there’s that.
I tried investing in an agric business, but I missed the window. I also have some other long term investments, like stocks. I haven’t tried any other investments.
Why haven’t tried any other investments?
I wanted to try Mutual Funds. But I was unsure about it.
You know how Mutual Funds work?
Not really.
How much do you imagine you’ll be earning in 5 years, and how did you arrive at that number?
1.2… 1-point… ₦1.2 million at the very least (using today’s estimates). It’s mostly because of the skills I have and I’m trying to acquire. And the confidence to even call this amount is because with the skills I’m looking to acquire, there is global demand.
Wait, how much is $6000?
About ₦2.2 million.
Yes. That’s the amount, at least. There’s a price chart for motion designers in the US. The pros earn like $300k a year. On average, I should be looking at $7000 per month, but that -1k is to solve for X, where X is the Nigerian factor.
What’s something you really want but can’t afford?
A beach house. I won’t say a car, because I really don’t find driving as a necessity. An efficient life for me will be Ubers, and Taxifies. Or carpooling. But I never get the money reach that side, so I dey jump bus.
What’s the last thing you paid for that required serious planning?
I would have said rent, but I already programmed it somehow. It didn’t really require serious planning actually. I just have this thing where I just keep rent money aside.
But serious planning would be my laptop. I paid ₦500k.
When was the last time you felt really broke?
Really broke? How broke?
What is broke for you?
Broke for me is when you’re down to your last ₦50k. Last time I felt like that was two years ago. There’s an amount of money my bank account dwindles to, that I just start to feel sad. When you have money, you’re calm. That’s why people’s voice changes when they’re rich. They take their words slowly. Because money is a nerve calmer.
Actually, this sadness starts to kick in for me when I’m down to my last ₦200k. Rock bottom is now ₦50k.
What’s the most annoying miscellaneous you’ve had to pay for?
My laptop charger. ₦30k. A bloody Macbook. It scattered. It’s one of the things that triggered me to dump my Mac. Those things are ridiculously expensive. That was also my third charger. Anyway, if you must buy a Mac, buy a surge protector.
What’s your greatest fear, right now?
It’s something coming up that I can’t afford, like a family emergency. This fear has never reared its head in any form, but I’ve had hints. Like the health from one of my parents. I’m expecting it to become a problem in the future, so I’m doing my best to delay it as much as I can, by taking as much burden as I can now, whenever I can.
Let’s talk about happiness. On that 1-10 scale.
About my finances? I’m at a 6-7, because I don’t have grand needs. I can afford the simple things; food, clothing, shelter, Internet, transportation. I can even afford to take a holiday. Then my family, I can afford to take care of
People tend to ignore the things they could be grateful for in the present because they want to aim higher. I get that, I also like to aim high. But I also like to pay attention and be grateful for the present. I have awesome friends. I have an awesome family. Those things are priceless.
What’s something you want me to ask but I didn’t?
“How many children will you haveee?”
Depends on how financially buoyant I am before I start popping, and after I start popping. But also, that depends on how many my wife is willing to pop. Because no be me get the bẹlẹ́. But if I could, I’d have a lot of children. I’m definitely going to be adopting too.
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When was the first time you earned money?
A scholarship when I was in 100-level. The money wasn’t coming to me – it was going to my dad’s account – but it was in my name. That’s the first money that’s ever come in my name. 220k a year.
But besides that, I didn’t make any money in Uni or anything like that. No businesses and all that.
But my first salary was in NYSC – ₦9,775 – in 2009. Then the state I served was paying us ₦40k quarterly.
After NYSC, I travelled for Masters and so I was also working. This was 2012. My first job was paying £7/hour and I worked and I worked 8 hours a day – 40 hours per week. I was a cold-caller at a Utility company. Also, students were restricted to 40 hours a week. I changed jobs twice after, but by the time I was coming to Nigeria, I had about £3,000 in cash. I already invested £1,200 of the money in Nigerian stocks, mostly oil company stocks.
Why did you come back?
Marriage noni. I actually proposed not coming back, but my fiancee didn’t want to relocate. My family was like “Oh come back, don’t worry you’ll get this and that.” So I came back.
Marriage plans kicked off immediately. I think only the bridesmaids’ dresses and my wedding gowns. But I really didn’t have to spend much. My family paid for the whole thing.
After marriage, I was just chilling and getting into the job hunt vibe, then one morning, two things happened.
What?
I got an email from an auditing firm – one of the biggest in the world – emailed But then, something else popped.
Whatttt?
Bẹlẹ́. I found out I was pregnant. I really wanted to continue with the application, but when these guys interview you, there’s always the screening exercise where you run all kinds of tests. The tests were definitely going to come back with a positive for pregnancy. So I just let it go.
Also, there was some comfort in the fact that I hadn’t exactly run out of my small stash of money, so I focused on carrying my baby full term. The baby came in 2015. When my baby came, I wanted to give the baby some time before going back to job hunting.
