The National Bureau of Sta-tistics (NBS) has released the first data set of growth rates since the country rebased its gross domestic product (GDP) in April. It reviews downward the 2013 national growth rate by 1.9 per cent from 7.4 per cent to 5.5 per cent. A careful study of the data confirms the maxim that the higher up the national GDP goes, the cooler the growth rate becomes. Bis-marck Rewane, chief execu-tive of Financial Derivatives, a consulting firm, observed said that ‘it is much easier to grow when you are small than when you are big.’

But the downward revision of the country’s growth is not the real story. That lies in the interesting trends revealed by the data.

Demographics is King

Yvonne Mhango, sub-Sa-haran Africa economist at Re-naissance Capital, in a report ‘Nigeria’s GDP: Bigger but Slower’ points out that the data

shows the nuggets in the Ni-gerian economy are not to be found in the oil and telecoms sectors as generally presumed. Instead, they are in manufac-turing, specifically food, ce-ment, and textile, as well as real estate.

These are poised to benefit from the country’s booming population, and growing mid-dle class. Despite the chal-lenges faced in the power sec-tor, manufacturing recorded solid growth of 22 per cent or a good one-third of total revised growth. This indicates the huge demand and market size for

producers in these beneficiary sectors. For example, the food, beverages, and tobacco subsec-tor grew to 12 per cent – or al-most half of total manufactur-ing quota - in 2013 from 7 per cent in the preceding year.

Real estate is another dy-namic sector. This should come as no surprise. Although it is generally agreed that valu-ations are excessive there is no debate that the rate of develop-ment in its cities is phenom-enal. Cement, which makes up 1 per cent of GDP, grew by 25 percent from 14 per cent in 2012 to 39 per cent in 2013.

This is in line with growth rates of 14.2 per cent in the construction sector against 9.4 percent in 2012, and 12 per cent in the real estate sector versus 5.6 percent in the pre-vious year. The take-off of the Nigerian Mortgage Refinance Corporation (NMRC) and the passing of the Pension Law Reform will give added fillip to home ownership in coming years further boosting the sec-tor and its contribution to GDP growth.

Not so fastMhango is clear that ‘tele-

coms growth is in the past and the sector has matured’.

The issue the GSM compa-nies are facing is a structural one, not one of tightening in disposable income as many commentators have noted about the brewery sector. Ni-gerians is a phone-saturated country. Beyond the din and ambiance of indistinguish-able promos, most subscribers simply ignore the confusing menu of packages cast before them. In 2013, MTN, the mar-ket leader, added 9.3 million new subscribers but managed to grow revenues only by 5.7 per cent in the face of what the company describes as ‘aggres-sive competition and a difficult operating environment.’

This may have an unin-tended consequence. If growth is indeed slowing in the sector it means that there are fewer places to invest the huge rev-enues being generated by these companies. Therefore, the demand by Arunma Oteh, director-general of the Securi-ties and Exchange Commis-sion, and Oscar Onyeama, her

counterpart at the Nigerian Stock Exchange, that these companies be compelled to list makes a lot more sense. Slow-ing growth is evidence that companies in the sector are transitioning into the cash-cow phase, aka dividend distribu-tion era. This will be a good thing.

Any cause for alarm?According to DaMina Ad-

visors, a London-based risk research, and consulting firm, the decline is not good news coming on the heels of growing concern over the spread of the Boko Haram terrorist threat to the commercial capital of Lagos.

DaMina analysts do not be-lieve that a 4.5 per cent growth rate is unthinkable. If the for-eign share of transactions on the NSE drop below the cur-rent 45 per cent suggesting capital flight, it will remove the cushion undergirding the high speculative forward price earn-ings multiples of many listed Nigerian companies.’ This could happen if a ‘combination of prolonged anaemic econom-ic growth stagnation, falling oil exports, a fast depleted forex reserve stock and declining eq-uity market valuations, which may be more proximate than is currently apparent.’ For the country’s policy-makers, the gallows consolation is that foreign investors looking for sub-Saharan exposure have few alternative choices. With a 2013 growth rate of 1.9 per cent, South Africa holds little attraction, and the prosperity of a growing number of region-al economies are tightly corre-lated with Nigeria’s.

Vanguard Markets | Monday, July 21, 2014 | Issue 002

INTERVIEW

A cerebral approach to transactions at Olaniwun Ajayi LP

! Deal Engineer - page 3

C-SUITE

Fixed Income & Forex

Inside

Your listing or your life

A proposed bill to compel companies with either more than N40 billion in share-holders’ funds or over N80 billion in assets to list on the NSE raises serious questions.

! Page 2

Back on the throne

Jim Ovia, founder of Zenith Bank, has resumed as chairman of Zenith Bank. This comes as no surprise to many who knew it was only a matter of time before he re-turned to what many call the Goldman Sachs of Nigeria.

! Page 2

Crossed fingers for Q2 earnings

Companies are set to begin releasing second quarter results. What lies in store?

! Page 6

Manufacturing roars ahead

0B 10.0 10.004/07 07/07 07/0714/07 15/07 15/0717/07 18/07 18/0709/07 10/07 10/07

100B 12.0 15.0

14.075B 11.513.0

50B 11.012.0

25B 10.5 11.0

FGN Bonds & TBills NITTY NIBORFGN BondsTreasury Bills

O/N1M

3M6M

Wolemi Esan

161.507/07 15/07 18/0710/07

163.0

162.7

162.4

162.1

161.8

FX ($/N)

Source: FMDQ

BidAsk

1M2M

3M6M

9M12M

African wax fabrics mill Source: shaddersafrica.com

3%‘12 ‘13 ‘14f ‘15f ‘16f

7%

6%

5%

4%

Annual GDP Growth

Sub-Saharan Africa

Nigeria

4%‘11 ‘12 ‘13

8%

7%

6%

5%

Real GDP Growth

Source: World Bank Source: National Bureau of Statistic, Central Bank of Nigeria

Old GDP SeriesNew GDP Series

INSIGHT2

JAYWALKER

RESHUFFLE

VM | Monday, July 21, 2014 | Issue 002

Listing by Order

Early this month, a bill in-troduced by Hon. Chris Az-ubogu, APGA - Nnewi North / South and Ekwusigo, to compel companies with assets worth more than N80 billion or shareholders’ funds that exceed N40 billion to list on the Nigerian Stock Exchange passed 2nd reading. In the past, similar calls for such ob-ligatory initial public offerings have come from voices as di-verse as labour unions, retail shareholder associations, and market regulators.

In the view of Hon. Ek-wusigo the bill would assist

the companies to raise cheap funds in contrast to bank loans and the concomitant high interest rates. Supported by Leo Ogor, PDP – Isoko North/ Isoko South, the Dep-uty House Leader, he argued that if passed the bill would enable more Nigerians to par-ticipate in the upside of the national economy.

