New Lessons

What do you do when you suddenly realise you’ve got competition? How do you respond to such threat without making some costly mistakes? How do you know that your strategies for building brand loyalty amongst your target audience is the right one in the face of competition? This is where we are right now and I can tell you the  answers are not easy. I am following my gut instincts by following what my intuition tells me me. This is much different from emotions. I don’t allow emotions to rule me when it comes to business. I simply do what has got to be done.

The product has given its’ first hint of monumental success based on consumer reactions to it. Yes, we now have another competitive distributor but that has not taken my gaze off my goals and objectives. I have not come this far to give up. I am trudging head on. We’ve also advised the manufacturer to obtain Standard Organisation of Nigeria’s certfication. This will help in affirming the quality of the product and it gives us the right to sell this product within Nigeria.

 Apart from selling the brand through large retail chains or stores, I have also decided to engage the services of Direct Sales Agent who will be brand ambassadors and engage in one on one communication with our target audience. For our affiliate program, we have put in place an attractive sales commission for our agents. Based on our sales forecast, our agents will be making a minimum of N5,000 – N10,000 weekly. We intend to also offer more incentives as sales increase. For now, we’re taking it one step at a time.  Got to go peeps.

Have a wonderful holiday. Merry Christmas.

Investing in turbulent times

Hey, don’t go thinking I know all the answers cos I don’t. I am actually trying to discover what everyone is investing in amidst the global financial crisis. I spoke with a friend of mine yesterday and she suggested real estate. My grouse with buying land in Nigeria is the issue of  “Omo o nile” and attendant dubious charges. I would rather buy a detached three bedroom bungalow, within the range of N5mn – N6mn (which is dependent on whether I can access mortgage facilties), located in Lagos. Since I don’t have such huge funds right now, I have to think of something else.

For the past one month, I have been trying to scout for other alternative investment options (long-term), and someone had suggested ARM Investment. Please note that I did not include the link to the website. I’d rather not cos from my own point of view, either they are yet to engage the services of a social media strategist, or someone is simply not doing their job. I filled in the forms a month ago and I am yet to be contacted by a Wealth Advisor. What is the essence of setting up a website if there’s no one capable of attending to visitor’s enquiries. I also tried calling the numbers stated on the websites and unfortunately, none seems to be working.

My question today is: If you have some funds sitting idle in your savings account, where would you invest it?

Public Offer II

I came across this article written by the Proshare team on the recent Public Offers in the capital market. I would like to state here, that this is not an approval of the various stocks in the market but an opportunity for discerning investors to make up their mind based on other factors beyond the promising figures.


In a season of offers and more (including repeat) offers by quoted companies, especially firms in the banking sector of the Nigerian Stock Exchange, it is important for investors to seek to look beyond the rhetoric, commentaries and celebrated endorsements by leading lights in the market, economy, politics and society at large.


An investor therefore needs to be able to narrow down the list of stocks that is in front of him/her and research same.


Nowadays, there are a ton of great resources available out there for researching stocks, and fortunately most of them are free. Online research is becoming more and more popular because of its convenience and ease of use. The NSE exchange site allows you to see the stock performance over a period, the Proshare website gives you analyst commentaries on stock, annual accounts, equity research notes and fund managers report while the online editions of newspapers and other websites shares news and analysis on quoted stocks to allow you to make intelligent decisions.


Once you’ve gathered the facts, you should then perform the analysis. Different investors use different methods for determining what stocks to buy. Most investors prefer fundamental analysis, although there are also a large number who focus on technical analysis. Whatever one you decide to use, here are a few final considerations to keep in mind:


* Focus on the market cap, not the per-share price. The market cap is the per-share price times the number of shares outstanding. In essence, this is how much you would have to pay to buy the whole company. Every company has a different number of shares outstanding, making per-share price comparisons meaningless. For this reason, a stock which is trading at N40 per share might actually be cheaper than a stock trading at N5 per share. This doesn’t mean that price per share is completely unimportant; some technical analysts believe it can provide clues to where the stock will go next but for fundamental analysis it’s really not important.


* There is no perfect stock screen, because every investor is looking for something different. Some are looking for growth, others for value, still others for dividend income. The screens you apply should be done with your unique goals in mind.


To help you understand how this works, lets us review a current offer – Afribank Nigeria Plc.



