Rewane seeks strong institutions for economic growth

Rewane seeks strong  institutions for economic growthAn economist and Chief Executive Officer, Financial Derivatives Company Limited, Bismarck Rewane has said that building strong institutions is key for Nigeria to achieve desired economic growth.

He spoke at the 2019 Time Management and Productivity/Nigeria’s Employee of the Year Award Summit (TAMS/NEYA Summit) held in Lagos.

He said: “There are three variables for economic growth. They are good leadership, sound policies and strong institutions. A combination of the three will still produce the desired level of growth. But where institutions are weak, whatever growth is achieved is not sustainable and will eventually come back to zero”.

According to him, it is regrettable that Nigeria continues to trumpet its abundant potential due to the richness in human and natural resources yet little is being done to harness this richness. He admonished the country to urgently start to work on the famed potential to achieve economic growth. Rewane stated that labour productivity in the country is very poor and that if that must be corrected to achieve Gross Domestic Product (GDP) growth that is commensurate with our size and resources, then the economy must make hard choices.

“GDP growth can be achieved if we fix our weak infrastructure. The power sector problem, for instance, continues to be a huge burden with the sector hampered by enormous debt overhang and the inability to attract fresh financing. But this can easily be corrected if the debts are converted to equities,” he said. The financial expert also called for a review or the elimination of the fuel subsidy regime and the restructuring of the exchange rate management to make it more efficient.

Other stakeholders at the summit equally stressed the need for an urgently overhaul of the nation’s infrastructure, particularly in the education sector.

The TAMS/NEYA summit is organised yearly by SB Telecoms and Devices, a provider of time management-focused human resources management solutions to organisations.

AB InBev to increase investment in Nigerian brewery to $400m

Anheuser-Busch InBev says it expects the total investment in its new brewery at Sagamu in Nigeria to be up to $400m.

The Chief Executive of the company, Carlos Brito, made this known at a media briefing in Johannesburg on Wednesday.

According to Reuters, Brito said the $250m brewery, which had already started operation, would be expanded in phases.

The CEO, however, did not give a timeline for the next phase.

“Nigeria (is) becoming a more and more important market as we grow in that market,” he was quoted as saying.

“I mean we’re growing double digits; we didn’t grow in the past as fast because we were lacking capacity and now that we have capacity, strong brands and (a) great group of people, we’re challenging the status quo there.”

The brewery, which was unveiled last year, is the company’s fourth in Nigeria after those located in Ilesa, Onitsha, and Port Harcourt.

At the inauguration of the facility, the Managing Director of the company, Annabelle Degroot, said the brewery would create 600 direct jobs and well over 2,000 indirect jobs along its value chain.

“While direct employment is very important to us, the impact of the multiplier effect that our breweries and business has on the economy cannot be over emphasised. Yearly, we buy over 30,000 tonnes of sorghum and maize and other raw materials locally. This will be significantly increased with the coming on stream of this new brewery,” Degroot said.

Foreign investors dump more Nigerian shares

The nation’s stock market suffered foreign investment outflows of N41bn in April, compared to N30.20bn in the previous month,

Data obtained from the Nigerian Stock Exchange on Thursday showed that foreign investors pulled out a total of N166.03bn from the market in the first four months of the year.

Total transactions at the nation’s bourse increased to N148.91bn (about $485.9m) in April from N110.10bn (about $359.3m) in March, according to the NSE’s Domestic and Foreign Portfolio Investment Report for April.

It said the total value of transactions executed by foreign investors outperformed those executed by domestic investors by four per cent.

Foreign portfolio investment outflow includes sales transactions or liquidation of portfolio investments through the stock market, while the FPI inflow includes purchase transactions on the NSE (equities only).

“Total foreign transactions increased by 37.13 per cent from N56.09bn in March 2019 to N76.92bn in April 2019. Total foreign outflows also increased by 38.34 per cent from N30.20bn to N41.78bn whilst foreign inflows increased by 35.76 per cent from N25.89bn to N35.15bn between March and April 2019,” the NSE said,

The report showed that the value of the domestic transactions executed by institutional investors’ outperformed retail investors by 18 per cent in April.