Hon. Fort Dike, PDP – Ihia-la, disagrees with this position. Known for speaking his mind, he stated that the proposed law is ‘anti-business because it will be in conflict with the general ideas of investment in the country and make the par-liament look like it lacks busi-ness knowledge.’

The decision to list should be at the sole discretion of boards, who owe allegiance to the best interests of their shareholders, employees, and customers. Perhaps, the de-bate should be inverted. In-stead of companies that fall within these arbitrary catego-ries being forced to list and pe-nalized for not doing so, they should be given incentives for doing so.

Taking the arguments pre-sented by sponsors of the bill, each one can be disputed with sufficient points.

There are material nuances to consider in the determina-tion of whether a company should raise capital through debt or equity. In the same vein, the arithmetic on which is cheaper is not so simple. Let us not forget that for many companies of this size, they can raise offshore loans that are significantly cheaper than the exorbitantly priced funds available locally. Companies could also put up a credible argument that so long as they pay their taxes to government it is not their duty to provide gangways to vessels of eco-nomic participation. Moreo-ver, a lot of the talk on broad-ening economic participation often gives the impression that it is mainly about giving retail shareholders access to wider stock portfolio choices. This is a paradox in an age when deretailization is a secu-lar trend. Finally, while it is not proclaimed there is a risk that foreign companies might

see themselves as the main target of the law. If this is true it sends the wrong signal at a sensitive time.

Companies do rationale things. If it makes solid busi-ness sense for them to ap-proach the market, they will not hesitate to do so. Besides, if the so-called cheapness of equity is not undisputed, what are the other gains for companies that are not in dire need of capital when they list their shares? This is where the proponents need to do more homework in building their case.

Then what if the market sen-timent is not right at the time a qualifying company crosses the threshold? Assuming that investors are cool toward the

sector for any number of rea-sons, should executives and their investment bankers not retain the prerogative to de-cide the most opportune time to sell shares at at a good valu-ation?

This is not to say that the idea wholly lacks merit. There are a good number of local and foreign companies in Nigeria whose presence on the bourse would enhance risk diversifi-cation and boost income for investors. A few local success stories come readily to mind though they may not meet the 40:80 threshold (N40 billion in shareholders’ funds and N80 billion in total assets). The Sahara Group, South Atlantic Petroleum Limited (SAPETRO), Folawiyo Group,

Arik Air, BUA Group, Tastee Fried Chicken, CHI Farms, Obasanjo Farms, CHISCO Transport, and the Lekki Con-cession Company to name a few. For the foreign compa-nies they are numerous poten-tial candidates.

In the end, it should not be forgotten that in a bid to achieve a good end the welfare of Nigerians should be fore-most. With teams of lawyers, tax consultants, and consult-ants, big companies that are determined to bypass the law would find innovative ways to restructure their operations so that they will always stay a few inches below the imposed ceil-ing. This is the time for wider consultation and not populist sentiment. ;

In January 2010, Sanusi Lamido Sanusi, the former governor of the Central Bank of Nigeria, issued a directive that required all bank chief executives that had served for up to 10 years to leave their positions by the end of July that year. Those affected were Jim Ovia at Zenith Bank, Tony Elumelu at United Bank for Africa, and Akinsola Akinfemiwa at Skye Bank. They were barred from returning to the boards of the financial institutions for 3 years.

Four years later, each of these men have reinvented

themselves. Tony Elumelu sits atop HEIRS Holdings that has interests in agriculture, hospitality, power and real estate, Akinsola Akinfemiwa is the chairman of Heritage Bank, and Jim Ovia, has had a good run in every race he has deemed to enter since from philanthropy to telecoms, and real estate.

In a testament to the suc-cession planning at Zenith Bank, the board announced his successor, Godwin Eme-fiele, the current CBN gover-nor, less than a week after the directive was made public.

Tolu Ogunlesi, a social com-mentator, describes him as having ‘the knack for living beneath the radar, and es-chewing the barefaced capi-talist aggression of many of his billionaire colleagues, which ensures that he mostly stays out of controversy.’

This week it was announced that the CBN had approved his nomination as chairman of the bank he founded more than 20 years ago. As chairman, Ovia will not be part of the day-to-day running of the bank, whose motto is ‘In your best interest’. Rather, he will be charged with

setting the tone of its strategic direction at a time of thinning margins and higher costs. Al-ways the biggest individual

shareholder of the bank, Ovia would not be dismayed at the excellent job his protégés have done in his absence.

The new chairman has a strong passion for informa-tion and communications technology. He serves as the president of the Nigerian In-ternet Group. He is also the proprietor of the University of Information and Commu-nication Technology, Agbor, Delta State, where he hails from.

Born on November 4, 1951, Ovia began his professional career in 1980 at IMB, a merchant bank. Seven years later, he had risen to head the bank’s corporate finance de-partment. In 1990, he set out to start Zenith Bank.

He is also the chairman of Quantum Luxury Prop-erties Limited, and a sits on the board of the Africa Finance Corporation. He is a Member of the Order of Federal Republic (MFR), a national honour. He holds a B.Sc. degree in Business Administration from the Southern University, Loui-siana (1977), and a master’s degree in Business Adminis-tration from the University of Louisiana (1979), both in the United States. He is an alumnus of Harvard Busi-ness School’s Owner/Presi-dent Management (OPM) program. ;

Obiora Onyeasoobiora.onyeaso@customsstreet.com

Should companies be forced to list their shares on the Nigerian Stock Exchange based on arbitrary numbers such the size of shareholders’ funds and the value of assets? The matter is not so straightforward.

FY 2013 (N Bn)

Gross Earnings 335.27

Net interest income 189.26

Operating income 264.47

PBT 110.60

PAT 95.32

EPS 3.01

Zenith Bank 2013 Results

Source: Nigerian Stock Exchange

The Godfather Returns

Aerial view of the Civic Centre and the Civic Centre Towers, two iconic prime properties in Jim Ovia’s real estate portfolio

Source: skyscrapercity.com

A.P. Møller – Mærsk, the shipping line and terminals operator, could be obliged to list on the NSE

of our lawyers as trusted advisors and enablers of transactions, not academics. We are known to take a commercial, business driven approach to law. If you look at the profiles of our lawyers, you will find that a number of our lawyers have MBAs, and one of our partners is currently pursuing a DBA. We are constantly at work thinking up new ways of solving clients’ problems.

What is OA’s client solving approach?

We believe our clients come to us for cutting-edge solutions to intricate legal problems. We also believe that each matter needs a mul-tifaceted approach to find the best solution. According-ly, whatever the nature of the instruction, we are insistent on a cross-functional, rigor-ous approach when explor-ing solutions for our clients. We discourage silo thinking here. For instance, if a bank-

ing client has a pending case we will pool resources from our litigation, and banking practices to brainstorm on the matter. Throughout the process we maintain open communications with the cli-ent. This helps in developing our case management strat-egy, which is compiled in a single document for easy ref-erence when needed by new team members.