From humble beginning with one branch in 1960, Afribank has grown to over 221 branches in major and sub-urban locations across the country. Afribank has also recently obtained CBN approval to open 48 additional branches in strategic locations in Nigeria. The Afribank Group comprise subsidiaries, affiliates and associated companies which include: Afribank Capital Markets Limited (100%), Afribank Registrars Limited(50%), AIL Securities Limited(61%), Afribank Insurance Broker Company Limited(100%), Afribank Estate Company Limited(100%), Afribank Trustees & Investment Limited(100%) and ANP Int’l Finance Company Limited, Dublin(100%). In addition Afribank has made investments in the following affiliate companies: Consolidated Discount House Limited (24.5%), Electricity Meter Company of Nigeria, Zaira (17%), Niger Insurance Plc. (10%), Unique Ventures Limited (40%) and Trustfund (Pension Fund Administrators) (15%). The development of this financial superstructure has made it possible for the Bank to leverage as a one–stop shop for the delivery of a wide range of financial services.



Analysis of the investment ratio between 2003 and 2007 shows that Afribank’s earnings per share increased from N0.45k to N1.02k translating to a CAGR of 22.59%. Dividend per share increased from N0.15k in 2003 to N0.30k in 2007 translating to a CAGR of 18.92%.


The bank did not pay dividends both in 2005 and 2006 as a result of the restructuring costs which it had to undertake in 2005 to position it to efficiency and the goodwill in the account of the bank in 2006.


Earnings yield increased from 6.45% in 2003 to 8.84% in 2007 while the dividend yield also increased marginally to 2.61% from 2.15% during the same period. In a similar development, dividend cover improved marginally to 3.39x from 3.00x. The average P/E ratio for the financial year ended 2006 and 2007 is 13.52x while the average dividend pay-out for the period between 2003 and 2007 is 30.78%.


The share price appreciated by 64.90% from N6.98 to N11.51 translating to a CAGR of 13.32% while the net asset per share increased from N3.34 to N6.13 which is a CAGR of 16.37%. Meanwhile, the shares being offered will qualify for any dividend or bonus that may be declared for the year ending 31st March, 2008.


Investment in Afribank shares in the last seven years has proven to be profitable in terms of capital appreciation, dividend and bonuses earned.

Public Offers

Of late, we’ve been deluged with a number of public offers from the banking and other sectors. Quite a number of these organizations and institutions have painted a bright picture of their business performance. They’ve also gone ahead to give brilliant future forecasts.

My concern however is not with the number of public offers in the market, but how to separate the wheat from the chaff to determine the really good ones to invest in. My word of advice during this public offer bumper season is “Please really consult the advice of your stockbroker or your finanical analyst”. If you fail to do so, you may just find yourself incurring losses with equity investment.

Assessing my goals for September

Last month, I did not give an update of my expenses and savings goal for the month. It was a rather busy month for me which included a lot of travelling for business meetings and other official functions. This month, I really won’t be dwelling a lot on my total networth. Rather, i’ll be giving an update on how effective I was in tracking my daily expenses and monthly savings. August was a bit flat for me especially in terms of my investments on the stock market due to the prolonged bearish run, there were a few dips here and there but overall, I held on steady. Remember, my investment goals are long-term not short-term.

For the month of September, I increased my savings goals from $1,134 to $2,591 due to a recent 40% increase in my annual salary (my organization has decided to include mid-year salary reviews as part of its’efforts in maintaining internal equities amongst employees) also received monthly cooperative check payments to my accounts; invested $2,540 in some public offers and private placements while my pension contribution earned an additional income of $979. To this end, I can begin to focus on my expenses for this month cos while my monthly income has been increased, this has also led to an increase in my monthly contributions towards pension which puts me in relatively healthy financial shape.

So, what are my goals for October? Reviewing my savings goal for the year which was a million naira, I’ve been able to save a bit more than a million naira by pruning down on my daily expenses. Right now, I’m saving towards my next vacation coming up February 2008 (I don’t have a specific destination in mind right now) but I’m working on it. I need a break to enjoy and spoil myself a little while seeing some wonderful sights around the world.

This month, i’ll be tracking my expenses a bit more closely by recording whatever I buy in my little notebook and also keeping all receipts so as to know where my money is going. Last month, I got off on a good start by tracking my expenses and keeping tabs on receipts but somewhere down the line, I lost track of all the receipts and couldn’t even locate some because Iwas not recording it in my notebook. Due to the recent salary increase, I also intend to increase my monthly savings goal from 70% to 80%.

