Dialectic Africa Analyst

Dear Readers:                                             Oando  has been in the news  negatively  of recent.  The Securities & Exchange Commission of Nigeria (SEC) issued a directive that a  forensic audit  be carried out on Oando in October.  A directive of this nature had never been issued by the SEC to a listed company.  When we suddenly cross our fingers (prematurely) and hope that Nigeria may be turning a new tide, the Minister of Finance (a politically exposed person)  suspends the  Director-General of the SEC: Mounir Gwarzo for malfeasance approximately a month after  he directed a forensic audit and the suspension of trading in Oando's shares.   Suddenly, Oando became more emboldened in an air of perceived innocence and defiance granted it by the suspension of Mounir Gwarzo by Mrs. Kemi Adeosun, and has been writing long letters to the investing public and filing suits in every and any court in its quest to stop the ongoing forensic audit. We learnt in grade

         The most disturbing business relationship in the world is one where one party compensates another party that is supposed to be loyal to the society at large and uphold certain fiduciary principles.  You are paid by one entity but, your allegiance is supposed to be to a larger entity that has not compensated you in cash and/or kind but expects the integrity of your profession to trump selfish business concerns.   Auditors get paid by the client but, the investing public is expected to believe the audited financial statements meet certain required and expected standards of honesty and transparency.  Reality of events across the world clearly shows that audit firms have pledged their loyalty to the paying client and not the users of the financial statements they audit. Africa needs better audits by auditors if it its constituent countries’ stock exchanges are ever to become developed markets and if it wants to increase stock market participation rates by its citizenry. Af

Dear Africa Interested Professionals:                                                            I have put together a bunch of random thoughts to close out the first quarter of 2017.  Will be back to the rest of the continent as from Q2 2017 and put Nigeria to bed for awhile.   Stanbic IBTC Accounting Scandal: Do you know that everyone directly linked to the falsification of results is now out of the Stanbic IBTC picture directly?   1. Atedo Peterside; Resigned as Chairman of the board of Stanbic IBTC. 2. Sola david-Borha: Resigned as CEO of Stanbic IBTC Holdings.  Now works for Standard Bank  Group out of Johannesburg. 3. Arthur Oginga: Resigned as CFO and has left the Standard Bank group entirely.  He now works for a bank in Botswana.   4. Jim Obazee; The Executive Secretary of the Financial reporting Council that leveled the charges against Stanbic IBTC.  He has been relieved of his duties.  The Corporate Governance Code for businesses he was about to imple

Dear Africa Interested Professionals:                                                            Zenith Bank on February 27, 2017, released its fiscal year 2016 result; Kenya Commercial Bank did the same on March 9, 2017.  Zenith Bank offered its shareholders a final and second dividend for the 2016 fiscal year of N1.77 per share.  This equates to a final  dividend yield of approximately 12% which is one of the best dividend yields for a bank in Nigeria's stock market history in relation to its current price.  The market did not budge as the stock was marked down on March 13, 2017, at pretty much the same price it was when the result and dividend declaration was announced on February 27, 2017.  What could have caused this?  The chatter among investors is the announcement of of hybrid capital raising in excess of N100B to commence later this year.  I do not agree that the imminent capital raising announcement was the major cause of the investor apathy towards Zenith's eye-po

Dear Readers,                        This morning Access Bank was down in excess of 5% during trading hours.  During the last two hours of the trading day, there was a concerted effort to mop up the supply side to stop the bleeding on the downside.  The stock succeeded in closing the day just down 0.46% .  Maybe, another 30 minutes of trading and a deep red price movement would have a turned into a shallow green price movement.   Dangote Cement also rose with minimal shares traded <55,000 and as expected boosted the overall market as it single-handedly makes up one-third of the market capitalization of the Nigerian Stock Exchange.  There are vested interests here of course and plenty of exposure...  If Dangote Cement goes down (stock price wise), the Nigeria ASI Index goes with it and many emerging market portfolios will be hit. Stay tuned.  We are in interesting times. Companies that use chicanery to drive interest in their stocks, will find their level regardless of artific

Dear Readers;                        I will make this quick.  Companies must present a true state of affairs of their businesses.  While I cannot force them to do so, I will call them out.  Luckily, investors are actually getting a bit more cautious in their usual exuberant reaction to results that appear impressive on first take.   Dangote Cement: Dangote's Cement is not selling.  This has been a perennial issue.  The company is producing but, is selling way below its production.   The company is now competing on the level of Zenith Bank for interest income witha figure of N43.82B .   Finance income earned in 2016 by a cement company is approximately 90% of the interest earned on bonds by Zenith Bank for the whole of 2016 - $48.73B.  This is ridiculously deceitful.  This line item was pretty much used to negate finance expense of N45.4B.   Operating Profit for the group actually declined 16% from FY 2015 - 2016.   Outside of Nigeria, where the company is embarking on a

Dear Africa interested professionals:                                                      Find below the verbatim text from the SEC about the Brokerage Scandal in Nigeria.  This is classic example of the grandiose speeches  I mentioned in my last article that are more focused on self than transparency.  The SEC's response is largely defense and pacifying rather than providing clarity and answering questions.   Why did the media have to break a story more than four months after SEC knew about it?   Now, the SEC wants to respond and feel it is being proactive and transparent.  This issue will be buried before you can dig six feet.  It is Nigeria; nothing of this nature is new. People are talking as I write and the hook is gradually being removed from the mouth of the fish.  Victor Ogiemwonyi will not be sentenced to jail for any financial crime.  He has enough people that sit at the top of regulatory bodies to get him off the hook.   This is why I continue to repeat; nobody