In spite of the govern-ment’s efforts to draw in private sector partici-pation into power and infrastructure there is a

strong residue of public distrust and resentment over the privatization of common assets. What is your view?

One thing we can all agree on is that the govern-ment has no business being in business. That said, it is understandable that when people do not fully appreci-ate the constraints faced by the government in funding costly, large-scale socially beneficial projects like power and infrastructure all by it-self, and the attendant op-

portunity cost, there is a ten-dency to leap to wholesale condemnation of privatiza-tion. Knowing the magnitude of competing demands faced by state and federal govern-ments, I will say that privati-zations, PPPs, and similar arrangements ultimately serve the public good when properly structured. That the government and sponsors do not always do a good job of communicating the ration-

ale of these sales, cannot be an indictment of the ethos of these arrangements. Let us not forget that these same arrangements were the bat-tering rams used to disman-tle the inefficient monopolies enjoyed by state-sponsored companies in the past. The choices and convenience they have brought have been a great service. For example, we all remember the bu-reaucracy Nigerians suffered under NITEL until the GSM licenses were sold. When we take out sentiment, what we find is that, when properly executed, deregulation and

indeed, privatisation, has the potential to deliver benefits at lower costs to taxpayers and customers.

Sector-wise, does the work-mix at the firm evolve with trends in the economy?

As a full service firm, we receive instructions in both contentious, that is, litigious, and non-contentious, that is, advisory, matters from our clients. Naturally, most of our advisory work, be-ing transaction-driven will

reflect the push-and-pull of economic forces. For exam-ple, during the banking con-solidation round of 2004-5, we worked with over 60% of the financial institutions. Again, in 2009, during the Central Bank’s banking sec-tor intervention we worked closely with the regulator to assure financial system sta-bility. As situations arise, we adapt and fit in, whilst retaining our core essence. It is the only way for a firm to remain relevant and indeed thrive.

What recent global M&A transaction would you have liked to work on?

That would have to be the aborted Pfizer-AstraZen-eca combination. The sheer scale of the two companies’ global operations, multiple regulatory jurisdictions, and the size of the offer gave it all the tantalizing features of a transformational deal on so many levels. In the end, AstraZeneca shrugged off the suitor’s offers, and Pfizer chose not to launch a hostile take−over for AstraZeneca. If it had gone on a full of-fensive, one would have liked to see the creative defensive structures that AstraZeneca’s lawyers would put in place. It would have been the stuff of case-study dreams for years to come. I would have liked to work on this deal advising the sell side. ;

What is your role at the firm?

Until recently, I was part of the Firm’s Specialized Trans-actions Practice. Essentially, the practice deals with the most innovative transactions in the market. Its respon-sibility is to craft bespoke solutions to situations that often have no precedent in market. For instance, on one occasion we had a client who needed financing to develop its upstream petroleum as-set. After we considered a number of options, we set-tled on a forward sale struc-ture, whereby we presold the crude reserves to raise the necessary funds needed to exploit its proven reserves. Putting together deals of this nature is what our Special-ized Transactions Practice is known for.

Then about two years ago, I moved to the Power & In-frastructure Practice, and as the name suggests, the practice focuses on two key sectors of the economy, in which we are privileged to frequently attract the top mandates. Only last year, during the privatization of the Power Holding Com-pany of Nigeria, Olaniwun Ajayi LP advised on 9 out of the 15 privatized assets. We have also been advising on the Azura-Edo Independ-ent Power Project, which is widely regarded as the tem-plate for future IPP develop-ment projects in these parts. On the infrastructure side, we are also working with a client on the development of a deep seaport to serve Ni-geria’s burgeoning maritime needs as well as a number of other major PPP deals.

What qualities charac-terise Olaniwun Ajayi?

I would say our bias for technical, intellectually demanding high-end work. Olaniwun Ajayi’s reputation is not built on the solicitation of vanilla-category briefs. We push the envelope of the law. We advised on the first Liquefied Natural Gas project, the first utility scale Independent Power Project, the first bond issuance by International Finance Corporation and so on. We do not see ourselves in the narrow sense of passive dispensers of legal opinion. Instead, we like to think

INTERVIEW 3

DEAL ENGINEER

Wolemi EsanPartner, Power & Infrastructure Practice, Olaniwun Ajayi LP

About the FirmD Founded: 19620 Number of Partners: 8

B Number of Associates: 65

EducationUniversity College, London (UCL)Master of Laws (LLM)

Lagos State UniversityBachelor of Laws (LL.B.), Law

Recent transactions• AdvisedontheUS$3.15 billion

financing of Dangote Industries Limited for the development of a 400,000bpd refinery

• AdvisingontheUS$1.5 billion financing of the development of a deep seaport in Lagos, Nigeria

• AdvisedontheUS$1.2 billion fi-nancing of the development of a fertilizer plant in Eleme, Rivers State

• Advisingontheon-going devel-opment of the greenfield Azura-Edo IPP, a c. 459MW open cycle gas-fired plant in Edo State

• AdvisedontheUS$500 million financing of an international ship-ping conglomerate for the expan-sion of its vessel portfolio

Wolemi Esan is a partner in Olaniwun Ajayi LP’s Power and Infrastructure Practice. He has done extensive work with private companies and public agencies in a variety of situations that cut across his core practice area, and other expert verticals. He has a strong background in financial matters, and is widely acknowledged as a leading authority in derivatives and securitization in the Nigerian securities market.

VM | Monday, July 21, 2014 | Issue 002

Olaniwun Ajayi law firm library

Our bias for technical, intellectually demanding high-end work sets Olaniwun Ajayi apart.

Our clients come to us for cutting-edge solutions to intricate legal problems.