It said, “Retail transactions increased marginally by 6.6 per cent from N27.44bn in March 2019 to N29.26bn in April 2019. However, the institutional composition of the domestic market increased more significantly by 60.75 per cent from N26.58bn in March 2019to N42.73bn in April 2019.

“Foreign transactions, which stood at N1.539tn in 2014, declined to N1.219tn in 2018. Over the 12-year period, domestic transactions decreased by 66.68 per cent from N3.556tn in 2007 to N1.185tn in 2018.”

The NSE said total foreign transactions accounted for about 51 per cent of the total transactions carried out in 2018, while domestic transactions accounted for about 49 per cent of the total transactions.

 

According to the bourse, total foreign and domestic transactions carried out from January to April this year stood at about N298.79bn and N270.37bn respectively.

The Chief Executive Officer, NSE, Mr Oscar Onyema, at the 2018 Market Recap and Outlook for 2019 in January, noted that the rise in foreign outflows highlighted attenuated foreign participation due to a shift to higher-yielding assets with lower risks in developed countries, coupled with the impending political risks in the Nigerian elections.

We Can Boost Forex With Viable Commodities Exchange  – SEC

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Worried by the reliance on oil as the major source of foreign exchange earnings for the country, the Securities and Exchange Commission, SEC plans to boost forex earnings via the existence of viable Commodity Exchange 

Acting Director General of the SEC, Ms. Mary Uduk disclosed this at the opening ceremony of a Training for Senior Managers and Management Staff of the Investment and Securities Tribunal, IST in Abuja, Tuesday.

Uduk who was represented by Head of Department, Registration, Exchanges and Market Infrastructure of the SEC, Mr. Emomotimi Agama, said the nation needs to harness the full potentials in the Commodities market.

According to Uduk, “The Capital Market Master Plan did an analysis of where we are and where we want to be as the leading capital market in Africa and one of the areas is the Commodities market which is very important, but one of the least developed. The Nigerian economy is mainly agrarian driven, all states of the federation have exportable quantities of commodities and we have some of the highest grades in the world.

“Government wants to diversify to agriculture and so we need to be able to export some of these commodities. If the farmers do very well, the earnings of the country will be boosted” She said.

The SEC Ag. DG .explained that the Commission! is poised to ensure that Nigeria realizes its full potentials in the Commodities market insisting that these commodities can be exported, while on the other hand industries can be set up that will employ a large number of our teeming population.

“If we can develop this very well, our country will be better for it. What we need now are better pricing, transparency and better quality and these are what we set to achieve with the farmers and that is why the Commodities Exchange is important.

“The crude form they are trading now does not provide the farmers the benefit of price discovery, transparency among others. The only way to achieve these is to have an exchange hence the need arose to set up the Technical Committee to look holistically at all the issues.

Uduk disclosed that expectedly with the successful introduction of an initiative, there are bound to be disagreements and disputes, hence the need to train the IST officials, who are empowered by Investments and Securities Act, ISA 2007 to adjudicate on capital market issues.

She said, “It was realized that this success in the commodities market will bring about disputes. Once the exchange becomes very vibrant, there is bound to be issues and disputes.

“By virtue of the ISA 2007, the Investments and Securities Tribunal, IST is the adjudicator in event of such issues in the capital market. It is then important the IST which has this responsibility is properly aware of these issues and the types of disputes that will arise”.

She added that the training is to create a foundation that we can build upon as we go along. Our resolve is to always involve the IST in capacity building so that when there are disputes, they could be quickly resolved thereby increasing investors’ confidence and deepening the market.

SEC denies probing MTN’s listing, NSE defends process

The Securities and Exchange Commission has said it is not probing MTN Nigeria Communications Plc over its listing on the Nigerian Stock Exchange.

SEC alleged that some stockbrokers were instigating false media reports.

The SEC spokesperson, Mrs Efe Ebelo, told our correspondent on Tuesday that the commission had approved MTN’s listing last week and had no issues with it.

The acting Director-General, SEC, Ms Mary Uduk, said last week that MTN sought to come to the market by way of an introduction and they wrote to SEC the previous week requesting for approval to register its existing shares.

Uduk stated that the approval had been granted, describing the approval as a further indication of the determination by SEC to work with companies interested in the capital market.

She said, “We believe that this will also encourage other service providers to come to the market.”