Emergency Fund

Lately, i’ve been saving a huge sum for the purpose of emergency. I define an emergency fund as funds for sudden and unexpected expenses. This includes a sudden change of job role which may deny me some benefits I had earlier taken for granted, medical expenses which my current medical scheme may not cover and other miscellanous expenses that suddenly creep up out of nowhere.

I have this tidy sum in my savings account right now and I really had no idea about where to invest it for the short term until I thought about treasury bills. I have been toying with this idea for some time now due to the low interest rate available for savings account holders within the Nigerian banking industry. Besides, I have also been toying with the idea of taking a one year break from my career while I pursue other personal interests. So, I called up my friend at First Bank who was kind enough to tell me that the rate is 5.9%. This may not seem attractive to a lot of people, but on the other hand, remember i’m not looking for huge returns. I need an outlet where I can stash this fund till I really need it. Treasury bills offer a safe return and I can decide to use the income I receive from this investment towards my living expenses or in the interim roll it over till I’m really sure on what I intend to spend it on.

Furthermore, in the event of an emergency, I can pull out my funds but until then, Treasury Bills will be a safe outlet for my funds.

When Banks become their own Registrars.

Of late, I’ve been observing the recent trends by our banks after the consolidation exercise. Most banks have decided to open shops as registrars or issuing houses. What this translates to is; if you are an ordinary shareholder in XYZ bank, probably your share certificates and dividend warrants were being posted by GHY registrar.

Recently, I received my dividend warrant from Intercontinental Bank and was surprised to note that I was credited twice with different share unit bringing my total number of share units to 30,000. I decided to make a make a visit to Intercontinental Registrar to complain about this error. On arrival, I was informed by the customer service executive that the mistake did not occur from the bank rather it was the fault of Wema Registrar, who were obviously miffed about losing a client that they decided to mess up the books. (How plausible does this seem?)

The point I’m trying to make here is that if every bank decides to establish its’ own registrar house,  coupled with the fact that banking stocks are the most attractive and lucrative on the stock market, isn’t that a bit crazy. Will they be vying for each other’s account or vying for clients in other sectors such as agriculture, food, beverages and tobacco, insurance and so on. These are some of the questions running through my mind.

As at the time of writing this article, UBA, WEMA, Intercontinental, GTB, First Bank. UBN, Zenith Bank, IBTC, Oceanic are some of the banks that have established their respective registrar outfits.

GT bank makes refund to GDR investors

Domestic investors to the recently concluded GTBank GDR are to contact the respective underwriters through which their investments were made for collection of surplus monies due.

This development arose following the price determination which has brought down the price of the GDR as a result all domestic subscriptions were adjusted to reflect the offer price of US$11.20, whilst taking into consideration the subscription multiples of a minimum of 50GDRs. A domestic investor that subscribed for 500GDRs would initially have paid US$6,375 based on the Reference Price.

However, following the adjustment to reflect the official price of US$11.20 per GDR, the investor would be allotted a total of 550GDRs, while US$215 will be returned to same as surplus monies.

Explaining the reason behind the refund the bank is making to domestic investor it said, “Given the differences that exists between the Nigerian and international equity issuance process, one of which is the pricing of primary securities, the bank adopted an innovative and unique offering process, with a view to ensuring that such differences are minimised to a large extent in order not to frustrate the transaction and completion time line, while achieving the above mentioned objectives.

“In a typical primary equity offering in Nigeria, a “Fixed Price” approach is often adopted, i.e. investors are advised of a fixed price at which the primary offering will be made on the day an offer opens up till the closing date. However, in international capital markets, a “Book Building” process is often adopted for the marketing and pricing of primary equity offerings. Book Building is basically a capital issuance process which aids price and demand discovery. The Offer price is then determined after the bid closing date.

“Consequently, the underwriters of the domestic tranche adopted a Reference Price of US$12.75 per GDR for the duration of the domestic tranche as a guide for domestic investors, with the caveat that the offer price to be determined on July 20 may close at below or above the Reference Price, given the international market practices. On July 20, 2007, the offer price was fixed at US$11.20 per GDR.”

In July 2007, GTBank became the first Nigerian and African bank to issue a full listed GDR offering on the London Stock Exchange.

