Category Archives: Forex

Nigeria fines MTN’s Banks over Forex breach

A few weeks after the Central Bank of Nigeria (CBN) directed local commercial banks to refund foreign currency (forex) it says telecommunications giant MTN had banked through them, the CBN has gone ahead to debit the accounts of two banks it cited for facilitating what it termed as illegal capital repatriation from Nigeria.

The banks mentioned were Standard Chartered, Stanbic IBTC,  Citibank, and  Diamond Bank which were all directed to refund a total sum of $8.13 billion for breaching Nigeria’s forex rules on behalf of MTN.

It was later reported that the CBN had debited N2.4 billion ($7.9 million) in fines from Standard Chartered and N1.2 billion from Citigroup. The CBN spokesman said they had investigated the remittance of forex by the banks related to irregular certificates of capital importation (CCI’s) issued to offshore investors of MTN and concluded that $3.45 billion was repatriated by Standard Chartered Bank, $2.6 billion by Stanbic IBTC, $1.7 billion by Citibank Nigeria and $348 million by Diamond Bank between 2007 and 2015.

MTN had been in talks to raise funds, possible do an IPO in Nigeria which is their largest market, like a recent one in Ghana. In various statements to shareholders on the matter, MTN said they are a law-abiding corporate citizen and that the issue of historic dividends allegedly repatriated by MTN Nigeria between 2007 and 2015 had been investigated and concluded at the Nigerian senate which found that there was no collusion to contravene forex laws.

MTN’s has since sued the CBN and Attorney General of Nigeria to restrain them from taking further action against assets of the company.

Cement Moment: CDC Buys into ARM

ARM (Athi River Mining) Cement seems to have been grappling with a short-term debt burden. It was reported that an Indian firm Ultratech was interested in investing $125 million, a few weeks ago for a stake in the firm. But today’s results announced by ARM, which show a full-year loss of Kshs 3.5 billion, 9blamed on an unrealised exchange loss  of Kshs 3.7 billion) also came with a notice that the CDC Group, the UK  government-owned development finance institution, has committed to invest Kshs 14 billion (~$140 million) for equity in the listed company.

CDC will become the largest shareholder in ARM and the company will use $110 million of the new funding to reduce their short-term debt (payments stand at about $1.5 million per month) and which totaled $200 million at the end of 2015. ARM shares have lost 2/3 of their value, now at 30 after trading as high as 80 in 2013

A few days ago, CDC also announced an acquisition of 10.7% of I&M Holdings, the parent group of I&M Bank. More detail here about ARM’s debt and fund-raising history, and when they kicked Bamburi, then a large shareholder, off their board.

Other Cement Companies

An Oxford Group report notes that The growth in (Kenya) construction activity has been a boon for producers, but the scope for further increases in the near term is sizeable, given that Kenya’s per-capita consumption remains well below that of other major economies on the continent. Annual per-capita demand for cement averages 100 kg, according to sector players, compared with 506 kg in Egypt and 230 kg in South Africa…However, the rise in domestic demand has not necessarily translated to a healthier balance sheet for the country’s producers. The average net profit margins for Kenya’s cement firms hit an all-time low of 11% last year, according to ARM Cement.

  • Bamburi: A recent investor note about Bamburi mentions that its shares have gained 25% in the last year and it increased its’ profit by 45% in an industry which recorded a decline in average net profits. Bamburi also has a generous dividend policy and has paid an increasing level of divided since 2011.
  • EAPCC East African Portland Cement is said to be trying to negotiate with the government to use some of their vast land holdings in Athi River / Kajiado area to restructure the company.
  • Dangote: Is still interested in investing in Kenya? Media reports say there’s a grinding plant in Kenya with others planned.
  • Savannah Cement completed a major plant upgrade to boost the firm’s production and efficiency.