I committed the next year and a half, and so I started job hunting in mid-2016 again. Then the recession hit.
What was your biggest struggle at this point?
First, I was doing the usual blind applications online, sending in CVs and all. My partner hustled for jobs and opportunities too. The ones that invited me for interview were like, “you’re married. How are you going to manage both? Will your husband be comfortable with late nights?”
Tragic. How were you getting money to get by all this time?
I was throwing the little money I had into a bunch of things. I invested in a family member’s poultry farm that brought in some stipends. For every ₦200k I invested, I got a profit of ₦80k in 4 months. Then allowances from my partner.
I tried experimenting in stuff. For example. I started helping small businesses with their bookkeeping and projections. Only 3 gigs came that year, 2016, and they were at ₦30k each. I tried starting a business to keep busy, but the margins weren’t good enough to earn anything from it. It really was just to keep me busy.
2017 was a drought for me. There was this company – a small financial services company – they hired me on a contract basis. So I only got paid when there was work, but I really just wanted the experience. There was a lot of free time, and I was like, “might as well drop another baby since I’m at home.”
Another one.
I kind of knew how many children I wanted to have, so might as well. I went on to have my second baby in 2018. Some months after my second baby, I got a fulltime job now paying ₦60k.
What’s happened to your perspective between 2014 and now?
Not like marriage is bad, but growth might be harder when you have to carry people along, somehow. If I wasn’t married I wouldn’t have had a child. If I didn’t have a child, I’ll most likely be earning more.
The job market, especially at entry level, has a prejudice against married women and mothers because they assume you’ll be making excuses for family and all that.
That period also showed me that I’m not a “buying and selling” person. I’d rather spend my time providing services. There’s also the part that I grew up really comfortable – there was always money. But you see this period? I learned frugality.
Let’s break down that monthly ₦60k.
First, because I’ve started working, I’m having to restock on work clothes. My partner provides for most of the big bill needs, but he still gives me money for the kids’ care. He pulls in all his weight, but to be honest, baby care money is never enough.
Then there are small debts from when I didn’t have a job. Transport is cheap because my workplace is not too far from where I live, so it’s almost negligible.
How much money do you feel like you should be earning right now?
Hahaha. ₦400k, at the very least. And that’s because of the experience I would have gained between then and now. Plus the qualifications I now have – ICAN.
Okay, realistically how much money is good money right now?
As per Frugal Master now, I’ll have enough to meet my needs and have enough to save at ₦200k.
What’s something you want but can’t afford?
A good phone, a powerful computer, and a good watch.
Do you have a pension?
Hahaha. Pension ko, pension ni. The company I work at is really small. To be honest, they can’t even afford it.
What’s the last thing you paid for that require serious planning?
My ICAN induction. I had to plan for that ₦100k because it’s not like I had any money at the time. Also, I’m currently paying for graphic design classes – ₦70k.
Design?
Yeah. I love design, video games, animation and all of that. I’ve been enthusiastic about them for as long as I can remember. When I was Abroad, I spent a lot of my money on buying game CDs – GTA V, Far Cry, God of War, Assassins Creed, Driver, etc.
Anyway, paying for it took a big hit on my finances.
Sounds like an important investment. Tell me about your other investments.
I invested in stocks, and although it made some decent dividends, it took a hit in 2016 during the recession. At some point, I had to liquidate the stocks for an emergency.
Also, there’s that farm that the family member has. But Oga farmer is no longer receiving outside investment. So I have no active monetary investments.
What’s the most annoying miscellaneous you paid for recently?
A bridal shower. Ugh. It was ₦10k, but that money was unexpected at the time.
Do you have an emergency plan for health and all that stuff?
My father. My father is my 9-1-1. I mean, my partner always comes through, but I can also be sure of my father.
What’s the scale of your happiness looking like right now?
7/10, and it’s mostly because of my kids. They’re the reason I still keep fighting and pushing to be better. They are the reason all those years don’t feel wasted.
What do you think you’d have done differently about the last few years?
I’ll use protection, first of all. I don’t regret my first child, but I’d have conceived that baby much later when I’m already working. In fact, this is the order I would have done it; get a job, then marry, then have kids.
Still grateful.
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The guy in this story has literally been trained all his life for one purpose; to fight and defend the sovereignty of his country. Doesn’t mean he doesn’t think about money or worry about it sometimes.
When did you first earn a salary?
My first salary was ₦2500 per month.
Huh?
Oh, it was 2000 when I entered JSS 1. I was 11 years old. Every boy soldier received a salary – there was the extra ₦5,500 transport allowance. It increased as we climbed classes, but somehow I can’t remember how much it was increasing by.
What school was this?
N.M.S. – Nigerian Military School.
I think NMS ingrains this spirit of independence in you, because the moment I entered NMS, I never really depended on my parents for money again. Also, it’s like they started grooming us for manhood at such a young age.