Ebelo said any issue surrounding MTN’s listing was between the telco and the NSE as SEC held nothing against it.

She, however, said SEC might be forced to intervene in the matter if necessary.

The NSE, in a statement on Tuesday, said it had not received any communication from SEC indicating that “it is probing the Exchange in connection with the listing of MTN Communications Nigeria Plc or any other matter.

“The Exchange’s position is, thus, that those reports are inaccurate.”

The NSE had said on Monday that its attention had been drawn to a few critical issues raised in various print and social media platforms regarding the listing of MTN Nigeria on the Premium Board of the Exchange.

It said because MTN Nigeria listed by introduction, its shares were expected to be available for trading on the day of listing, adding that no MTN shares had been offered for subscription by the company prior to listing.

According to the NSE, without any intervention, it is possible that there will be no shares available for trading on the listing date.

On the issue of the scarcity of shares claimed by some reports, the NSE said, “Indeed, currently, no rule of the Exchange compels shareholders in a listed company to tender their shares for trading.  Shareholders are at liberty to trade their shares at any time and price suitable to them.

“Thus, in order to stimulate trading in the shares of companies that list by introduction, the NSE’s practice is to urge the company to make shares available on the day of listing.  In the case of MTN Nigeria, the NSE had requested the company as part of the listing process to make shares available and the Exchange expects the company to do that.”

The bourse noted that since the listing of MTN Nigeria last Thursday, a total of 105,301,759 shares valued at N12.231tn had been traded in three days.

These trades, it said, were carried out by 10 dealing member firms in 134 cross deals/negotiated deals.

The NSE said because cross deals involved clients of the same dealing member firm on both sides of a trade, significant issues had been raised that dealing members who had not been involved in the cross deals had been unable to trade on behalf of their clients.

“The Exchange is not unconcerned about this state of affairs.  Indeed, council members of the Exchange urged brokers to discuss with their clients about possible sales of shares,” it added.

The NSE also said there appeared to be a misconception that a concession was given to MTN Nigeria on the minimum free float required for companies listed on the Exchange.

It stated that the Exchange’s rules for listing on the Premium Board required a company to have a minimum free float of 20 per cent of its issued share capital or that the value of its free float be equal to or above N40bn on the date the Exchange received the issuer’s application to list.

The NSE said, “MTN Nigeria met with the free float requirement of N40bn.  The free float of MTN at the time of listing was in excess of N90bn.

“While we believe we have addressed the concerns raised, we would like to assure our stakeholders and the general public that the Exchange will continue to uphold global best practices in its business operations and will sustain engagement with its stakeholders to continually develop regulatory frameworks that ensure our market completely reflects our values of ambition, fairness and inclusion.”

MTN said its listing by way of introduction on the NSE created a new telecoms and technology asset segment for the NSE.

According to a statement issued by the company on Tuesday, its listing on the premium board is because it met all the requirements to list on the board.

It stated that its listing meant that existing shares of MTN Group (78.8 per cent) Nigerian investors (19.4 per cent) and other investors (1.8 per cent) would be listed, adding that shareholders were free to trade their shares on the NSE if they so wish.

The United Nations Nigerian Humanitarian Fund, made up of 14 private sector companies including Oando Plc and Access Bank Plc, have led the drive to raise funds for the humanitarian crisis in the North-East.

The fund, which was launched in November 2018, pooled funds from the private sector and donor countries to create a more collaborative and effective response to the ongoing humanitarian crisis in North-East.

Some of the private companies are Seplat Petroleum Development Company Plc, Zenith Bank Plc, Ecobank Transnational Incorporated, First Bank of Nigeria Limited, Nestle Nigeria Plc, Unilever Nigeria Plc and Nigerian Economic Summit Group, among others.

A statement on Monday said the companies were acting as advocates, proactively raising awareness of the plight of Nigerians in the North-East.

It said the NHF-PSI was founded on the premise that Nigeria’s private sector not only cared for its nation’s most vulnerable, but also possessed the vision, resources and natural problem-solving ability to reduce it on an unprecedented scale if harnessed into collective action.

The statement read in part, “Since the start of the Boko Haram crisis, more than 27,000 people have been killed in the three north-eastern states, thousands of women and girls have been abducted and an estimated 823,000 people remain in areas that are currently not accessible by international humanitarian actors.

