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West & Central Africa

Controversy over First Bank of Nigeria’s clash with regulator stirs bank run

A bank run has started at First Bank of Nigeria after a recent scandal concerning its board of directors and the Central Bank.

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Nigerian businessman Obafoluke Otudeko.

A bank run has started at First Bank of Nigeria (FBN) after a recent scandal concerning its board of directors and the Central Bank of Nigeria (CBN). Customers at branches around the country are withdrawing cash, fearing that the bank could shutter its doors. 

The International Center for Investigative Reporting (ICIR) stated that the customers were making panic-withdrawals after a board shake-up that revealed poor corporate governance at the bank. Some of them fear that the bank could collapse, a situation with which many are familiar in Nigeria. An anonymous FBN customer told the ICIR that she withdrew her N900,000 ($2,202.1) savings from the bank amid the scandal.

The ICIR quoted the customer as saying: “I have been in this country long enough to read the writing on the wall. With the Central Bank’s intervention in the leadership of the bank, I have a serious concern that there could be a corporate misdemeanor from the managers of the bank. I have utmost respect for the bank with its long-standing legacy, however, I have to be cautious at this time.” 

On April 29, the CBN dissolved the board of directors of FBN and First Bank of Nigeria Holding (FBH), citing insider abuse and the breakdown of corporate governance. This led to the expulsion of Obafoluke Otudeko, the largest shareholder at FBN and FBH, and the chairman of FBH, and Ibukun Awosika, the chairman of FBN.

Background: Nigerian bank crises

Between 1994 to 2006, approximately 45 Nigerian banks were liquidated, according to a document from the Nigeria Deposit Insurance Corporation. Many Nigerians, who could not withdraw their money on time, lost their life savings at the banks, including international footballer Austin Jay Jay Okacha. Okacha lost $1 million in the collapse of Societe Generale bank in Lagos in 2004 despite promises from then-President Olusegun Obasanjo to help retrieve his funds.

When the stock market fell 70 percent between 2008 and 2009, the CBN stepped in with a rescue plan. In a bid to save customers from losing deposits, it commenced a consolidation exercise that eventually led to the merger of some financial institutions.   

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Mike Adenuga beats out Abdul Samad Rabiu to reemerge as Nigeria’s second-richest billionaire

His net worth has dropped by more than $400 million this year as Globacom’s share price sank.

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Mike Adenuga. ©Billionaires.Africa

Telecom mogul Mike Adenuga has reemerged as Nigeria’s second-richest man after three weeks in the third position. Now, he trails only Africa’s richest man Aliko Dangote, who tops the list of Nigeria’s wealthiest people, with a net worth of $19.8 billion.

The leading businessman, who is the founder of Nigeria’s second-largest telecom services provider Globacom, has surpassed billionaire industrialist Abdul Samad Rabiu, whose net worth has fallen from more than $7 billion to $5.8 billion in less than three months.

Adenuga’s reemergence as Africa’s second-richest man comes nearly two months after an exclusive report by Billionaires.Africa confirmed that Rabiu had surpassed the telecom and oil mogul to become the country’s second-wealthiest billionaire.

According to Forbes, Adenuga, who derives the majority of his fortune from his mobile phone network, Globacom, and his oil exploration company, Conoil Plc, has surpassed Rabiu as Nigeria’s richest man, with a net worth of $6.3 billion, compared to Rabiu’s $5.8 billion.

Adenuga, like Rabiu, has recorded a significant decline in his net worth in recent months. However, his the drop in his wealth has been less severe than Rabiu’s, who has lost more than $1.2 billion of his fortune over the past two months.

The revaluation of his interest in Globacom has caused his net worth to fall by more than $400 million since the start of the year, from $6.7 billion to $6.3 billion at the time of writing.

Nearly two weeks ago, Conoil reported a double-digit percent increase in earnings in the first half of 2022 despite a significant decrease in top-line performance during the period under review.

Despite a double-digit decline in revenue, profit increased by 70.5 percent to N1.81 billion ($4.35 million) in the first half of 2022 from N1.06 billion ($2.55 million) in the first half of 2021, according to the company’s half-year financial report.