At that time, even though I was still tiny, people said I behaved like a 20-year-old.
Right after NMS, I gained admission to a regular University. But that’s not where I wanted to be.
Where did you want to be?
The NDA – Nigerian Defence Academy. I got admitted in 2009 eventually. I remember my first salary – they gathered our money for a few months and paid us ₦120k. When you resume at the NDA in October, you don’t get paid till December.
What happened next?
Moving forward, they paid us ₦28k, then they did a compulsory savings of ₦14k per month for us. When you’re passing out, they give you all the money they saved for you. While passing out, past administrations used to give fresh officers a Peugeot 206. But they were no longer giving that when I graduated.
Anyway, by the time I was graduating, I was given close to a million naira.
Mad. Freshly minted Soldier. One million bucks in the bank. What did you do with it?
Omo, I no know o. I have no idea exactly what I used that money for. I was just buying and buying and buying. I later regretted it sha. I felt I could have used that money productively.
How?
Maybe invest in property? Even if it’s to buy land in one village or something. Then maybe it would have grown in value. I was just buying wristwatches, perfumes and rubbish-rubbish things. But if it happened now, ah man done sharp.
If you no get sense for Nigeria, you no fit get sense for this life.
When did you graduate from the NDA?
2014. I remember looking at my decorated shoulder like, oh boy na me be this? Best day of my life. There’s this sense of joy I feel by just being an officer and the prestige that comes with it. There’s some access you get that even people with money don’t get.
They gave us a two-week break, and the next thing, we were at the frontlines. I was 25.
Ehn?
Yes. In the Northeast, fighting Boko Haram. I’ve spent my entire time as a soldier there. I can’t remember the last time I spent a celebration or festive season with my family. In fact, there was one festive season we were out on an operation. The town we went to was one of those towns that was once captured by Boko Haram before we recaptured it. I’ll tell you what we did: We got a goat, killed it, made barbeque, then danced, and sang. We had a really good time.
To be honest, I think not being dependent has made being away for long periods easy – it’s a mindset.
That’s interesting – the independent part. Especially since the military forces you to conform to a routine.
One thing about the military is that you have to love it. You need to train yourself to love it, irrespective of the outcomes. There will be good days, and there’ll be bitter days.
Talking about bitter, I’m curious, what’s your most bitter experience?
Ah, there’s this superior I respect a lot. We eat together and gist together. He’s also one of the soldiers who trained me – we were really close.
One time, we went on an operation. I can’t give you the full details, but there was Boko Haram, and there was heavy gunfire.
This senior officer got hit 5 times. Like, 5 actual bullets to the torso and thigh. I was watching him bleed out, and was willing to donate, but our blood groups didn’t match. In the end, he got airlifted and made a recovery. Those moments, knowing he could have been dead any moment, were really heavy for me.
Another officer I knew; they went out, and their truck got blown away by an IED. Just like that.
Personally, there’s something about constantly hearing or expecting someone to say “them dey come, them dey come” – Boko Haram that is. It stresses your mind.
In a scenario where he’d died – grateful he didn’t – what would that have meant for his family?
Someone would have made a call to his wife to tell her; the person would tell her how he fought well and died.
Then arrangements would begin for all his benefits.
What are the benefits?
When someone dies, there are different allowances they pay:
Group life insurance
Death benefits
Burial expenses, can’t remember the rest.
Also, there are educational benefits – I can’t remember all the details – for his first three children up to tertiary level. The Nigerian Army pays.
In the end, about five different allowances are accrued to your next of kin. Even if a person gets injured in battle and they have to be dismissed on medical grounds, they still get insurance benefits
You know, I think I know these things because I have a good sense of how the army works, including a lot of the administrative work that many people don’t care for.
So when I hear people say the Army doesn’t take care of the families of the deceased, I know it’s mostly lies and ignorance.
I’ve helped a friend’s family process their benefits after he died in battle.
Okay, back to you about money, what was the first salary the Nigerian Army paid you?
₦165k net. Everything else is deducted – tax, pension and health insurance. I also get an operation allowance of ₦45k every month. It’s an allowance for serving in the Northeast.
There are also other allowances – for example, if you go for a language course, that’s an additional ₦20k. I’m going to learn Spanish.
Spanish? Does this have anything to do with Barca?
Hahaha. No, I just like the language. I’m not really a football fan like that.
How could you be a football fan when you’re constantly out fighting or preparing to fight?
Ah, forget o. Some people go dey frontlines, still dey watch match, dey argue who play pass. Some people even have cable dishes hanging out of their tents when they’re camping out for long periods. You’ll see people finding all sorts of ways to hang their dishes, still watching, still buying subscriptions.
You have to make yourself happy somehow. It’s yours to defend.
Completely random, but what’s your body count?
Seriously, I dunno. I’m in the artillery, and we fire from long distances. So the orders come like, they are in so and so place, drop two there, drop one there, drop three there. My own job is to calculate the ranges and fire and make sure we hit our targets.