MARKET DATA4

MARKET SNAPSHOT

3-MONTH PRICE TREND OF BELLWETHER STOCKS

LEGEND

ACCESS 9.8011.317.22 PE 6.01

0.00

May June M

14/07 18/07

T W T F

CADBURY 74.2598.3558.27 PE 24.50

0.00

May June M

14/07 18/07

T W T F

DANGCEM 240.05250.02185.00 PE 20.26

0.95

May June M

14/07 18/07

T W T F

DANGSUGAR 9.3012.458.67 PE 10.33

0.20

May June M

14/07 18/07

T W T F

FLOURMILL 77.8791.8563.91 PE 26.76

0.13

May June M

14/07 18/07

T W T F

FO 238.00259.9427.06 PE 55.09

3.94

May June M

14/07 18/07

T W T F

GLAXOSMITH 68.9971.4453.06 PE 22.62

0.01

May June M

14/07 18/07

T W T F

GUARANTY 30.0031.8022.67 PE 9.34

0.03

May June M

14/07 18/07

T W T F

NASCON 10.7215.1010.20 PE 10.51

0.68

May June M

14/07 18/07

T W T F

NB 175.61189.00140.00 PE 30.38

1.18

May June M

14/07 18/07

T W T F

NESTLE 1125.001250.00916.00 PE 40.06

15.00

May June M

14/07 18/07

T W T F

OANDO 25.0036.899.32 PE 5.45

2.99

May June M

14/07 18/07

T W T F

TOTAL 180.00188.58146.26 PE 11.46

8.95

May June M

14/07 18/07

T W T F

TRANSCORP 5.915.951.17 PE 48.56

0.11

May June M

14/07 18/07

T W T F

UACN 62.1271.2053.23 PE 21.32

0.53

May June M

14/07 18/07

T W T F

UBA 8.069.586.65 PE 5.37

0.21

May June M

14/07 18/07

T W T F

DIAMONDBNK 6.328.005.86 PE 3.20

0.08

May June M

14/07 18/07

T W T F

FBNH 15.9018.9311.50 PE 7.71

0.33

May June M

14/07 18/07

T W T F

FCMB 4.264.903.01 PE 5.16

0.11

May June M

14/07 18/07

T W T F

FIDELITYBK 1.943.101.85 PE 7.28

0.06

May June M

14/07 18/07

T W T F

GUINNESS 198.02266.70162.00 PE 24.96

6.98

May June M

14/07 18/07

T W T F

INTBREW 29.5031.0018.00 PE 32.80

0.00

May June M

14/07 18/07

T W T F

JBERGER 63.0076.4559.18 PE 10.31

5.05

May June M

14/07

T W T F

18/07

MANSARD 2.672.731.95 PE 14.05

0.15

May June M

14/07 18/07

T W T F

PZ 38.5047.0630.08 PE 31.36

1.75

May June M

14/07 18/07

T W T F

SKYEBANK 3.404.903.19 PE 2.81

0.13

May June M

18/07

T W T F

14/07

STANBIC 27.2627.5015.39 PE 14.66

0.21

May June M

14/07 18/07

T W T F

STERLNBANK 2.382.922.09 PE 4.58

0.07

May June M

14/07 18/07

T W T F

UBN 9.2312.808.10 PE 20.45

0.42

May June M

14/07 18/07

T W T F

UNILEVER 52.7765.0043.32 PE 41.55

1.27

May June M

14/07 18/07

T W T F

WAPCO 119.01136.7387.50 PE 12.63

6.98

May June M

14/07 18/07

T W T F

ZENITHBANK 25.2227.4019.23 PE 8.72

0.21

May June M

14/07 18/07

T W T F April May June M

16/06 20/06

T W T F

TICKER 9.8011.797.22 PE 6.24

0.05

1 3

4

9

10

5 6 8

11

7

2

1. 52-week low price2. Year Low Price3. Current price4. Year High Price5. 52-week high price6. Current price7. 5-Day Price Change 8. PE Ratio9. Daily Prive Movement over 3 months.10. 30-Day Moving Average11. Daily Price Movement over Last Week