The group’s cost-cutting strategies, which reduced sales-related, administrative, and distribution costs, can be attributed to its double-digit increase in earnings as management continued to create value for shareholders.

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Billionaire Gbenga Agboola’s Flutterwave faces allegations of financial impropriety amid IPO plans

Despite the allegations, the firm is continuing to prepare for its IPO.

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Olugbenga Agboola.

Flutterwave is under fire and facing allegations of financial misdeeds, including money laundering, insider trading, fraud, and perjury.

The news comes as the company prepares to list its shares in an IPO, which will allow investors to purchase shares of the company on the open market.

Agboola, a well-known tech entrepreneur and billionaire, is the CEO of Flutterwave, a technology firm with offices in San Francisco and Nigeria. In just one year, the six-year-old tech firm’s valuation has surged to $3 billion under his leadership.

According to sources familiar with the situation, the tech firm has begun searching for investors for its planned IPO in the United States and possibly Nigeria. However, because the talks are still in the early stages, it has not yet mandated financial advisers.

The preparations for the startup’s IPO come amid allegations of financial impropriety. Recently, more than $52.5 million in cash deposits were frozen across 62 bank accounts owned by the startup and four Kenyans on suspicion of being the proceeds of card fraud and money laundering.

Patrick Njoroge, the governor of the Central Bank of Kenya, stated nearly two weeks ago that Agboola’s Flutterwave is providing remittance services and operating payment businesses in Kenya without the necessary licenses.

The statement has been characterized as a regulatory setback that may have an impact on the operations of the fintech behemoth and the expansion of the African fintech ecosystem. Njoroge named Chipper Cash, another African fintech heavyweight, as one company that is not permitted to operate remittance businesses, or to provide payment services to merchants in Kenya.

Despite the allegations, Flutterwave CFO Oneal Bhambani, who joined the company in June, stated that preparations for the firm’s IPO are continuing.

“Operationally, we are putting in place all aspects of controls, processes, and infrastructure to prepare for an IPO subject to market conditions,” he said. “Given Flutterwave’s market position and strong balance sheet, the company has a significant growth opportunity over the next few years.” 

Experts believe that waiting until at least next year to address the allegations will benefit Flutterwave, and that its valuation will be higher if investors are given sufficient time to rebalance, as all attention is presently focused on the global market downturn.

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Ardova dismisses winding-up order, as Femi Otedola’s Zenon serves majority shareholder petition over $6-million debt

The once promising relationship between Otedola’s Zenon and Abdulwasiu Sowami’s Prudent Energy has taken a new turn.

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Femi Otedola. ©Billionaires.Africa

Arodva Plc, a Nigerian oil and gas marketing company majority owned by Nigerian businessman Abdulwasiu Sowami, has denied reports that it is facing a winding-up petition over a $6-million debt owed to Zenon Petroleum & Gas Limited, an oil company founded by billionaire businessman Femi Otedola.

The news comes as the once promising relationship between Otedola’s Zenon and Sowami’s Prudent Energy, Ardova’s majority shareholder, takes a new turn over the debt.

The oil company stated in a press release on Tuesday that its management’s attention has been drawn to recent media claims regarding the debt, and it is critical to set the record straight that no winding-up petitions are presently facing the company in relation to the 2019 transaction.

The company went on to state that the current issues are related to claims and warranties made under a share-purchase agreement between Prudent Energy and Zenon for the purchase of shares in Forte Oil Plc in a $200-million deal in 2019.

The management went on to state that Ardova is not party to any of the proceedings, that the proceedings have no bearing on the company’s rights or operations, and that it has no claims against its assets.

Zenon, which has a guarantee for the prompt payment of the debt, served Prudent Energy with a petition earlier this week, more than a month after the deferred consideration, which was due on June 18, had yet to be paid despite demand letters sent to Sowami.

Experts believe that the dispute will reignite debate over Ardova’s share ownership structure.

The $6-million debt, which represents the remaining purchase consideration for the Forte Oil stake, adds to Prudent Energy’s pressures, as shares in Ardova, the company that it acquired nearly three years ago, have fallen significantly from an average price of N23.6 ($0.055) per share in 2019 to N13 ($0.0305) per share at the time of writing this report.

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