There was this time when Boko Haram was advancing towards a town. There was going to be a lot of fighting; we had to evacuate civilians from the place first. In trucks. It had to be quick. We told them to get on the trucks we brought before a particular time. Missing that truck was as good as missing out on life.
Because when the fighting started, artillery first, anyone who was still there after the evacuation: boom, boom, boom. Na one chance.
Wait, I need to take a call. It’s my babe…
…Okay, where did we stop?
Let’s start with her, how does she feel about you being a soldier?
I made her understand that this is my life. This has been the only life I’ve known. And she seems to be fine with it.
Okay, back to money; how has your salary increased every year?
It’s +8k every year, all things being equal.
So you already know what you’ll collect in 10 years time?
Yes. But then this minimum wage conversation might change that. So allowances are where income becomes slightly different.
Let’s talk about your current net?
Currently, my salary is ₦205k, add my operation allowance and that brings it to a total of ₦250k.
Here’s the fun part: How do you spend the money?
The first thing is, the more time you spend on the frontlines, the less money you spend. So now, the expenses tend to be the recurring things: Subscriptions, phone calls, family, and just baby boy stuff. For my savings, my babe was telling me about one of these savings apps, but for now, I use a separate account.
So money doesn’t come in from anywhere else?
Oh, I farm. Let me tell you how it started. A few years ago, I was like, what else can I do besides this my usual salary? So I started a fish pond at my base. But the problem was that, even though I made a profit on my investment, I couldn’t give it the time it needed. My time is not my own.
So I switched to crops and went to get land. I invested 200k in the whole thing: labour, seedlings, fertiliser – minus land, the Local Government gives you land if you want to farm.
I got 3 acres, and in less than 6 months, I harvested 90 bags of corn. Sold it at 8k per bag. Calculate it.
I didn’t even maximise the farm to the max, again because of time.
To be honest, my own was even small. Someone I know – a superior – harvested 150 bags of rice and 200 bags of corn a few years ago. I know a hunter who was sleeping in his farm during planting season. When he came back, he’d harvested 800 bags of beans (35k). Over 4000 bags of corn.
Eventually, I’m going to just buy more land and pay more attention to it. The Bank of Agric has made these things way easier than they were a few years ago.
There’s just so much money that can be made from Agriculture. Take for example, I bought three really big rams before Sallah season – one died – but how much did I buy them each? 10k. I’m going to put them on a trailer to Lagos. Do you know how much each of them will sell for during Sallah? Up to 60k. Remember that I’m not spending a dime on food. They’re just roaming around, eating grass.
Farming looks difficult to start, but when you get a hang of it and put things in place to minimise risk, you go blow.
What’s the last thing you bought that required serious planning?
I did Ajo for 10 months with a few people and bought a car for ₦1.5 million. I generally don’t have big expenses, well until I started planning for marriage.
Ah, Bae and Baello, how’s that going?
It’s really expensive. It’s a constant struggle because one family member makes a decision, and that decision will cost you extra money.
For example, the hall we might be using will cost ₦450k. The photographer is going to cost ₦250k. I’m trying to budget and the money just keeps increasing and increasing, meeting after meeting.
For example, when we did Introduction, her family wanted to do big things like getting an outdoor space, and calling crowd. But we resisted and all that. Do you know how much it cost? ₦500k.
₦500k for ‘Hello?’
Oh boy, it’s not easy. The lifesaver is that my babe is taking care of most of her own expenses, like bag, shoes, makeup and all that. And I’m just grateful because she’s paying for all of these from her own hustle. She told me she wanted to start selling stuff, so I gave her some money to start.
Interesting. How much did you give her to start?
₦50k. And now, na she dey reign. Whenever I need money now, she’s the one that bails me out. It’s funny how it all started. She was in school when she said she dreamt that she was selling stuff. I told her to do her research, and when she was sure she wanted to do it, I was like, I have this ₦50k I’m not using. Oya take. And that’s how it all started.
You know, I’d love to talk to your wife sometime.
Whenever you’re ready. One of the reasons I like her is that for every money she spends, she’s constantly thinking of how she can earn it back. Whenever I’m getting reckless financially, she just says Oga, you done dey do pass yourself.
It doesn’t mean she doesn’t like enjoyment, her discipline is just on point.
If you had to rate your financial happiness now, over 10.
Oh boy, 8 over 10. I can buy anything I want to buy at any time. I pay all my bills. I can afford all my needs. To be honest, the only thing that I really want that I can’t afford is a house.
When do you think you’ll retire?
I’m doing this day by day, I don’t think about it too much. That’s all.
Nobody wants worst-case scenarios, but what happens to your family if disaster strikes on the frontlines?
I think it just feels good to know that my family will be fine.
I hope you don’t have any more questions. I have to leave now. It’s a long night ahead.
