Dialectic Africa Analyst

Dear Africa Interested Professionals: I will endeavor to be concise because I have a lot to say and not enough time to do so. I wrote in my last article on this blog three weeks ago, that the CEO of Diamond Bank should resign for the sake of the bank's continued existence as a going concern.  While my wish has now become reality, the manner has set many bells ringing.  You remember that boyfriend that said "if I cannot have you, no one will?"  The girlfriend ends the relationship with the boyfriend and the boyfriend eliminates her as a form of last revenge.  Diamond Bank being acquired ( merger frankly has no place in this discussion) by Access Bank has pretty much put Uzoma Dozie in the history books as the last CEO of Diamond Bank.  If he had to ignominiously resign as the CEO of Diamond Bank, it would not be for someone else to take over, no matter how capable apparently.  If Uzoma goes down, then Diamond Bank must go down with him.  The seat he waited for si

Prologue I have utmost respect and regard for Pascal Dozie and his achievements within the Nigerian business environment and the way he conducts himself without craving for visibility and adulation. The bank he founded is now a publicly listed corporation with over one hundred thousand shareholders who have invested in the bank and expect the bank's executive management to align their interests with that of the shareholders and act in their fiduciary interest.  The desire of ONE should not destroy the financial investment of MANY.  While I expect Pascal to be happy that his son is now the CEO of the bank he founded, I doubt he will be happy that the bank he founded is huffing and puffing (under the leadership of his son, Uzoma) when it should be rising and shining given the bank's compelling strategy, customer base and goodwill.     Investors understand that equity investments are risky and all funds may be lost just the same way a woman understands that she can d

Dear Africa Interested Professionals: I will make this one quick while leaving you enough reason not to comfortably believe the earnings provided to you by the management of FCMB.  1. FCMB has delayed its Q3 result on the basis of the result being audited and formally made an announcement to this effect on October 17.  Finally, it releases the delayed result that is actually unaudited like the other banks that had released their Q3 earnings over a month ago.  This is never a sign of honesty.  2. FCMB has struggled to generate pre-tax income of N7.1B over the first six months of the 2018 fiscal year.  Suddenly, over the period July 1 - September 30, 2018, FCMB tells the world it has generated pre-tax income of approximately  N7.7B.  In my experience covering African companies, most of the time in scenarios like this, I uncover an act of desperation and chicanery somewhere embedded within the financials to tell a better story than the reality of the day.  FCMB has not failed to di

Dear Africa Interested Professionals: Both banks that are the subject of this article, currently have CEOs that are sons of their owners/founders: Subomi Balogun for FCMB and Pascal Dozie for Diamond Bank.  Both CEOs were selected by their fathers and  groomed  for the top corporate office they now hold.     Ladi Balogun has been with FCMB for 18 years consecutively (post business school) and Uzoma Dozie has been with Diamond Bank for 20 years consecutively.  The former has been the CEO of FCMB for approximately 12 years and the latter has been the CEO of Diamond Bank for four years.  Now lets get down to the crux of the matter.  I have always been against the running of companies in Africa by children of the owners and/or founders.  This is not driven by any inherent form of incompetency; but, the bleak expectation for shareholders when  family interests are pitted against shareholder interests  as they often are on an almost daily basis in companies of this nature and i

T his ‘big picture’ analysis will look at what has happened in the economy and the stock market in Nigeria in 2018, why it is happening and how to make the best of the present situation.  Nigeria’s economy rose by 1.95% in Q1 2018, slightly below the revised figure of 2.1% for the fourth quarter of 2017. Q1 2018 is Nigeria’s fourth consecutive quarter of positive economic growth. The GDP growth of 1.95% for Q1 2018 broke a positive trend of five consecutive quarters of improving GDP growth. The non-oil sector (which the government had made its perennial focus for a more resilient economy) grew 0.8% annualized in Q1 2018 compared to 1.5% in Q4 2017. The oil sector grew by 14.8% annualized in Q1 2018 relative to the revised figure of 11.2% in Q4 2017. Overall, Nigeria’s four consecutive quarters of positive economic growth was driven mainly by recovering oil production and steadily rising prices. The Nigerian economy appears to be moving back to its perennial over reliance on the

Dear Africa interested professionals: On April 25, 2016, I wrote an article (can be found as the featured post on this blog or using the  search function) and stated that the domestic retail investor will determine the performance of the Nigerian stock market.  2018 has brought more evidence to buttress my assertion. The Nigerian stock market’s most ignored and maligned customer base is the domestic retail investor.  This largely ignored customer base determines how the stock market in Nigeria will perform. In January 2018, domestic retail investors put N 106.5B in the Nigerian stock market and the stock market rose approximately 16%. The contribution of domestic retail investors has not even reached half of that figure per month from February to June 2018 and the Nigerian stock market is now in negative territory at approximately 1.6%. Total foreign portfolio investment from January - May 2018 rose by 121% compared to the same period in 2017. Domestic institutional in

Dear Africa interested professionals:                                                            When I ponder on earnings quality, it goes beyond the financial performance of the companies as provided to us by their directors.  Are the numbers provided to us possess the qualities of transparency, authenticity and longevity?  Are this year's numbers going to be adjusted (restated) next year with the reality of this already known today?  Do restatements suddenly become an annual recurring act for some companies, just the way financial reports are audited annually? Public companies that continually restate their books, change key figures significantly without any clear, detailed explanation are guilty of poor earnings quality as their audited financials are not as reliable as they should be.   I have randomly selected visible companies across different industries in Africa and reviewed their two most recent annual reports (covering three fiscal years) for restatements an