Falling profits: Nicol plans to diversify investment areas

Dar es Salaam. National Investment Company Limited (Nicol) will diversify its investments as it seeks a cushion against the risks of injecting all its money in a few platforms.

Currently, about 90 per cent of Nicol’s investment is based on its ownership of a 6.6 per cent stake of NMB Bank Plc. The company has also invested in DSE Plc, Vodacom Plc, TBL and in other listed companies.

With declining profitability of the banking sector, the Nicol chief executive officer Kinoni Wamunza said at the company’s 4th annual general meeting in Dar es Salaam at the weekend that it was high time for the company to think beyond investing in banks. For instance, NMB reported a net profit of Sh93.3 billion during the year ending December 31, 2017. That was 39 per cent drop from Sh150.3 billion that it registered during the year ending December 31, 2016. “The overall performance of equity investments was affected by a mix that is heavily skewed towards the banking sector. We are in the process of diversifying the investment mix to reduce the risk, improve profitability and yield returns on shareholders’ funds,” Mr Wamunza said. As a result, Nicol reported a profit of Sh1.3 billion in 2017. From the money, the company set aside Sh983 million for payment of dividends to shareholders.

The AGM declared that Nicol should pay a dividend of Sh26 per share to its shareholders starting October 15, this year. The Nicol board chairman, Dr Gideon Kaunda said apart from the existing avenues, for the coming three years, the company’s share portfolios would comprise of 20 per cent to be injected into listed shares; 10 per cent will be in Treasury Bills while another 10 per cent will go into Treasury Bonds. The company will also inject 20 per cent of its investment portfolio into fixed deposit receipts.

“Such a portfolio- mix is expected to increase Nicol’s income and dividend payments to shareholders by 20 per cent per annum,” he said.

Dr Kaunda added that if all goes well other planned area of investments would include real estate, oil and gas sectors, noting that the company was also wooing foreign investor to invest in it.

“Investors from Hong Kong have shown interest to buy shares in NIcol. However, we first want more locals in the company…We will conduct a sensitization campaign for Tanzanians to invest in local company,” he said

Ministry of Finance and Planning, deputy permanent secretary Dr Khatibu Kazungu said for Tanzania to attain its medium income country status, the government would want to see local people investing in several development areas.