MOBIL

WEMABANK

NPFMCRFBK

WAPCO

MANSARD

FIDSON

TOTAL

PAINTCOM

PZ

WAPIC

OANDO

COSTAIN

RTBRISCOE

JBERGER

NIGERINS

NASCON

CONOIL

UPDCREIT

DNMEYER

TRIPPLEG

MOST GAINED & DECLINED

20.16%

13.27%

12.24%

6.23%

5.95%

5.33%

5.23%

5.00%

4.76%

4.65%

-10.68%

-8.03%

-7.89%

-7.42%

-7.41%

-5.96%

-5.00%

-4.97%

-4.76%

-4.57%

INDEX DAILY MOVEMENT

MoFr42.70

42.80

43.00

42.90

43.1042,891.82

Tu We Th Fr

NSEASI

MoFr0.437

0.439

0.443

0.441

0.445438.71

Tu We Th Fr

NSEBNK

MoFr10.45

10.49

10.57

10.53

10.611,059.78

Tu We Th Fr

NSECNSMRGDS

MoFr0.465

0.470

0.480

0.475

0.485469.09

Tu We Th Fr

NSEOILGAS

VM | Monday, July 21, 2014 | Issue 002

MARKET SNAPSHOT

MARKET DATA 5

CURRENCY CROSS RATES

Currency codes/names

United Kingdom

Pound Euro Japanese

Yen Swiss Franc US Dollar CFA Franc

BCEAO CFA Franc

BEAC

Chinese Yuan

Renminbi

Ghanaian New Cedi

Hong Kong Dollar

Nigerian Naira

Saudi Riyal

South African Rand

US Dollar Utd. Arab

Emir. Dirham

GBP 1 0.7902 0.005756 0.6506 0.5841 0.001205 0.001205 0.09476 0.172 0.07537 0.00364 0.1558 0.05466 0.5841 0.1591

EUR 1.2657 1 0.007285 0.8234 0.7393 0.001524 0.001524 0.1199 0.2177 0.09539 0.004607 0.1971 0.06918 0.7393 0.2013

JPY 173.751 137.29 1 113.038 101.488 0.2093 0.2093 16.4637 29.8845 13.094 0.6325 27.0635 9.4965 101.488 27.6361

CHF 1.5373 1.2147 0.008848 1 0.8979 0.001852 0.001852 0.1457 0.2644 0.1159 0.005596 0.2395 0.08402 0.8979 0.2445

USD 1.7121 1.3528 0.009855 1.1139 1 0.002062 0.002062 0.1622 0.2945 0.129 0.006232 0.2667 0.09357 1 0.2723

XOF 830.196 655.957 4.7785 540.106 484.897 1 1 78.6616 142.785 62.5618 3.0219 129.306 45.3732 484.897 132.042

XAF 830.196 655.957 4.7785 540.106 484.897 1 1 78.6616 142.785 62.5618 3.0219 129.306 45.3732 484.897 132.042

CNY 10.5627 8.3461 0.0608 6.8718 6.1694 0.01272 0.01272 1 1.8167 0.796 0.03845 1.6452 0.5773 6.1694 1.68

GHS 5.8899 4.6539 0.0339 3.8319 3.4402 0.007095 0.007095 0.5581 1 0.4439 0.02144 0.9174 0.3219 3.4402 0.9368

HKD 13.2706 10.4866 0.07638 8.6336 7.751 0.01598 0.01598 1.2574 2.2824 1 0.0483 2.067 0.7253 7.751 2.1107

NGN 280.072 221.298 1.612 182.208 163.583 0.3374 0.3374 26.537 48.1694 21.1056 1 43.6223 15.3069 163.583 44.5453

SAR 6.4218 5.0742 0.03696 4.1779 3.7508 0.007735 0.007735 0.6085 1.1045 0.4839 0.02338 1 0.351 3.7508 1.0214

ZAR 18.3123 14.4713 0.1054 11.9136 10.6958 0.02206 0.02206 1.7351 3.1495 1.38 0.06666 2.8522 1 10.6958 2.9126

USD 1.7121 1.3528 0.009855 1.1139 1 0.002062 0.002062 0.1622 0.2945 0.129 0.006232 0.2667 0.09357 1 0.2723

AED 6.2899 4.97 0.0362 4.0921 3.6738 0.007576 0.007576 0.596 1.0818 0.474 0.0229 0.9797 0.3438 3.6738 1

INDEX PERFORMANCE

Date Week Opening

Week Close Change WtD MtD QtD YtD

1 All Shares Index 42,832.82 42,891.82 59 0.14 0.96 0.96 3.78

2 NSE 30 Index 1,945.69 1,948.74 3.05 0.16 0.88 0.88 2.18

3 NSE Banking Index 438.08 438.71 0.63 0.14 1.35 1.35 -2.04

4 NSE Insurance Index 148.19 150.41 2.22 1.5 2.44 2.44 -1.61

5 NSE Consumer Goods Index 1,053.69 1,059.78 6.09 0.58 0.15 0.15 -3.68

6 NSE Oil/Gas Index 477.63 469.09 -8.54 -1.79 0.18 0.18 38.02

7 NSE Lotus Islamic Index 2,836.03 2,853.38 17.35 0.61 -0.74 -0.74 -0.34

8 NSE Industrial Index 2,705.31 2,767.11 61.8 2.28 3.76 3.76 8.66

MARKET SNAPSHOT

Date Deals Turnover Volume Turnover Value Traded

StocksAdvanced

StocksDeclined Stocks

Unchanged Stocks

All Shares Index Value

1 14.07.2014 5,502 468,559,126 6,200,244,950.37 125 \ 132 27 \ 23 29 \ 30 69 \ 79 42,930.60

2 15.07.2014 5,692 251,758,465 3,003,431,717.63 114 \ 117 33 \ 27 27 \ 32 54 \ 58 42,971.56

3 16.07.2014 5,098 317,158,558 3,060,821,383.87 120 \ 122 22 \ 29 26 \ 18 72 \ 75 43,030.27

4 17.07.2014 4,904 365,252,261 4,432,207,242.48 114 \ 124 27 \ 28 25 \ 20 62 \ 76 42,918.52

5 18.07.2014 4,778 374,304,901 3,207,141,742.24 117 \ 122 34 \ 24 21 \ 31 62 \ 67 42,891.82

DATA PARTNERDATA VIZUALIZATION

TRADING BREAKDOWN BY SECTOR

Sector %

Financial Services 73 \ 72

Conglomerates 8 \ 13

Oil & Gas 8 \ 6

Others 11 \ 9

WEEK-TO-DATE RETURN-15% -10%

-40%

-20%

-30%

-10%

0%

+10%

+20%

+30%

+40%

+50%

+60%

+70%

+80%

+100%

+90%

+120%

+130%

+140%

+110%

+150%

-5% 0% +15%+10%+5% +25%+20%

YEA

R-TO

-DAT

E RE

TURN

LAGGING

SLIPPING LEADING

IMPROVING

4344

47

36

7

8

9

10

11

12

13

15

18

19

22

25

26

27

2931

323437

1

24

17720

21

24

99 30

133

35

38

339

40

16

5

4546

41 42

441411111111

23

411

362848

# TICKER WTD YTD

1 DANGCEM -3.60 10.05

2 NB 0.54 3.89

3 GUARANTY 1.25 10.92

4 NESTLE 1.84 -7.50

5 ZENITHBANK -0.36 -8.72

6 FBNH 2.72 -0.43

7 WAPCO 0.93 -2.58

8 GUINNESS 5.55 -13.14

9 ETI -0.58 6.30

10 STANBIC 1.20 26.70

11 UBA -0.63 -11.80

12 FO 16.98 139.40

13 OANDO -1.79 15.42

14 TRANSCORP 10.69 33.33

15 ACCESS 0.93 2.08

16 UNILEVER -6.36 -4.28

17 FLOURMILL 0.00 -10.34

18 UBN 0.52 0.21

19 PZ 0.55 2.84

20 CADBURY -0.34 -9.80

21 UACN -6.68 -8.08

22 DANGSUGAR -2.15 -22.22

23 INTBREW 0.34 2.79

24 DIAMONDBNK -2.50 -15.10

25 JBERGER -1.38 3.55

26 FCMB -4.82 12.47

27 ASHAKACEM 12.24 55.07

28 GLAXOSMITH 1.47 1.47

29 7UP 0.00 43.60

30 TOTAL -0.04 0.62

31 FIDELITYBK 0.00 -25.65

32 STERLNBANK 0.43 -7.60

33 MOBIL -0.04 13.83

34 CONOIL 0.31 -3.43

35 SKYEBANK -2.10 -25.68

36 PRESCO 2.87 -1.14

37 OKOMUOIL 0.00 -25.00

38 CAP 1.30 -19.50

39 NEIMETH -8.33 -3.97

40 MAYBAKER 5.99 -27.76

41 All Shares Index -0.46 3.64

42 NSE 30 Index 0.03 2.02

43 NSE Lotus Islamic Index -0.74 -0.95

44 NSE Industrial Index -0.69 6.23

45 NSE Consumer Goods Index 0.73 -4.23

46 NSE Banking Index 0.17 -2.18

47 NSE Oil/Gas Index 4.99 40.53

48 NSE Insurance Index -0.55 -3.06

The relative size of each individual stock’s bubble chart is determined by its market capitalization. For indices, the relative size of each bubble chart is the total value of the capitalization modified values of each constituent stock.Pink bubbles represent individual stocks, and grey bubbles represent indexes.

The \ arrow signifies week-on-week change in value. This week’s value is shown on the left of the \ sign, and last week’s value on the right.

2820

2825

2830

2835

2840

14/07 18/0716/0611.6

11.8

12.0

12.2

12.4

FGN Bond Index Market Value YTD Return

www.afrinvest.comwww.customsstreet.com

VM | Monday, July 21, 2014 | Issue 002

RESEARCH

Earnings Weatherman

Conglomerates Analyst Coverage

International Coverage

Rocket Launcher

Sector Company Afrinvest 12-Month Target Price Rating

Banking

Access Bank 11.8 ACCUMULATE

Diamond Bank 11.19 BUY

ETI 19.4 ACCUMULATE

FBN Holdings 22.17 BUY

Skye Bank 5.95 BUY

Sterling Bank 3.02 BUY

UBA 10.41 BUY

Zenith Bank 28.88 ACCUMULATE

Consumer GoodsDangote Sugar 11.97 BUY

Flour Mills of Nigeria 96.20 ACCUMULATE

Insurance

AIICO 1.70 BUY

Mansard 3.29 BUY

Continental Reinsurance 1.48 BUY

Custodian and Allied Insurance PLC

4.37 ACCUMULATE

Oil & Gas Total 267.69 BUY

It is report card time. Any time now companies are due to start releasing their half-year re-sults. If the latest results from Unilever, the consumer goods company, are anything to go by, then investors should prepare themselves for a bloody earnings season.