“To assess the situation firsthand, on May 14, 2019, Oando led a delegation that included the Managing Director of Access Bank, Mr Herbert Wigwe, and the former Chairman, NESG, Mr Kyari Bukar, to a first-ever collective tour of two internally displaced camps in Maiduguri, Borno.

“The objectives of the tour were also to raise awareness of the plight of the millions of people in the North-East, and more directly galvanise a new wave of donor support for the initiative from businesses and individuals across the country.”

The Group Chief Executive Officer, Oando, Mr  Wale  Tinubu said private sector leaders had a collective responsibility to lend diverse resources to alleviate the suffering of Nigerians.

He stated that the onus was on private sector leaders to use their position to repair, nurture, build and sustain the society and pave a path for a truly inclusive economy.

The United Nations Humanitarian Coordinator for Nigeria, Mr Edward Kallon, said, “The humanitarian community has been working tirelessly to provide shelter, food, health care and other basic needs for families who have been left with little or nothing.

“To see directors of banks and energy companies show compassion for the mothers and fathers, daughters and sons affected by this crisis brings a new beacon of hope for people who have endured so much.”

Wigwe buttressed Tinubu’s point, saying, “We cannot keep looking for donor funded agencies from other countries to come and solve our problems. It is important to note that what is happening in the North-East can spiral to other parts of the country. So, we need to do what is required to stop it.”

He noted that each time the private sector in Nigeria stepped up to do something, they always succeeded.

“You can count on us that we will raise the money and continue to work with and support you to end this crisis. We know the government cannot do it alone, we will support the government,” Wigwe added.

SEC announces guidelines for cross-border securities issuance

The Securities and Exchange Commission says the West African Securities Regulatory Authorities has drawn up draft guidelines on cross-border issuance of fixed incomes and a mutual recognition agreement for the region.

The acting Director-General, SEC, Ms Mary Uduk, said the guidelines were drawn at the 44th conference of the International Organisation of Securities Commissions in Australia.

She said issues around cross-border issuance of securities were discussed at the meeting with the aim of giving a final approval at the next executive council meeting.

Uduk said, “Recall that WASRA had also consented to the convergence of existing rules of capital market regulatory agencies within the region in a bid to ensure that cross-border listing is carried out with little or no hitches.

“This is expected to allow foreign companies to carry out their businesses and assist in deepening capital markets within the West African sub-region.”

She commended WASRA members for their determination to build a strong and competitive regional market that would rank at par with the markets of other regions of the world and, more importantly, in the areas of transparency, disclosure, efficiency, accountability and investor protection.

Uduk also disclosed that the Africa and Middle East Regional Committee met during the meeting and deliberated on the findings of a report on listings as a challenge in the region.

She said members agreed to engage consultants to implement the recommendations of the report.

According to her, the aim of the meeting is to foster the growth of capital markets in the region through the integration and deepening of the markets by sharing information and experiences from different jurisdictions.

Stock market records highest gain in three months

The nation’s stock market recorded its highest gain since February 12 last week as the market capitalisation of equities rose by N1.874tn following the listing of MTN Nigeria Communications Plc on the Nigerian Stock Exchange.

The market started the week on a negative note, as the NSE All Share Index dropped by 98 basis points on Monday while the market capitalisation of equities dropped to N10.701tn from N10.842tn on Friday the previous week.

Further declines were recorded on Tuesday and Wednesday as market sentiment remained bearish.

The NSE ASI, however, increased by 52bps and 153bps on Thursday and Friday respectively following MTN Nigeria’s listing on Thursday.

MTN’s share price gained 21 per cent to close the week at N108.90 with a total bid of 262 million units (227 million units at N108.90 and 34 million units between N90.00 and N108).

Analysts at Afrinvest Securities Limited said 528,600 units of MTN’s shares had been traded so far at a total value of N57.6m.

“Major trades carried out so far are 244,000 units crossed at N108.90; 44,850 units crossed at N108.90 and 203,600 units crossed at N108.90,” they said in a note.

Analysts at Vetiva Capital Management Limited said with significantly high demand for the stock expected to continue, they expected market activity to remain upbeat as investors continued to source the shares.