The London Stock Exchange (LSE) has recognised ARM Life Plc, following the company’s contribution to Nigeria’s Gross Domestic Product (GDP).
This honour came after the company was featured in the ‘Companies to Inspire Africa 2019 report’, which was published by PwC Africa in conjunction with the LSE.
The NSE, recently partnered with the LSE and PwC Africa to host participating companies, market operators and international participants in Lagos. The British Deputy High Commissioner would also host a networking reception, and select fast-growing companies in Africa, to celebrate the launch of the report in Lagos.
According to the LSEG, the criteria for giving the awards to ARM Life were its high standards of corporate governance, year-on-year growth trajectory, ethical business practices: challenging the status quo and being the benchmark for competition in this regard.
The Managing Director, ARM Life, Mr Stephen Alangbo, while speaking on the recognition said, “This in turn makes us a delight to our customers and partners thereby gaining their loyalty.” He explained that the company’s year-on-year growth achieved in gross premium written, profitability and policy count were attributable to the unique strategy and values of the organisation.
The 2018 financial report of the company showed that ARM Life paid N604.15 million claims to its customer in the year under review, while its gross premium earned rose from N3.58 billion in 2017, to N5.699 billion in 2018.
Airtel Africa Plc released its prospectus for a global Initial Public Offer (IPO) of ordinary shares worth $750mn (N270.0bn). The offer size translates to an addition of 595.2 million to 744.0 million ordinary shares to its current shareholding.
The Company expects to be admitted to the premium listing segment of the main board of the London Stock Exchange (LSE) at an offer price ranging between £0.8-£1.0/share. Also, the offer price for the Nigerian issue is expected to be within the range of N363 and N454/share, scheduled for listing on 4th of July.
KEY INFORMATION FOR INVESTORS
ISSUER – Airtel Africa Plc
DOMICILE AND LEGAL FORM OF ISSUER – the United Kingdom, Public Company limited by Shares
CURRENCY OF ISSUE – Nigerian Naira The currency of issue of Offer Shares sold pursuant to the Nigerian Offer shall be Naira.
OFFER PRICE – ₦363 to ₦454 (80 pence to 100 pence) The Offer Price for Offer Shares sold pursuant to the Nigerian Offer shall be determined by reference to the £:US$ last practicable date prior to pricing and may, therefore, differ from the indicative range set out herein
OFFER SIZE – 501,125,542 to 716,406,927 ordinary shares.
PURPOSE – The sole purpose of the issue is to deleverage the company’s balance sheet.
TYPE AND CLASS OF SECURITIES BEING ADMITTED TO TRADING – Ordinary shares of US$1.00 each ranking pari passu with other issued Ordinary Shares of the issuer
FUNGIBILITY STATUS: The shares listed on the NSE are fungible which means the shares can be traded on the London stock exchange (LSE)
NIGERIAN ADMISSION – Application has been made to Nigerian SEC and stock exchange (NSE) for registration of the Ordinary Shares set to be issued in connection with the offer.
EXPENSES CHARGED TO THE INVESTOR NOT APPLICABLE. – No expenses will be charged by the Company to any investor who purchases the Nigerian Offer Shares pursuant to the Nigerian Offer
To invest in Airtel shares, sign up at www.armstocktrade.com if you don’t have an account with us. Already a member? Log on to our portal to start trading.
In a twist of events, the Nigerian Bourse closed negative last week, with the NSE ASI shedding 2.05% WoW to close at 30,432.13 points, with market capitalization dropping by N449.16 billion. The bearish sentiment was spurred by losses recorded across all sectors; Banking (-0.96%), Cement (-5.13%), Construction (-5.44%), Personal care (-2.62%), Food (-1.69%), Insurance (-1.48%) and Oil & Gas (-11.90%). Dissecting the sector performance reveals selloff across various stocks such as GUARANTY: -3.80%, DANGCEM: -5.26%, PZ: -9.26%, UNILEVER: -0.16%, DANGSUGA: -12.88%, SEPLAT: -6.64% and MTN: -0.33%.
• Dangote Cement Plc – STRONG BUY (FVE: N248.14): Dangote Cement Plc (Dangcem) Q1 2019 result showed decline in group revenue by 0.8% YoY to N240 billion, largely emanating from Nigeria. However, the high base of effective tax rate in the prior year, resulted in much softer decline for EPS to N3.54 from N4.23 in Q1 18. Going into 2019, we forecast slower growth in our PBT stemming from i) downward revision of our 2019 and 2020 volume forecast; ii) downward adjustment to revenue per ton; and (iii) reduction in our gross margin estimates to 57.8% from 58.3%.
• Seplat Petroleum Development Company Plc – STRONG BUY (FVE: N782.15). Seplat recorded a decline in EPS by 53% QoQ to $0.06 over Q1 19 following drop in revenue as well as increased over lift in the period and loss on derivatives. We have reduced our FVE on the stock following moderated expectation on capital allowance and increase in our cost per boe estimates which led to a reduction in our forecast 2019 EPS to $0.33 from $0.43.
