In a bid to expand their operations and drive growth, businesses all across the globe often tap financial resources. They utilise varied capital options, leveraging on funds acquired from such sources to strengthen existing structures as well as pursue further development.
One of such financing resources, relatively easier to access and that gives firms future purchasing power in the present is debt financing.
According to Allan Kunigis, financial freelance writer and author, when firms seek debt financing, “The amount they pay in interest is tax deductible, effectively reducing their net obligation and creates an opportunity, which helps businesses know well in advance exactly how much principal and interest they will pay back each month. This makes it easier to budget and make financial plans.”
Additionally, proponents of this category of financing say debt financing is generally considered to be an inexpensive source of capital for business, especially when compared to equity, which involves giving up part of the ownership of the company.
It is against this backdrop that these experts advise that businesses settle for this source for capital.
In Nigeria, businesses, irrespective of the sector, have at one point in their existence adopted and continue to use this financing source. An example of such businesses in the country that have leveraged on this capital means in times past with positive tales to share include the widely reputed longest surviving and most resilient indigenous Nigerian bank, Wema Bank Plc.
It is premised on this success story that the bank, which has over the years diligently offered a full-fledged range of value-adding banking and financial advisory services to the Nigerian public, has announced its plans to raise N20 billion debt capital in the next few weeks.
According to its representatives, the capital, which would position the bank to leverage on future opportunities in the industry, was sequel to an approval by shareholders at the last yearly general meeting to issue bonds or preference shares this year to raise N20 billion in the first tranche of a N50 billion programme
Disclosing this at a media parley held recently in Lagos, the Managing Director of Wema Bank, Segun Oloketuyi, explained that the Tier-2 capital will position the bank for further growth after it obtained a banking license upgrade from the Central Bank of Nigeria (CBN).
He noted that the bank is fully prepared to scale up its operations to cover locations in the North and the eastern part of the country.
“To ensure that this approval is leveraged appropriately, we are already in the process of raising N20 billion in Tier-2 capital. We expect to re-open five branches in the next three months in Kaduna, Lokoja, Minna, Aba and Enugu.
“In spite of the challenges in the economy and in the industry, we remain optimistic about the future of the bank. Our retail focus is beginning to yield good numbers and we are already ramping up efforts to ensure that we deliver on the promises to our stakeholders,” he said.
Oloketuyi promised that the bank would increase the drive of the ongoing cost containment initiatives and leverage on technology to increase efficiency across all channels and platforms. Oloketuyi explained that in 2009 when the new management took over the operations of the bank, the lender was in a distressed situation with negative capital.
The seasoned banker added that the non-performing loan ratio was 89 per cent but due to prudent risk management framework, by 2014, the non-performing loan ratio came down to 15 per cent and has been reduced further down by 2.9 per cent.
Wema Bank recorded a 11.11 per cent growth in profit after tax for the half year ended June 30, 2016. In a filing from the Nigerian Stock Exchange (NSE), the bank’s net earnings for the half-year stood at N1.1 billion as against N99 million posted in 2015, representing an increase of 11.11 per cent.
Pre-tax profit also stood at N1.3 billion during the period under review, from N1.2 billion posted a year earlier, accounting for 8.33 per cent.
The bank’s gross earnings grew by 16.3 per cent from N20.9 billion in 2015 to N24.3 billion during the second quarter of 2016.
“The 2016 financial year has been a rather eventful one for the Nigerian economy. The year has been characterised by deceleration on a number of economic indicators coupled with increasing energy costs, intensified by rising inflation, all within a tough operating environment.
“The banking industry has not been immune to these challenges as we witnessed a decline in customer deposit growth rate, reduction in margins, and an increase in NPLs in some sectors.
“In spite of these challenges, Wema Bank has been able to deliver a modest improvement in the first half of the year. Interest income grew by 15.2 per cent from N17.5 billion in H1 2015 to N20.2 billion in the current period.”
Star makes historic partnership with 5 European clubs
History was made recently as Star Lager Beer announced a partnership with not one but five of the biggest European football clubs, Arsenal, Juventus, Real Madrid, PSG and Manchester City, having a combined history in football of 544 years.
By virtue of the partnership, Star has become the “Official Beer Partner” of Arsenal, Juventus, Real Madrid, PSG and Manchester City. These five clubs also have a combined history of 87 domestic league titles, 13 Champions League titles and numerous European titles.
Marketing Director, Nigerian Breweries Plc, Franco Maria-Maggi, described the partnerships as a commitment from Star, Nigeria’s foremost beer brand to bring new football experience to consumers and loyal fans of the clubs.
“They bring freshness and new levels of excitement to the established football order. We are happy to partner with these football clubs as we collectively want the same things; to excite football fans and give them memorable, unforgettable moments.
“It is what Star has always done and this is yet another way to demonstrate our commitment to creating exciting moments for our consumers,” Maggi said.
The partnership bestows Star Lager rights to promote the brand in association with Real Madrid, Arsenal, Juventus, Manchester City and Paris Saint-Germain to millions of fans across Nigeria and beyond, supporting its vision to embrace an unrivalled passion of football.
The partnership, first of its kind in Nigeria by a beer brewery intends to see Star Lager actively engage consumers and fans with cross-promotional events and communication materials designed to enhance the visibility of the European giants in Nigeria.
MTN unveils Praiz, Iyanya, Chidinma, Falz as brand ambassadors
In line with its commitment to supporting Nigerian musicians by providing alternative platforms through which they can receive lucrative value for their intellectual property, MTN has announced brand ambassadors for 2016-2017.
According to MTN’s General Manager, Consumer Marketing, Richard Iweanoge, this is designed to enable the company continue to support the development of the entertainment industry by financially empowering artistes and musicians through the promotion and monetisation of content on its various digital platforms, MTN Music+, Caller Ring Back Tunes (CRBT) and Value Added Services (VAS).
Music ambassadors for 2016-2017 are Praiz (Praise Adejo); Iyanya (Iyanya Mbuk); Chidinma (Chidinma Ekile); Falz (Folarin Falana); Tekno Miles (Augustine Kelechi) and Skales (Raoul Njeng-Njeng)
Four other ambassadors are Saka, (Hafiz Oyetoro); Nedu (Steve Onu); Osuofia (Nkem Owoh) and Adamu Zango.
Speaking on this, MTN Executive, Amina Oyagbola said, “MTN remains proud to be associated with the growth and development of the careers of all our ambassadors, past and present.
“We specially thank all our former ambassadors for their immense contributions to building our brand and making us the network of choice in Nigeria.
“We will definitely continue to maintain the strong and mutually beneficial relationship with them through the monetisation of their content on all our digital platforms, MTN Music+, CRBT and VAS.,” she said.
Iweanoge added that, “With the significant investment made so far in Nigeria’s music industry, MTN remains and will continue to be one of the biggest supporters of the music industry. We have a track record of consistently providing the stage for some of Nigeria’s biggest artistes to shine and express themselves”.
He stated that through its CRBT, MTN is the largest music distributor in Africa.
“Through the platform, we ensured that Nigerian musicians would no longer suffer the scourge of piracy. They are able to make good money as a result of their hard work. Also, as Nigeria’s most innovative telecoms company, we have been able to deploy music as a platform to give other value added services to our teeming subscribers,” he said.