‘He is a fool who trusts to luck; one should play a safe game.” — Leo Tolstoy, 1828-1910, VANGUARD BOOK OF QUOTATIONS, VBQ, p 62.

“Fools rush in where angels fear to tread.” — Alexander Pope, 1688-1744, VBQ 

Sometimes a national matter likely to affect the fortunes of millions of Nigerians comes up requiring the insight of sages from time immemorial. Fools have always been separated by sharp operators since cowry shells, gold and silver were the legal tenders. There will always be fools and clever men to fleece them.

Paradoxically, the best time to defraud people in any country is always during serious economic downturn such as we are experiencing right now. That is when those promising miracle financial solutions have the opportunity of making them poorer while fattening their own pockets. The primary duty of media people remains the same — to protect the people by informing them, educating them and presenting the basis for them to make intelligent decisions instead of falling prey to economic predators. Because banking is central to the economy, it is naturally the first point of departure today. We end with the sector which is driving everybody round the bend right now — refineries. Sandwiched between them is my former home — breweries.

Banking — All that glitter is not gold

“World Bank warns about Non-Performing Loans in Nigerian Banks; Reaching 5.10 per cent – above prudential limit.” — Report, October 22, 2024.

The report went on to say that: “The banking system’s capital buffer zone has been eroded due to high inflation, significant depreciation of the Naira and the increase in the NPL ratio.” That is bad news; and it is closer to the truth about the situation with Nigerian banks than all the false advertisements about 100, 200 per cent increase in profits. Because banks are now in the capital market raising funds in order to meet the capital requirements established by the Central Bank of Nigeria, CBN, there is an urgent need for them to “show” significant improvement in profits in 2024 and 2025 in order to lure the unwary into the net.

We have had such swindles before; as recently as 2005 in fact, when in order to meet the baseline N25 billion capital required by the CBN, all the banks issued IPOs promising three things: higher profits in the future, share appreciation and high dividends in exchange for over-priced shares. Today, AMCON is still battling with N5trillion toxic loans dropped on the CBN by the consolidated banks. What’s wrong with that? Well, everything.

The same surviving banks, which left the public with their mess to carry are now back in the market demonstrating one most vital sign of distress as in 2008-9; when they announced huge profits while piling up Non-Performing Loans, NPL. The directors bear different names; but, it is clear that most of those now in charge are clones of the former looters of the 2008-9 period. One of the earliest banks, in particular, should be avoided. Control has shifted to those who openly confessed to share manipulation years ago. I fear for those buying its shares!!!

Otherwise, why have the banks not revealed the NPL crisis which will get worse as bank interest rates continue to climb and revenue declines for others?

The deception about the capital base is an open conspiracy exposed by the World Bank. In May 2023, when the CBN insisted on keeping the official exchange rate at N420/US$, the black market rate was already near N700/US$.

Today, despite the CBN’s efforts to unify the rates, the official rate is N1600/US$ and the parallel market rate is N1720/US$. So, a bank whose share capital in 2023 was N10 trillion or $23.8 billion; now is worth only $6.250 billion.

That is without factoring in inflation as the World Bank has mentioned. In short, what the banks are publishing amounts to illusions of progress and nothing more.

Breweries 

suffering from lasting hangover

“In all things, one must consider the end.” — Jean De La Fontaine, 1621-1695, VANGUARD BOOK OF QUOTATIONS, P 47 available online.

In the nineteenth and early twentieth centuries, nobody would have believed that cigarette smoking in public would be outlawed or that the manufacture of the product would be in absolute decline. Today, most young kids under the age of ten would not know what is done with the object if they stumble on it. Breweries are racing to catch up with cigarettes in the industrial graveyard. It is painful to me as the Marketing Manager of three breweries and a Consultant to a fourth in the 1980s. Naughty by nature, the sales/marketing staff of a brewery are the only members of staff of any company who are provided with all the beer and stout they can drink, free; and still get well paid at the end of the month.

As manager, and the one allocating beer to customers from five-star hotels to Army, Air force and Navy Officers’ Messes nationwide to local hotels and beer parlours, everywhere beer is consumed was an extension of my office. On several occasions, I would finish an appointment with the Manager of Hamdallah Hotel in Kaduna, and five minutes after be at a drinking outlet at the motor park. I was at home everywhere; and I was a spy 24/7. I got close to my customers in order to know as much as possible about the consumers. Invariably, I would return home or to my hotel if on tour to jot down observations. Home and hotel were interchangeable to me because I spent 70 per cent of my time on the road — particularly weekends when beer consumption was highest. Tuesday and Wednesday were my off-days. There was a strategic reason for that.

The preamble is to warn potential investors in brewery shares to be careful. To be candid, for breweries in Nigeria today, the party is over for reasons too long to squeeze into one third of a column. Get in touch if you want to find out more.

Don’t blame God or bad luck; blame yourself if you lose your shirt.

Rrefineries are coming; run away

“If you shut up the truth and bury it underground; it will but grow and gather to itself such explosive power that, the dav it bursts through. it will blow up everything in its way.” — Emile Zola, 1840-1902. VBQ.p 255.

For decades, Nigerians had been convinced that the price of petrol, N185/litre on May 29, 2023 would drop once the nation’s four refineries start producing fuel once again. That assumption rested on three fallacies. One, Nigeria has no refineries. We keep maintaining, at great cost, scraps called refineries. Two, even if resuscitated, they would never produce 18 million litres of fuel — which is their maximum capacity. Being old and small, compared to global refineries, they lack the economy of scale which will drive down the cost of production. Three, the Kaduna refinery is the wrong refinery, in the wrong place and for non-economic reasons. Altogether, the four will never deliver enough fuel, consistently and at the right price, without subsidies to meet all our requirements. So, beware; if the Federal Government decides to sell them, as they must. Don’t waste your money on them. Give the money to a university instead.

Private refineries are just a little better in terms of investment. Collectively, they are coming on stream at a time when petrol is going the way of cigarettes. In less than ten years, anybody driving a petrol/diesel vehicle in the US, Europe, China and most of Asia will be arrested. The world is racing to hydrogen, ammonia, ethanol, methanol and even water. Investing in petrol/diesel refineries amounts to throwing your hard-earned money into the river. Give them to a school.