• Guaranty Trust Bank Plc – STRONG BUY (FVE: N49.66): GTB Q1 19 revealed a double-digit expansion in EPS (+16% QoQ to N1.68) on the back of lower funding cost as well as strong NIR. Although, we expect a slower growth in EPS (+4% YoY to N6.53) over 2019, our case for GUARANTY remains the resilience in NIR, improved cost management, still strong loan book with a moderate expansion in credit loss provision to 0.5%.
• Fidelity Bank Plc – BUY (FVE: N2.92): Fidelity bank kicked off the year on a good note with the bank posting EPS growth of 17.2% QoQ to N0.21 largely due to support from a higher interest income and lower OPEX. Despite an expected decline in NIR for the bank, we expect Fidelity to record a modest growth in earnings over 2019 on account of our expectation of higher loan growth as well as moderation in funding cost. We forecast a 11% increase in EPS (N0.88) over 2019 and thus maintain our BUY rating with an FVE of N2.92.
• CCNN Plc – BUY (FVE: N22.87): We had earlier noted the solid volumes reported by CCNN in its Q1 19 financials. As a result, we now see increasing volume growth on the horizon with our forecast average capacity utilization of 88% and domestic market share of 5.6% by FY 2023 (FY 18: 3.1%). Additionally, we see increased efficiency on the company’s new plant translating to improvement in margins with average estimate of 48% (previously: 43%). Consequently, we have raised our FVE to N22.87 (previous estimate of N17.31) which translates to a BUY on our rating.
I had a talent for blowing cash. My bestie Becky was tired of my money habit. No matter how much I tried to save, I always end up dipping into it and using the cash for seeming emergencies.
The thing is I love shopping a lot. I love clothes, shoes, trendy handbags and all things nice. I love to slay and with the salary, I got working at a four-star hotel for five years, I could definitely afford the lifestyle I wanted. The only problem was that at 28, I was still jumping Danfo up and down Lagos and getting into tongue wars with conductors over Fifty Naira change every time.
It used to be me and Becky making these crazy trips around the city on most days, but the baby girl got herself a cool ride and left me at it. Now, I could always hitch a ride whenever we were on the same shift or going in the same direction but on days when it was not so and I had to use public transport, it felt so lonely and annoying having to use public transport.
Perhaps, the negative vibes I was getting was a sure sign that I was grown enough to own a ride and honestly, with my salary, I could afford it if I became more disciplined with money and saved towards it. This thought bothered on my mind for a long time.
While scouring the internet one evening, I came across a pop-up ad from ARM Life on saving for the future and when I checked it out it was like the answer to a prayer I didn’t even realize I was offering.
I went to ARM Life official site and gathered information about the kinds of policies they offer and I chose ARM Life Saving Plus Plan as it suited me perfectly.
I can say confidently choosing a saving plan on ARM Life was the smartest decision about money that I have ever made. I got an SUV in three years and even Becky was surprised.
She grilled me non-stop about how I bought the car. At first, she imagined that it was a gift from my parents or fiancée. She knew my habit with money so she found it hard to believe that I was able to afford it.
I let her in on the secret and now we both are using the platform to save for bigger plans in our individual futures!
For 3 consecutive years, our Mutual Funds have outperformed their benchmark
In an interview with BusinessDay’s Dolapo Ashiru, Kai Orga, Acting Managing Director at ARM Investment Managers, speaks on various issues regarding the fund management sector of the economy and how the ARM Mutual Funds have performed over time.
Interviewer: How are you leveraging on technology via digital & mobile platforms to further increase your reach and serve clients better?
Kai Orga: In cognizance of the fact that digital is the future, ARM Investment Managers started on a journey a few years ago to overhaul our platforms, systems, and processes to make them more customer friendly; improve our service delivery and reduce transaction turnaround times. We are implementing an omni-channel approach whereby solutions delivered are consistent across the various platforms, facilitated by a harmonized customer service.
Today, we have multiple channels to serve our clients – a web client portal, mobile application, Quickteller, GT USSD, E-Bills Pay, GT Collections, Shortcode to name a few, which are all being utilised by clients to execute transactions with us. We are able to onboard new clients easily and in real-time; and an integrated mobile application is also underway, as we make a conscious effort to move away from having multiple applications operating in silos. Adding to our portfolio of channels, we launched PayDay Investor last year, an investment application that enables our customers to invest seamlessly in the ARM Money Market Fund while providing convenience, and excellent user experience to our customers.
We are however mindful of the inherent risks associated with financial technology and the need to ensure that customer data is kept safe and managed appropriately, therefore, we have strengthened our risk management processes by including IT security as a focus area within our risk management framework.
Interviewer: What are your views on the emergence of Fintech companies and do you feel threatened by their emergence?