The transaction comprised a 2-tranche structure of a simultaneous US$250m domestic GDR offering and a US$500m international offering. The GDRs issued are represented by the underlying ordinary shares of the bank with an exchange ratio of 1GDR to 50 ordinary shares. While the domestic GDR offering is no different from the international GDR offering, this transaction structure was adopted as a means of ensuring that domestic investors were provided with the opportunity of participating in this historic offering.

Without a doubt, the recent GTBank GDR issuance in the international financial markets recorded an unprecedented milestone in the domestic capital markets and would provide the economy with several multiplier benefits.

The growing appetite for quality equity offerings from the international investing community is also viewed as a positive signal of the strong underlying prospects of the Nigerian economy in the short to medium-term. The GTBank GDR currently trades on the London Stock Exchange under the ticker symbol “GRTB”. It is understood that the bank will be issuing a secondary market trading guide for the GDRs to domestic investors in the very near future.

Reasons why you should start investing

When I discuss the future with some of my friends, I receive the response “the future will take care of itself”. To this statement I always say, “The future will take care of those who have taken care of the future”. Every human being who receives a reasonable sum of money as a monthly income should start investing for the rainy days. If you’re still procrastinating on saving for the future, these are some of the reasons you should consider.

Inflation – we’re all aware that inflation erodes the real value of money. What N100.00 could buy a year ago, the same amount cannot buy the same item currently. If you’re committed to saving N100 daily by trimming on items that you really do not need, you would be saving a total amount of N3,100 weekly and N37,200 on an annual basis. If you invest this amount in an investment or mutual fund such as “the ARM Discovery Fund” with an annual return rate of 8% per annum. In five years, this principal capital would have returned a total sum of N52, 080.

Future value of the Naira – a lot of individuals I know are quite pessimistic at the slow economic growth rate being experienced within Nigeria. I always point out that if our economic growth rate is slow and not rapid, why do we have a lot of foreign investments within the economy. (Think about the recent re denomination policy by the CBN) 

Let’s be honest with ourselves, we may not be satisfied with where we are economically and socially as a nation and as a people; but the government of the day is gradually putting in place policies that will transform the economy of this nation. When I was growing up, I was taught by Ghanaian teachers but nowadays, where are they? They’ve gone back home to a country that has become one of the fastest growing economies within Africa.

Financial Freedom – while watching the “Oprah Show” today, I was struck by the saying of the doctor who was invited on the show to talk about cultivating healthy eating habits. He said, “You don’t have to be motivated before cultivating an healthy lifestyle, doing it is enough motivation”. When I began my journey towards financial freedom, early retirement was the main motivation and I had a fixed figure in mind that I needed before I could retire. I never assumed that what I earned was insignificant. I made up my mind to save as much as I could with my mind fixed on the pictures of what I intended to do after retiring.

Capital gains – our parents grew up with the mindset of working and eventually retiring to paid pensions by the federal government. Many of them did not take advantage of the gains to be made on the capital market due to limited awareness and knowledge about investing in stocks. Imagine what the net worth of an individual who purchased stocks when they were being sold for less than a kobo would be by now. Such an individual would be worth several millions or billions of naira. Friends tell me that investing in the capital market requires huge funds to which I disagree. If you fail to take advantage of the knowledge that’s prevalent nowadays and kick start your investment goals, some few years down the line, the same stocks that are being sold for N30 max will be sold for N100. So, what are you waiting for?

Just how rich is rich? – When I graduated, earning a monthly income of N50,000 seemed like a huge sum of money and I thought of what I could do with such an amount. Two years later, the same sum does not seem so huge anymore. Now I think of how much I would be able to invest if I was earning half a million naira monthly. Some few years down the line, half a million might not seem a big deal anymore depending on where I am on my career path. You’re the only one who can determine how much you’ll need to be wealthy or rich. The earlier you start, the better off you’ll be.

Your Retirement fund is not enough to live the kind of life you desire. While saving for retirement is important, if you don’t have enough funds set aside for emergencies and life’s little luxuries, you may have to dig yourself out of debt.

One thing you can be certain of is that nobody will pay for your financial indiscipline if you don’t kick the habit in the bucket. I know of individuals who are waiting for their spouses to bring in the dough, waiting for an inheritance that may never come or hoping to win the American lottery or Who Wants To be a Millionaire cash prize of N10 million naira which may never materialize.

Luxury – if you’re having problems denying yourself a little bit of luxury, think of saving for investment as a means of buying financial freedom for yourself. Otherwise, open a separate account that will take care of occasional splurges on luxury items.