30-Jun-14 30-Jun-13 Change

N N

Revenue 29,280,133,000 29,667,942,000 -1%

Cost of Sales (18,280,715,000) (18,812,681,000) -3%

Distribution/ Admin and Other Expenses (8,315,277,000) (6,514,759,000) 28%

Other Income 6,189,000 1,322,000 368%

Financial Charges (677,846,000) -496,625,000 36%

Financial Income 64,851,000 117,676,000 -45%

Profit Before Tax 2,077,335,000 3,962,875,000 -48%

Taxation (612,762,000) (1,222,025,000) -50%

Profit After Tax 1,464,573,000 2,740,850,000 -47%

In reality, pleasant earnings surprises could turn out to be the exception. Most investors expect most companies to put up a least-evil performance. The question now is whether the dampened half year re-sults will signify an isolated blip on the screen or mark a tempering of business per-formance till after the 2015

elections. Two events, both outside the control of execu-tives, constitute flies in their ointment. Political concerns about the forthcoming elec-tions, and the growing threat of Boko Haram attacks in the southern part of the country.

According to DaMina Advisors, the private sector is ‘already reeling from high

operating costs due to erratic electricity supplies, and the unbudgeted costs of new security infrastructure for major airlines, telecom com-panies, banks, gas stations, commercial buildings and other manufacturing indus-tries, will erode the profit-ability of the many stressed companies.’

UNILEVER NIGERIA PLC

UBA Capital has published a helpful calendar of dates when companies released their results in 2013. It should serve as a guide for when they are likely to announce their results. Analysts at the firm also wrote that they expect ‘some quite impressive results from some of our preferred stocks.’

Companies H1 2013 Results Publication Date

Current UBA Capital Target Price

Current UBA Capital Rating

Access Bank Aug-21 12.3 BUY

Dangote Cement Jul-16 255.0 BUY

Diamond Bank Jul-31 9.5 BUY

FBN Holdings Aug-27 16.6 BUY

Fidelity Bank Jul-26

Forte Oil Jul-26

Guaranty Bank Aug-20

Mobil Nigeria Jul-30

MRS Aug-15

Oando Aug-16

Skye Bank Jul-24 4.6 BUY

Stanbic Bank Jul-30

Sterling Bank Jul-18

UBA Jul-29

Union Bank Jul-31

WAPCO Jul-29 120.0 BUY

Zenith Bank Aug-15 28.0 BUY

Analysts at Afrinvest have a fair quantity of BUY recommendations too.

It is not often that sea-soned analysts use gushing adjectives to describe com-panies. But that is just what the analysts at Cardinal-

Stone Partners have done. They describe Transcorp’s investment case as ‘very compelling as it presents an excellent opportunity into

Nigeria’s emerging utilities sector.’ They rate the stock a BUY with a 2014 target price of N6.62.

The National Associa-tion of Securities Deal-ers (NASD) announced this week that it will provide an Equity Analyst section on its website where research reports on Over the Counter (OTC) securities will be avail-able. This is a welcome step.

It is expected that the NASD will be able to attract reputa-ble analysts, and not pump-and-dump artists, to cover its companies.

The NSE has had a similar relationship with Thaddeus Investment Research & Advi-sors to provide coverage for

less visible companies not covered by sell-side analysts at bulge bracket firms.

At the start of the year, Bola Ajomale, chief execu-tive of NASD, disclosed that it was targeting over 230 companies to be traded on its platform.

In its July recommenda-tion list, Imara African Secu-rities places BUY recommen-

dations on all four securities included: Access Bank, Dangote Sugar Refinery,

Lafarge Cement WAPCO, and UAC.

Transcorp chairman, Tony Elemelu (second from left) rings the bell at the NSE, while Obinna Ufudo, CEO, (first from left) and NSE officials applaud

Satchets of Omo, a Unilever product, sold in a street corner stall

At Renaissance Capital, analysts are bullish on the banking sector. All nine financial insti-tutions under its coverage - Access Bank, Diamond Bank, Fidelity Bank, First City Monument Bank, First Bank, GT Bank, Skye Bank, Stanbic IBTC, and Zenith Bank – have BUY recommen-dations. Skye Bank has the highest price upswing potential at more than 100%.

COMMENTARIAT 6 VM | Monday, July 21, 2014 | Issue 002

Rocket Internet plans an initial public offering in Frank-furt in the third quarter. The company behind JUMIA, the

online retail store, is expected to be valued at between €3bn and €5 billion. Founded by Oliver, Alexander and Marc Samwer,

three German brothers, Rocket Internet aims to become the big-gest consumer internet group outside the US and China.

CORPORATES

New Listing

Board Changes FCMB’s Consumer Lending Muscle

BDC Capital Raising

Helios Bond Issuance

United Kingdom, 71%

Europe, 16%

South Africa, 8%

Asia, 4%

Middle East & North Africa, 4%

Helios Bond Issue Final Allocation

Source: Bank of America Merrill Lynch

Notore Chemical In-dustries, a nitrogenous ferti-lizer producer, plans to list its shares on the Nigerian Stock Exchange. According to sourc-es, the company has already approached the NSE with a formal request. Notore is the only producer of urea fertilizer in sub-Saharan Africa.

In November 2007, Emerg-ing Capital Partners, a pri-vate equity firm, took a stake in

the company. The listing may be an avenue for it to sell down its stake. Other companies in ECP’s portfolio include Continental Reinsurance and Oando.

During the week, Continental Reinsurance Plc informed the NSE of a possible divestment by ECP Africa Fund II PCC and its partners (the ECP Fund II Con-sortium) of their interests in the company. ECP invested in the company in February 2007.

Sterling Bank has notified the NSE of the resignation of three of its directors. They are Alhaji (Dr.) S.A. Adegun-wa, who until his retirement served as chairman, Alhaji Bashir Borodo, OON, and Mr. Yemi Idowu. Mr. Asue

Ighodalo becomes the new chairman. He is the co-found-er of Banwo and Ighodalo, a respected City law firm that enjoys long standing relation-ships with some of Nigeria’s biggest companies. He sits on the boards of the Nigerian Economic Summit Group, Dangote Flour Mills Plc, Christopher Kolade Founda-tion, FATE Foundation, Main Street Technologies Limited (sponsor of MainOne Cable Company), Union Bank (UK) Plc and Nigeria Leadership Initiative (NLI). Ighodalo is a veteran deal adviser and it would be interesting to see him put his rich experience to work at the One Customer Bank.

The appointment was made at the bank’s board meeting held on July 8, 2014.

FCMB Group plans to raise up to $300 million of funding this year to boost consumer lending by about 20 per cent to N540 billion. Ladi Balogun, the chief ex-ecutive officer, expressed a strong bias for tapping ‘the loan markets as opposed to bond markets due to more stable pricing.’

