Good morning readers. Here are 10 things you need to know this Wednesday morning in the press/news.
- President Muhammadu Buhari’s team lands in Kano as five more personalities die. The team met with state Governor, Dr Abdullahi Ganduje, on the directive of Buhari.
The Chief Press Secretary to Governor, Abba Anwar, in a statement, said the team was led by Dr Sani Gwarzo and that they met with Ganduje at the Africa House, Government House, Kano.
- The Nigeria Centre for Disease Control on Tuesday said it would target testing two million people in the next three months.
The NCDC DG, Dr Chikwe Ihekweazu, who said this at the Presidential Task Force on COVID-19 media briefing in Abuja, also said it cost between $18 and $20 to test a COVID-19 sample.
- FG seeks Jonathan, Diezani’s foreign accounts’ details
Kano records 38 new COVID-19 cases as tests increase.
Suspected COVID-19 patient dies in Ondo hospital.
I stabbed my mother-in-law for asking son to divorce me –Suspect
Delta correctional centre inmates protest, burn documents.
Fire guts NNPC station, 30 cars, buildings in Lagos.
51 nabbed as Lagos community protests against lockdown
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MTN opens up on alleged indebtedness to Nigerian Govt
MTN Nigeria Communications Plc has clarified an alleged indebtedness to the Federal Government of Nigeria in respect to outstanding taxes.
Its company secretary, Mrs Uto Ukpana, made the clarification in a notice posted on the website of the Nigerian Exchange (NGX) Limited on Tuesday.
Ukpana recalled that on Jan. 8, 2020, the office of the Attorney General of the Federation had transferred the case of MTN Nigeria’s alleged indebtedness to the Federal Inland Revenue Service (FIRS) and the Nigerian Customs Service for resolution.
She explained that MTN Nigeria cooperated with the authorities and provided relevant evidences to demonstrate full compliance to all extant tax and regulatory obligations and discussions were ongoing.
“As recently as 2020, the tax authority commended MTN Nigeria for its prompt payment of dues.
”In addition, when asked earlier, the company agreed to make advance tax payments ahead of established deadlines to support government’s revenue drive.
“This was also the case in 2020 when in response to FIRS appeal to support government, MTN Nigeria made an early payment of its 2019 company income tax (CIT) of N46.9 billion.
“MTN Nigeria did the same this year between March and June, making early payments of N95.5 billion for the 2020 CIT which was due June 30,” she said.
Ukpana pledged MTN Nigeria’s commitment to conducting its business in accordance with applicable laws.
“We are also committed to contributing to the social and economic development of Nigeria,” the communication firm declared.
Bamboo reassures customers of safety after CBN account freeze
Fintech investment platform, Bamboo has reached out to its customers reassuring them of the safety of their funds in the wake of the court injunction obtained by the Central Bank of Nigeria (CBN), permitting the freezing of the company’s accounts pending investigations that the apex bank is launching into the platform’s forex trading activities.
“We’re aware of the recent reports about us. Our legal and government relations teams are looking into it but we thought it was important to let you know that your money remains safe with Bamboo and will always be readily accessible,” the statement from Bamboo read.
FELLOW PRESS reported earlier that a federal high court in Abuja granted the request of the CBN to freeze the accounts of six fintech companies namely Rise Vest Technologies Limited, Bamboo Systems Technology Limited, Bamboo Systems Technology Limited OPNS, Chaka Technologies Limited, CTL/Business Expenses, and Trove Technologies Limited.
The apex bank said it was investigating “illegal foreign exchange trading” by the fintech companies and sought the court injunction to freeze their accounts for 180 days pending the completion of investigations.
The CBN alleged that the companies were complicit in operating without license as asset management companies “and utilizing FX sourced from the Nigerian FX market for purchasing foreign bonds/shares in contravention of the CBN circular referenced TED/FEM/FPC/GEN/01/012, dated July 01, 2015.”
Jumia share price down 48% in the last 6 months
Jumia, Africa’s largest online e-commerce platform has seen its share price decline by a whopping 48% in the last 6 months. For investors who bought the stock about a month ago, the stock is down 26%.
Before the recent slide, Jumia has been one of the best-performing stocks and is still up by 142.44% Year on Year (YoY), a significant return for those who bought this time last year.
Why the drop?
The first clue could be reactions from investors to the company’s recent results performance from its financial statement. In its first-quarter results, Jumia recorded a decline in revenue by 6.4% when compared to the first quarter of 2020 from €29.3 million to €27.4 million. This result is also lower than the revenues generated in the immediate past 4 quarters.
On its performance, the company stated that the decline in revenue was in line with its strategy to undertake fewer sales on a first-party basis so the company can focus on running an asset-light marketplace model where third-party sellers offer consumers an expanding range of products and services.
The economic downturn ravaging sub-Saharan African countries due to Covid-19 is also casting a gloomy outlook for the stock, making it less attractive for investors. With inflation high and purchasing power eroding, investors are worried that Jumia’s ability to grow revenues is constantly being threatened.
For example, Nigeria’s naira has lost its purchasing power as the exchange rate for the dollar is as high as ₦505 as of the time of writing this report. The company noted that its GMV (Gross Merchandise Value) declined by 13% YoY because of FX headwinds as a result of local currency depreciation against the Euro over the past year, with the Nigerian Naira, Egyptian Pound and Kenyan Shilling declining by 15%, 9% and 19% respectively against the Euro in the first quarter of 2021, year-over-year.
Jumia also mentioned in its earnings that Covid-19 induced lockdowns did not lead to meaningful “changes in consumer behaviour but instead created supply and logistics disruption” particularly in their food delivery business where dinner deliveries were affected by curfews in these countries.
To add, because of the Delta variant of the virus, more restrictions in other countries like Nigeria may be on the way.
Another reason for the decline is investors are taking profit on Jumia. Faizan Farooque, a former analyst with S&P Global Market Intelligence, stated in an article that he “believes that investors have already priced in Jumia’s future profits.” He further went on to say, “The company operates in a volatile, unstable market. The next global growth engine, Africa has a great deal of potential. However, it still has major infrastructure issues that need to be addressed.”
Comparison with Amazon and eBay
Other E-commerce businesses like Amazon has managed to improve its performance despite the effects of the pandemic. Its share price is up 10.44% Year-to-Date (YtD), currently trading at $3,519.28 as of the time of writing this report. Its financial statement also looks good as its net profit appreciated 12.25% compared to Q4, 2020.
eBay’s share price is also doing great as it is up 32.46% YtD, currently trading at $68.22 on the NASDAQ exchange, as of the time of writing this report. Its gains are a result of improved Q1 performance with its net income up by 45% compared to Q1, 2020.
Although one could say the performance of Jumia is poor compared to these other companies but it clearly shows that the African market is a tough market to crack due to inadequate infrastructure leading to technological deficiency. This poses a problem for Jumia as their entire business model depends heavily on technology.
Latest on Jumia
As stated earlier, Jumia announced in March that it would be selling 9 million American depositary shares (ADS). So far in the last 6 months, the company has managed to raise $570 million to boost its operating activities on the continent. It has also expanded its network of pick-up stations for increased convenience and has over 1,600 pick-up stations across Africa with 23% of packages delivered in pick-up stations in the first quarter of 2021.
Jumia is currently trading at $22.30, down 0.84% for the day as of the time of writing this report.
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