They said, “We expect the market to close positive at week open as the index continued to rally on the back of the new listing.”

The Nigerian Stock Exchange, in its weekly market report, said a total turnover of 1.172 billion shares worth N17.887bn in 18,380 deals were traded last week by investors on the floor of the Exchange, in contrast to a total of 1.477 billion shares valued at N10.876bn that exchanged hands the previous week in 20,740 deals.

The financial services industry (measured by volume) led the activity chart with 680.592 million shares valued at N7.395bn traded in 11,035 deals, thus contributing 58.09 per cent and 41.34 per cent to the total equity turnover volume and value, respectively.

The conglomerates industry followed with 266.636 million shares worth N818.249m in 1,152 deals. The third place was occupied by the Information and Communications Technology industry with a turnover of 82.390 million shares worth N6.085bn in 346 deals.

Trading in the top three equities, namely Transnational Corporation of Nigeria Plc, Access Bank Nigeria Plc and Guaranty Trust Bank Plc (measured by volume), accounted for 421.064 million shares worth N4.681bn in 3,073 deals, contributing 35.94 per cent and 26.17 per cent to the total equity turnover volume and value, respectively.

The ASI and market capitalisation appreciated by 0.08 per cent and 17.29 per cent to close the week at 28,871.93 and N12.717tn, respectively.

Sixteen equities appreciated in price last week while 42 equities depreciated, compared to the 18 gainers and 49 losers recorded the previous week.

The top gainers for the week were Thomas Wyatt Nigeria Plc, Neimeth International Pharmaceuticals Plc, A.G. Leventis Nigeria Plc, Transnational Corporation of Nigeria Plc and NPF Microfinance Bank Plc, which gained 24 per cent, 22 per cent, 16.67 per cent, 9.73 per cent and 8.89 per cent, respectively.

Regency Assurance Plc, Forte Oil Plc, Champion Breweries Plc, FCMB Group Plc and Wema Bank Plc, whose respective share prices shed 20 per cent, 18.88 per cent, 18.18 per cent, 13.89 per cent and 13.89 per cent were the top losers for the week.

SEPLAT Assures Shareholders of Capital Appreciation, Production Growth

One of Nigeria’s leading indigenous oil and gas company, Seplat Petroleum Development Company Plc has announced a ₦73 billion profit for the period ended, December 31st, 2018, with an assurance to grow production, drive increased shareholder yield and capital appreciation.

The Company reiterated its commitment to stronger growth in the oil and gas sector as it held its sixth Annual General Meeting in Lagos.

Seplat also announced ₦228 billion revenue in its full year 2018 financial result ended 31 December 2018. The figure represents an increase of 65 per cent from the ₦137billion the company recorded in the 2017. Seplat. listed on both the Nigerian Stock Exchange and London Stock Exchange, also recorded ₦73 billion profit before differed tax, indicating 480 per cent increase from ₦13 billion which the company declared in the same period in 2017.

A review of Seplat 2018 results indicates positive performance across all financial indices, confirming the Company’s position as one of the well managed indigenous oil firms in Nigeria. The gross profit for the period grew by 84% to ₦120billion from ₦65billion reported in December 2017. Operating profit stood at ₦95billion, representing a growth of 177% over ₦34billion recorded in the corresponding period of December 2017.  Seplat’s net profit after tax dipped by 45% from ₦81billion recorded as at December 2017 to ₦45 billion in December 2018.

Addressing shareholders, the Chairman, Seplat Petroleum, Dr. A.B.C. Orjiako, said the company’s 2018 operational and financial performance reflected the significantly higher year-on-year levels of production uptime  at its core oil producing assets combined with a firmer, albeit still volatile, oil price and increased contribution from the company’s gas business.

He added: “As you are aware, our results from the previous two years were characterised by  the extended period of force majeure at the Forcados terminal from February 2016 to June 2017.

“As we enter 2019, our reliable production base, low unit cost of production and discretion over capital commitments will allow the business to remain highly free cash flow generative and profitable. In the absence of any major interruption or force majeure event, this will enable Seplat to honour its dividend policy and provide an attractive yield to our shareholders in addition to the potential for capital appreciation.”%E

According to Orjiako, the company will selectively invest in low risk oil production drilling opportunities within the existing portfolio and the continued expansion of the gas business, with 2019 set to be the year that activity intensifies at the large scale Assa-North and Ohaji-South (ANOH) gas and condensate development.