Asue Ighodalo, chairman, Sterling Bank

Ladi Balogun, Group CEO, FCMB Group

Two hundred bureau-de-change have successfully raised their capital to N35 million in compliance with the new guidelines issued by the Central Bank of Nigeria. This was disclosed by God-win Emefiele, the governor of the Central Bank of Nigeria, during at a hearing before the House of Representatives Committee on Banking and Finance.

In recent weeks, BDC op-erators under the aegis of the Association of Bureau De Change of Nigeria have embarked on a public aware-ness campaign and legislative lobbying to persuade the apex bank to rescind its decision. BDCs have until July 31 to meet the new capital require-ment.

The CBN governor decried abuses among BDC operators

whose businesses had be-come ‘characterised by rent-seeking, weak operational structure, financing of illicit transactions, gradual dol-larisation of the economy and multiple ownership of BDC licences.’

He explained that a regu-latory overhaul is overdue to stem these abuses.

Professor Akpan Ekpo, director-general of the West

African Institute for Finan-cial and Economic Manage-ment (WAIFEM) has advised the regulator to tread with caution because the N35 million figure is high, and the time window too short. These could have unplanned consequences on the stable supply of forex to businesses and individuals that need to purchase currencies for legiti-mate uses.

On July 8, Helios Tow-ers Nigeria (HTN) priced a US$250m 5NC3 RegS senior unsecured high yield bond. Bank of America Merrill Lynch acted as sole bookrun-ner, lead manager and rat-ings advisor. HTN is a lead-ing telecoms towers operator in Nigeria with approximate-ly 1,200 towers across 34 out of 36 Nigerian states

The company plans to use proceeds for the offering to refinance the existing, ex-pensive senior and subordi-nated indebtedness, as well as extend the company’s debt maturity profile, optimize its

capital structure and estab-lish a liquid benchmark for the company’s future debt raisings.

The bond sale is historic in a number of ways. It is the first time that a non-commodity Sub-Saharan Africa corporate issuer and first Sub-Saharan Africa telco outside South Af-rica will be selling bonds, and the lowest ever coupon for an inaugural Nigerian corporate issuance at 8.375%.

The final allotment by re-gion shows the spread of ap-petite for Nigeria-exposed companies in attractive sec-tors.

Uniform Mortgage Underwriting Standards

Mortgage loans as % of GDP

UK, 81%

USA, 73%

South Africa, 32%

India, 5.8%

Brazil, 5.5%

Russia, 2.7%

Nigeria, 0.55%

Source: Dunn Loren Merrifield Source: Central Bank of Nigeria

The importance of uniform mortgage underwriting stan-dards across the different states’ jurisdictions has been emphasized by Sonnie Ayere, chief executive of the Nigerian Mortgage Refi-nance Com pany. He was speaking at a two-day workshop with the theme ‘Uniform Underwriting Standards for

Mortgage Loans’. Four states, Kogi, Abia, Enugu, and Akwa Ibom, have expressed their interest to participate in the standardization of terms for access to mortgages. NMRC is a secondary mortgage financing institution. The company was launched by President Goodluck Jonathan in January 2014.

Oando Wins the Medal

Oando Energy Resources Inc. (OER), a Toronto-listed E&P company, has completed the acquisition of Medal Oil Company Limited. OER issued 3,491,082 units of one common share and one-half of one war-

rant for each Medal Oil share. The total consideration was $5 million. Medal Oil holds a 5% interest in OML 131, a deep-water license covering 297,600 acres. ConocoPhillips owns the remaining interest in the block.

Godwin Emefiele, the Central Bank of Nigeria gov-ernor, is slowly learning the importance of Centralbank-ese, a unique language spoken by central bankers around the world. It is noted for its abil-ity to obfuscate listeners, be-ing non-committal, and never revealing what the speaker plans to do. Alan Greenspan once said that ‘if I seem undu-ly clear to you, you must have misunderstood what I said.’

Emefiele has got off on the wrong foot. Shortly after he resumed office, he called a big press conference to say exactly what he plans to do.

Thankfully, he has kept mar-kets guessing about exactly how he plans to achieve those goals: lower interest rates, a stable exchange rate, and free capital flow.

Next week, he chairs his first monetary policy com-mittee meeting (MPC). Analysts do not expect that he will cut rates anytime soon. Alan Cameron, a London-based economist at CSL, who was polled by Reuters explained that ‘we do not see any chance of rates being cut at July’s MPC, much less as inflation continues to creep up ahead of elections.’

REGULATORY

Waiting on Mr. Emefiele

2014

April May June

Inter-Bank Call Rate 10.50 10.63 10.63

Minimum Rediscount Rate (MRR)

Monetary Policy Rate (MPR) 12.00 12.00 12.00

Treasury Bill Rate 11.26 10.13 9.98

Savings Deposit Rate 3.42 3.41 3.42

1 Month Deposit Rate 8.19 8.27 8.46

3 Months Deposit Rate 9.38 9.42 9.30

6 Months Deposit Rate 10.07 9.76 9.52

12 Months Deposit Rate 9.69 9.29 9.19

Prime Lending rate 16.70 16.50 16.50

Maximum Lending Rate 25.63 25.76 26.07

Money Market Indicators (In Percentage)

COMMENTARIAT 7VM | Monday, July 21, 2014 | Issue 002

ConocoPhillips Acreage Facility

OML 131 deepwater oil block

HIGH TABLE

ART AS AN ALTERNATIVE INVESTMENT

The Raw Deal

Raw meat is not for every-one. Since the invention of fire by Paleolithic man, many find the consumption of unprepared meat unconscionable. Boiled, fried, grilled, steamed, and just about any other heat applica-tions is preferred to raw meat.

But do we go too far in the preparation of meat draining out all its soul in the process? In Nigeria, our obsession to attain a parasite destruction guarantee by boiling beef and chicken to its ‘second death’

is common. Meat is left too long in a boiling pot, which extricates all the nutrients, and flavour in it. Not satis-fied, most cooks go further to certify the meat officially dead by incubating it in a brothy soup or stew. Then they rely almost completely on its stock to breathe new life into it.

However through the course of history and spanning dif-ferent parts of the world, raw delicacies have emerged for numerous reasons; practical or otherwise.

An example dates back to 1950 in Venice, where an ail-ing aristocratic lady went to dine at the famous Harry’s Bar. When Giuseppe Cipriani, the owner, was informed that his guest was on strict medi-cal instructions to have only uncooked meat, he went ahead to shave thin slices of raw beef, which he served it with mus-tard sauce. He named it Car-paccio because the dish resem-bled the red hues and tones of the painter Vittore Carpaccio whose works were being exhib-ited in Venice at the time.