Kai Orga: The emergence of Fintech companies has paved way for technical innovation in the finance and investment industry and has given rise to simpler and more customer-focused processes and solutions utilizing faster and better technology as well as harnessing customer data. As a firm that is keen to embrace change, we do not view their emergence as a threat, but rather as an opportunity to learn, adapt and collaborate towards offering better services to our clients.
What is driving patronage for Fund managers especially from the retail client segment?
Kai Orga: The main drivers of patronage are returns and diversification. Retail clients have numerous options for saving and investing their funds; however, the service fund managers offer over and above banks, stockbrokers and other savings and investment platforms is the ability to invest in multiple asset classes and have their investments professionally and actively managed, even with very minimal funds. Through fund management vehicles, investors are exposed to equities, fixed income, money market instruments, real estate and even alternative investments such as infrastructure. Clients are even able to gain access to offshore investment vehicles.
Interviewer: What is the ratio of Retail Vs Institutional Vs HNI clients in the fund management space?
Kai Orga: The assets under management of ARM Investment Managers is currently split almost equally among the 3 investor types – i.e. retail investors, high network individuals and institutional clients. It is difficult to estimate the split for the industry as a whole; however, there is a concerted effort by fund managers to grow their retail products.
Interviewer: What is the average return on portfolio like in the various Asset classes?
Kai Orga: In 2018, bond and Treasury bills yields were 14.16% and 13.92% on average, respectively. As for equities, the Nigerian Stock Exchange (NSE) which comprises all listed securities in Nigeria had a negative return of 17.8% in 2018, after a positive return on 42.3% in 2017. The stock market in Nigeria is especially very volatile, which means there is significant opportunity for returns but the accompanying risk is also high. Stock selection is key when investing in equities as some specific stocks have a better performance history and are better able to withstand shocks in the market.
Interviewer: In advising clients what determines your portfolio structure/Asset mix for the different categories of clients?
Kai Orga: Our financial advisers profile clients majorly based on three categories being: The clients’ investment objective; risk profile (how much risk the client is willing to take in order to achieve returns); investment horizon (how long the funds are available for investment). All of these affect the investment advice given as some investments have a minimum holding period while some investments are very risky and should only be undertaken by individuals that have enough assets to sustain them should the investment turn bad. We also carry out an assessment of the clients’ peculiar circumstances – that is their age, marital status, number of dependents, income and net-worth, which feeds into our investment advice. One other important factor in structuring client portfolios is the performance of the various asset classes (both current and outlook) as we always strive to ensure optimal returns for our clients.
Interviewer: What are the current challenges being faced by fund managers in Nigeria? And how are you mitigating against those challenges?
Kai Orga: The Nigerian financial market is still relatively small with a lot of potential for growth. The main challenges we face as fund managers are around the implementation of ethical standards and effective corporate governance, as these factors ultimately have a major impact on the integrity of our financial market. Another key challenge is the depth of the market. While the industry has come a long way, low financial literacy and awareness has hindered growth of the industry. There is only so much development that can take place in terms of developing new products and asset classes unless we have a population that is ready to accept this. ARM Investment Managers does its bit by working with the regulators to improve financial literacy through series of financial planning presentations to targeted audiences.
Interviewer: How challenging is it to assess risk in the Nigerian Financial markets given our level of development and data availability?
Kai Orga: The Nigerian financial market is still relatively small but with a lot of potential for growth and development. The regulators have done a lot of work in terms of investor protection, and this is helping to reduce the inherent risks in the market. This is the reason Fund Managers’ investment universe is limited to listed companies and securities that are well regulated and monitored. However, while the non-bank financial services industry has come a long way, we still have challenges and inefficiencies surrounding transparency and disclosures as well as unfriendly practices. Furthermore, there is still a certain element of market risk that cannot be eradicated even in developed countries.
Interviewer: Which of your various mutual funds has received the most subscription from your clients and what reasons are given for this selection?
Kai Orga: Most Nigerian investors are risk-averse, so products in the fixed income space which are capital guaranteed and provide a steady stream of income are usually preferred. Consequently, the ARM Money Market Fund is by far the highest subscribed fund in terms of assets under management and customer base.
Interviewer: Can you give us an idea of your various mutual funds and their performance?
Kai Orga: ARM Investment Managers currently manages 4 different mutual funds: Aggressive Growth Fund, Discovery Fund, Ethical Fund, and Money Market Fund. Each fund has its own risk and returns objectives which ultimately determines the required asset class allocation to meet those objectives. The ARM Money Market Fund is a risk-free fund which guarantees investors’ capital while the Aggressive Growth Fund is our riskiest fund on account of its high allocation to stocks (80-100%).
The ARM Mutual Funds usually outperforms their respective benchmarks as well as other Funds in the industry with similar asset allocation profiles. For instance, ARM Money Market Fund is currently yielding 13.74% as of end of March 2019.