He added: “Seplat remains an ambitious growth-orientated company that is in a position of strength to capture inorganic opportunities where we can leverage our competitive advantages to seek out carefully considered, price disciplined and value accretive acquisitions. Finally, I would like to thank all our employees and wider stakeholders for their efforts and continuing support and I look forward to updating all of our stakeholders on our progress throughout the year ahead.”

Also speaking at the AGM, the Chief Executive Officer of Seplat Petroleum, Mr. Austin Avuru, said: “Seplat has delivered an excellent operational and financial performance resulting in robust profitability and cash flow generation providing us with an extremely solid foundation for growth in the coming years. At our core assets in the West, OMLs 4, 38 and 41, the extension of the license to 2038 means that we can confidently plan and invest long into the future to realise the full potential of those blocks.

“As Seplat continues to enhance production and revenue diversification with new wells scheduled at OML 53 in the East, the board took the Final Investment Decision to invest in the large scale ANOH gas and condensate development which will form the next phase of transformational growth for our gas business. Disciplined capital allocation continues to remain at the core of our activities evidenced by our continual deleveraging of our debt levels to the current balance of US$350m,” he added.

Avuru noted that Seplat’s board has recommended a final dividend of US$0.05 per share to all its shareholders. “In 2018, Seplat reinstated the dividend, increased capital investments and with the resources and headroom in our capital structure, we are equipped to capitalise on organic and inorganic growth opportunities as they may arise,” Avuru said.

He also announced that Seplat board has taken the Final Investment Decision for the ANOH and Amukpe to Escravos alternate export pipeline which will be completed and fully commissioned in Q2 2019. These projects are part of the future expansion initiatives of Seplat in Nigeria’s oil and gas industry.

SEL Capital will float N2bn SMEs’ fund — CEO

Image result for SEL Capital will float N2bn SMEs’ fund — CEOThe Chief Executive Officer, SEL Capital Limited, Mr Segun Opaleye, in this interview with FEYISAYO POPOOLA, speaks about the company’s support for Small and Medium Enterprises and interest in investing in captive power plant project

Funding has become a protracted problem for SMEs. What is SEL Capital doing to help address this? 

One of the major challenges facing SMEs is that a lot of times, the business is not in a position where one can go to sleep as a lender or a potential equity investor. What we usually do for them is to start them off with advisory services, helping them to understand exactly how the business should be structured for easy access to capital.

So, we take so much time in guiding them through what is required to run a proper business. We try as much as possible to help them create a structure that clears the usual doubts about SMEs. Although everybody talks about providing support to SMEs, but the question is: Are you really giving them the solutions that set them apart from the pack? First and foremost, you have to get them to the point where the structure supports transparency, good governance and sustainable business. That is what we are doing, guiding them through the process and helping them to fund and grow their businesses.

Your company is going through an expansion, are you going to lend more to deepen your market penetration as a result of this?

The whole idea is to increase our clientele base across all our touch points, be it our physical locations or e-channels. We have also in the short period, been very instrumental in capital raising for clients’ projects in key growth sectors of the economy. For instance, we just concluded a $12m capital raising for a captive power plant project for a client. We are also lending to businesses and individuals as well as helping SMEs to meet their funding requirements. We are helping SMEs to establish Letters of Credit, fund their Purchasing Orders and support their treasury management needs.

On the wealth management side, we have a few new products and at the appropriate time, we will let you know about some of these products as soon we get the regulatory approvals.

Can you tell us about your financial inclusion project and how you are exploring opportunities in the retail market space?

As part of our financial inclusion strategic drive, we are planning to float a N2bn SMEs Fund. We are starting with tranche one of N1bn, which is expected to close within the third quarter of this year.

What areas of operations is SEL Capital Limited focused on?

SEL Capital Limited was incorporated to seize emerging business opportunities in the financial services sector. Our vision is to become a leading Pan-African financial institution, offering financial advisory, wealth management and investment advisory services and provision of funding solutions to individuals and SMEs. We also help project promoters to create bankable projects and access funding for their projects. Our aspiration is to be the gateway and catalyst for mobilising capital for growth and development across Africa.

