Arunma Oteh, Director General, Securities and Exchange Commission Nigeria and Mustafa Chike-Obi, Managing Director, AMCON
Panel II: The Rebirth of the Banking Sector
Euromoney brought together over 250 policymakers, financiers, corporates and overseas investors at its Nigeria Banking and Capital Markets Conference, held in Lagos on 18 September.
Panellists throughout the day urged the need for Nigeria to seize the short window of opportunity provided by the Eurozone debt crisis and other developments in global markets to build on ongoing reforms in the country. A pervading theme concerned how the collaboration between the federal government and the private sector can help stimulate growth and job creation in the Nigerian economy, creating an environment which will enable small and new businesses to thrive.
Taking a closer look at the country’s economy, positive statistics emerged. Nigeria is the third fastest growing economy in the world and currently Africa’s preferred investment destination. Unprecedented foreign investment inflows are driving Nigeria’s capital markets, with 80% of all debt and equity activity in Nigeria from foreign portfolio managers. But all this is set against startling structural deficits in infrastructure, employment and in manufacturing, currently at 4% of GDP. Nigeria is vulnerable to changes in global oil prices, and ongoing developments in the US and China. But with sovereign wealth funds around the globe looking to co-invest in the country, now is the time to fix its domestic agenda. The much debated Petroleum Industry Bill, the transparent accumulation of reserves by the national sovereign wealth fund and the diversification of the economy away from the oil and gas sector into agriculture were among some of the priorities mentioned.
Panellists were resoundingly positive about the banking reforms that have taken place in the country. AMCON is working well with NPLs reduced dramatically and bank lending to the real sector showing promise for the next 12 months. Participants highlighted the Central Bank’s firm handle on price and exchange rate stability. Tighter regulation, a greater culture of compliance, a revamp of listing requirements and a market making effort by the NSE which will provide liquidity to the capital markets, were other key aspects mentioned. This robust framework will pay dividends when the dust settles, panellists said. A lot more however remains to be done. More activity and transparency is needed in the corporate market, education of the buy side is essential and the quality of risk management should be given more attention. Furthermore, the introduction of a new PPP network will need to be complemented by mutual recognition of the public and private sectors' respective needs and how best this can benefit the country. A fair and balanced transaction structure is required to ensure its sustainability.
With a top quality line up of speakers, this conference provided a unique platform for analysis and debate on the development of Nigeria’s capital markets and banking sector at a significant time.
Many thanks go to all of our sponsors for their support for the conference. We look forward to welcoming you again in 2013.