Closer to home in Africa are the Ethiopians, swear by kitfo, an African steak

tartare, served with local Ethiopian spices and cheeses, and tere sega, a ceremonial dished served at weddings. Anthropologists suggest that due to the numerous wars in the Abyssinian region, soldiers ate their meat raw as a protective measure. Had meat been cooked in war time the smoke and smell would alert their enemies.

There are several examples of raw food consumption from around the world. Ceviche (seafood ‘cooked’ in the citric acid of lime), crudo, an Ital-ian version of ceviche, steak tartare, and of course, sushi, perhaps the most famous of raw diets.

Originally from Japan, the combination of rice and raw fish (sushi) was borne out of necessity. The vinegary rice was initially used as a pickling agent for the fish. Sushi as we know it ‘today evolved as a freshwater delicacy during the Edo dynasty (1603 - 1868).

In Nigeria, Bungalows Res-taurant, which has a mouth-watering 20-page menu, including sushi offers an au-thentic izakaya (Japanese pub) experience.

I ordered the Salmon nigiri, my sushi of choice in Lagos. The chef did not disappoint.

I would also recommend the sushi at Fusion Restaurant and the Avenue Suites. Although it has been a while, the greyish tint of the last salmon nigiri I ordered once at Bonzai on Akin Adesola Street in Victoria Island leaves me scared to rec-ommend it. The slightest per-ception of contamination with raw food is enough to make an unsold diner run for the hills, especially in Naija!

But my top pick for sushi would have to be Izanagi. Since it opened in June 2012, it has

built a reputation for giving VIP service to its regulars.

For the faint hearted diner, a salmon roll is probably a good entrance dish to the world of raw sushi. It is an easy entrée es-pecially if you have had smoked salmon since the texture is simi-lar. A note of caution though. The taste is markedly different. The combination of the sweet vinegary rice with the silky deli-cious fish is a taste once acquired can be highly addictive.

So order up and welcome the advent of Japanese restau-rants in Lagos. The cleaner, healthier Lagosian palate is here to stay. ;

Ify Ojiis a lawyer, writer and food lover. She is the creator of the GidiTang.com (synonym: Lagos Flavour) blog on food and drink in Lagos. teamlogiclimited@gmail.com

Avenue Suites1390 Tiamiyu Savage Street,

Victoria Island

Bungalows Restaurant1296 Akin Adesola Street,

Victoria Island, Lagos

Fusion Restaurant1C, Ozumba Mbadiwe Street,

Victoria Island, Lagos

Izanagi Japanese Cuisine19B Idejo Street, Victoria

Island, Lagos

EDITOR: MIDENO BAYAGBON

GROUP BUSINESS EDITOR: OMOH GABRIEL

CONTENT DIRECTION: OBIORA TABANSI ONYEASO

DESIGN & ILLUSTRATION: PUBLICAN MEDIA

Vanguard Markets features unbiased, in-depth coverage of corporate and market developments across a wide range of business sectors.Every week, Vanguard Markets delivers essential business analysis and commentary on Nigerian companies, regional economies, and global markets. Vanguard Markets is published by Vanguard Media Limited in associa-tion with Customs Street Advisors Limited, a specialist communications consultancy.

Vanguard Media Limited, Vanguard Avenue, Kirikiri Canal, P.M.B.1007, Apapa.

Website: www.vanguardngr.com

ISSN 0794-652X

Published by

In Association With

Last week, on Art as an Al-ternative Investment, we took a look at the top ten sales of Nigerian art. The 2014 edi-tion of Africa Now, organized by Bonhams, an international auction house, featured 120 lots from established names

including Ben Enwonwu, Yu-suf Grillo, El Anatsui, and Bruce Onobrakpeya. The most valuable sale was a 1976 oil painting Princes of Mali by Ben Enwonwu at £92,500.

As new records are set for Nigerian and African art on the international market, it is imperative to examine the in-dices that determine the value of an artwork; authentic-ity, quality, rarity, condition, provenance and value. These factors must be considered all at once in order to make an informed decision when pur-chasing a work, They may be broadly categorized into three.

Economic The laws of supply and de-

mand are generally applicable to the sales of art. Rarity tends to enhance value. Works by prolific artists tend to be less valued than those of artists

who produced less. Likewise, works by deceased artists are generally more sought after. The rarity of a given work is also determined by how many similar examples exist. For example, a painting is usually worth more than a print or a lithograph while a surplus of artworks by a particular art-ist tends to cause a reduction in market price. However, if collectors suddenly become active as a result of a change in perceptions or their mate-rial circumstances, the market price tends to rise. Therefore, the value of art fluctuates de-pending on how keen collec-tors are and how much they are willing to pay for a piece.

Work The quality of a given work,

its aesthetic merits, its signifi-cance within a larger context of artistic history and within

the specific context of an art-ist’s oeuvre, contribute to its overall value.

The period in which a work was created is another factor in determining its price. Ap-praisers generally value works completed early in an artist’s career higher than those com-pleted later, as early works tend to be more unpredict-able, daring and passionate, owing to the artist’s desire to establish a strong reputation.

Works of art that typify an artist’s aesthetic are also ap-praised higher than those un-characteristic of his oeuvre. Enwonwu’s most expensive work sold to date, the Daily Mirror figures are fine ex-amples of his aesthetic and are representative of his well-known elongated, lithe forms, as well as geometric shapes borrowed from classical Afri-can sculpture.

Other factors include the size of a work and medium of execu-tion. Generally, larger works of art are valued higher because of the degree of difficulty involved. Sculptures in wood, bronze, metal or stone are also consid-ered more valuable than paint-ings. Traditional paint media like oil is valued higher than acrylic and watercolor, which in turn are usually worth more than prints or lithographs.

The condition and the provenance of an artwork impact a given work’s value. For example, a painting that is ripped, water-damaged, discoloured, or extensively repaired may be significantly reduced in value. Works of art formerly owned by famous people usually command high prices, while established provenance like certificates of sale, exhibition and publication history help resolve questions

of authenticity, art-historical importance and enhance value.

Artist Artists who are well-known

and enjoy a rich history of col-lection mostly command more value than artists who are un-known. Several reasons can be adduced; education, years of practice, recognition including prizes and awards, profession-al affiliations, publications, and exhibitions in significant galleries and museums.

In conclusion, collections formed with passion and intel-ligence stand the test of time, both aesthetically and mon-etarily. In building a collec-tion that has huge investment potential, one must keep in mind its high liquidity factor, or marketability − the rela-tive ease to sell all or part of the collection quickly and thus convert its value into cash. ;

A Short Guide to Collecting Art

Ben Enwonwu’s Seven wooden sculptures commissioned by the Daily Mirror in 1960. Sold for £361,250 incl. premium

ARENA8 VM | Monday, July 21, 2014 | Issue 002

Oliver Enwonwuis the director of leading Lagos gallery, Omenka and president of the Society of Nigerian Artists.oliver@omenkamagazine.com

Salmon nigiri dish