ARM Mutual Funds
The ARM Discovery Fund is an investment that provides capital growth primarily through investments in equity, real estate and fixed income securities in the Nigerian market. The Fund Manager maintains a minimum equity position of 40% and a maximum of 65%. The Fund is suitable for investors who have a moderate risk tolerance level. The minimum investment is N10,000 and additional investment is N5,000.
The ARM Aggressive Growth Fund invests in stocks (80%-100% maximum) and money market instruments (0%-20% minimum). It is suitable for high-risk takers who expect capital appreciation over the long term. The minimum investment is N50,000 and additional investment is N10,000.
The ARM Ethical Fund invests in shares of Shari’ah compliant companies quoted on the Nigerian Stock Exchange, real estate and other investments compliant with Islamic Finance. Certain sectors that hold stocks such as Tobacco, Breweries, and Entertainment are excluded from the Fund’s portfolio. It is suitable for investors who would like to invest according to their moral beliefs and also wish to achieve long-term capital growth. The minimum investment is N10,000 and additional investment is 5,000.
The ARM Money Market Fund (MMF) is an open-ended fund that invests in money market securities such as Bankers’ Acceptances, Certificates of Deposits, Commercial Papers, Short term debt securities issued or guaranteed by any Federal or State Government of Nigeria (such as Treasury Bills). The Fund is structured to preserve capital invested and provide income which is payable quarterly. The minimum investment is N1,000
For 3 consecutive years, our mutual funds have outperformed their benchmark brief description of the different funds and their performance over the last 3 years is as stated below:
Year
Performance Measure
2016
2017
2018
3-year Average Fund Performance
Benchmark
3-year Average Benchmark Performance
Aggressive Growth Fund
Fund Return
4.16%
46.79%
-8.57%
14.13%
NSE 100%
6.11%
Discovery Fund
Fund Return
4.92%
34.66%
-5.49%
11.36%
NSE:T-bills
60:40%
10.35%
Ethical Fund
Fund Return
2.79%
22.18%
3.53%
9.50%
Lotus: Skye shelter: Osun Sukuk
50:20:30%
9.64%
Money Market Fund
Effective Yield
9.92%
17.19%
12.98%
13.46%
91-day T-bill
13.03%
Interviewer: What determines the inclusion of an asset class and the weight assigned to it in a Fund?
Kai Orga: Each Fund registered with the Securities and Exchange Commission (SEC) has a trust deed which clearly states its risk and return objectives, as well as the asset classes the Fund can invest in and the Fund’s allocation to the various asset classes (ranges). The actual weights assigned to the asset classes however is determined by the fund manager’s assessment of the market and expectations of future performance.
Interviewer: What kind of Equities are included in your equity fund and the criteria for their inclusion or removal?
Kai Orga: ARM invests primarily in blue-chip securities that have demonstrated the ability to provide steady returns over a period of time and also have high liquidity (that is stocks that are actively traded on the Stock Exchange). We invest in securities that we believe are priced below what we consider to be their true business value, to gain significant returns for investors when the price of the stocks rise to reflect the true value of the underlying company. In the same vein, we tend to sell stocks that we believe to be overpriced.
Interviewer: Where do you see the fund management industry in the next 5 years?
Kai Orga: We are confident that the regulators’ actions and efforts will ultimately serve as an impetus for faster growth in years to come. We see an increased interest in securities trading and in mutual fund products as investors become more financially aware, which should hopefully lead to the market becoming more dynamic with the inclusion of more asset classes and more securities on the Exchange. This, in turn, is expected to lead to increased competitiveness on the part of fund managers as we strive to improve our service delivery, leveraging on all available technology, and to focus on developing innovative products that resonate with our target market.
Wasn’t it just like yesterday you brought your children home for the second term school vacation and yet they are back to school in the blink of an eye? Of course you know what going back to school entails… School fees, new socks and singlets, maybe new lunch boxes, new stationery and a few more.
But in 4 months’ time, these expenses will look like child’s play in the face of the new school year responsibilities. In September 2019, your child could be in a new class which means bigger expenses
As is normal with many schools, a new class will require entirely new set of books, often new school uniforms, higher school fees, lesson fees, school bus, after school service and those other seemingly small fees that eventually add up. In short, in September, if you are not prepared, you’ll be up to your neck in expense.
That is why this is your big reminder to start preparing ahead of time. As a parent/guardian, now that you’ve paid the third term school fees for your child/ward, this is the time to draw up a mock list of what you could be spending money on ahead of September school year.
Here’s a guide:
You can also go ahead and find out the school fees and additional fees pupils/students in the class your child (ren) will be joining in the new school year pay. Also find out books they will require – have these listed giving room for any unexpected hike.
When that list is ready, find out cost of the items and pen them down. Now, go ahead and do the math to see how much you may need to foot the bill when the time comes.
You now have a tentative sum to work with. Take the next crucial step and start investing diligently towards it.
By the time four months comes around, you should have enough money plus interest accrued to sort school expenses without breaking a sweat.