And that is essentially the way we are structured. We are starting off with consumer finance, SMEs structured finance, all advisory services around project finance, corporate finance and wealth management.

We are a one-stop funding solution. We want to leverage our transactions experience working in one of the biggest financial institutions in Africa to drive business growth, which we believe is the required catalyst for growth and development in any economy.

What is your growth plan?

Our plan as an institution is to move from this initial phase, and in the next three years, translate to a merchant bank.

So, some of the things we are doing today are geared towards ensuring that we can easily move into the merchant banking space, which is our end game. We believe that with the support of our customers and other key stakeholders, we are on track to achieving this goal.

While we acknowledge that it is a tough order, if you see what we have done in the last one year, everything is geared towards that goal and we are poised to achieving it.

Do you have any plan to deepen your operations in the oil and gas sector?

I will not sit here and say that we can compete with the big players in that market.  We define what we can do based on our understanding of the market. So, our goal is to support every SME across sectors. As I said earlier, we are also planning to become a merchant bank where we can take on bigger players within that market.

What do you think gives you an edge over others given the highly competitive environment you play in?

For us, the business model is very clear. You really cannot support customers if you do not know their business. We do not intend to play in a sector we do not understand. Remember what I said earlier concerning the SMEs space. You can lend to anybody. But the question is: Are you creating value for your customers? Value creation is the only way to create emotional connection with your customer.

In our own case, what we do first is to create value through our advisory services. The same thing goes with our other lines of business. We work with them, give them the best by understanding their needs and being able to provide the solution that meets their specific needs as demonstrated in the example I gave you concerning the power plant. It is all about providing solutions. If you do not provide solutions to their issues, there is no way you can keep them.

Apart from the captive power project, do you see any risk in funding other areas of the power sector?

The major problem in the power sector is illiquidity. When you look at the entire value chain, you have the Gas Company, the Gencos and the Discos and government agencies as well. For example, you have a Genco that is supplying about 900 megawatts to the grid but getting paid half of that due to aggregate technical, commercial and collection losses. So, today, no investor will want to lend to any sector that is plagued with illiquidity. For us, we are very careful and that is why we support captive power plant projects.

With a captive power plant, there is a willing buyer and a willing seller. So, you are only taking the risk of the off-taker or the buyer. If you see any power project getting funded easily, it is most likely to be a captive power plant because all the illiquidity challenges are not there. So, you really will not go wrong with such.

As long as those challenges in the sector are not addressed, the sector will not be attractive to funding.

What are you doing for start-ups?

The fact is most of the start-ups are SMEs. According to the International Finance Corporation, nine out of 10 new jobs worldwide are created by small businesses. Therefore, for an economy to develop, such economy must develop the SMEs space.

At SEL Capital, we help entrepreneurs to create sustainable businesses and make them more bankable.

If we understand what you are doing as a business, then the question is: Is it in a sustainable/ bankable state that equity investors or lenders will be comfortable to fund the business? So, we guide you through the process to ensure you get the needed support.

Many SMEs have complained about the high cost of loans. What is your company doing in that area?

Let me take you back to the commercial banks today. In commercial banks today, as a non-prime borrower, you will probably get loans at 20 per cent plus. The question has always been why have we not achieved a single digit lending rate?

The truth is that the same customer that wants you to do a single digit lending is the same person that will bring funds to you and ask for 20 per cent. And remember, financial institution’s role is purely intermediation.

The good news is there are government initiatives and policies geared towards supporting SMEs.

Why is it difficult to bring down the Monetary Policy Rate to the level where the funds will be cheap to achieve lower lending rates?

It is not as if the Central Bank of Nigeria is not mindful of the need to have a lower lending rate. But the reality is that we are a nation that depends on a lot of Foreign Direct Investments and Foreign Portfolio Investment. And one of the things you can do to encourage these investors is high yield.

Some of them understand the problems in developing nations. There is a premium they require for foreign investors to find your economy attractive. If you keep the rates low and you do not get what you need to reflate the economy, it is a big problem.

There must be strategic direction and plans and at the minimum, it is a three to five-year plan. It is not a knee-jerk response; otherwise, you will kill a lot of things.