Bisi Onasanya, MD, First Bank
The FirstBank of Nigeria impressed delegates at the recently concluded World Economic Forum in Cape Town, South Africa about opportunities for Foreign Direct Investment in Nigeria, reports Adeola Akinremi
In Cape Town, South Africa, the venue of the just concluded 2013 World Economic Forum on Africa(WEFA), the Chief Executive Officer of FirstBank of Nigeria, Bisi Onasanya stepped up to the podium and declared: “Nigeria has all it takes to make the leap, its stable macroeconomic environment, large market size and a flexible labour market makes it a competitive economy…”
He was speaking at a breakfast meeting his bank organised for investors who attended the forum which played host to the crème of African society- presidents, prime ministers, diplomats, technocrats and business leaders.
Onasanya whose bank provided support for the 2013 WEFA said expansion of the non-oil sectors such as telecommunications, trade, construction, public and privately funded infrastructure and Agriculture are expected to continue to drive Nigeria’s economy.
According to him, manufacturing sector connected to boom sectors such as cement and FMCG trade will also experience growth just as the real GDP growth is expected to average above 7% over the 2014 -17 period with an average growth in GDP per capita of 6.3% to US$2,450 over the 2013 – 17 period.
He listed top performing sectors to include: telecommunications (31.83%), building and construction (12.58%), solid minerals (12.52%), hotels and restaurants (12.15%), real estate (10.41%) and business services (9.7%).
“Based on macroeconomic stability indicators, productivity gains from large market size, improvement in labour market efficiency and relatively high level of business sophistication, Nigeria demonstrates traits of an efficiency driven economy. Agriculture, retail trade and the oil industry still dominate the Nigerian economic landscape and monetary policies have also been stable,” he said. Though he acknowledged that the government is gradually implementing reforms focused on infrastructural development, Onasanya stated that the quality of institutional and administrative frameworks in Nigeria is a source for concern “due to corruption, undue influence and government inefficiencies. Other drawbacks are inadequate infrastructure, low adoption of technology and rising insecurity.”
“Nigeria’s slow progress in addressing these basic requirements places her in a category of countries with huge potentials but consistently weak or underperforming growth,” he explained.
Onasanya said Nigeria is at a critical point in her history and needs to take decisive actions to tackle these challenges as well as diversify its economic base.
He told the delegates that despite these challenges there are bright spots for the Nigerian economy with a few sectors showing great potential.
“The pending passage of the Petroleum Industry Bill; Nigerian Content Act passed in 2010 increasing Nigerian participation and use of Nigerian supplies/contractors in Oil & Gas industry;IOCs moving offshore to mitigate security risk;reforms that provided lower tax rates to companies operating offshore; foreign demand diversifying away from international oil and boosting development of alternative energy and Nigerian gas master plan are signs of hope coming from the oil sector,” he enthused.
He hinted that transportation infrastructure is still relatively undeveloped and affords huge investment potential.
According to him, “The establishment of Infrastructure Concessions Regulatory Act, enhanced private sector participation in infrastructure financing, Increased participation of foreign technical and financial players such as engineering firms and capital provision, increase in both number and sizes of the local construction companies in the transport space and the push by government to develop multimodal transport systems (rail, bus, ferry) are changing business landscape for the country.”
On the power sector, he said recent reforms and enabling legislation are also changing the power sector and retail segment. For instance he stated that the on-going progress with power sector reforms and selection of 14 preferred bidders for the 15 successor companies of the State-owned power company with payment of 25 per cent bid values worth US$560 million has prompted Nigerian bankers committee to work on a funding strategy for the power sector.
Onasanya said further that it has expectedly ushered in structured finance, loan syndication, spin-off ancillary support infrastructure and Capacity building in the power sector desks of financing institutions across the country.
And for the retail segment of the economy, he said there was an estimated retail sales of US$117.4 bn in 2012 and it’s expected to overtake South Africa as the largest in Sub-Saharan Africa by 2013.
He said: “The success attained by early entrants into the retail space in Nigeria is attracting more players with aggressive plans for expansion across key commercial hubs (Lagos, Abuja, Enugu, Ibadan and Ilorin) with increasing number of international fast foods chains, rise in e-commerce platforms and growing online retail trade.”
And bearing in mind that Agriculture has a critical place in the country’s economy, he said: “Agriculture holds huge potentials and the Central Bank of Nigeria (CBN) and the Ministry of Agriculture are championing several initiatives to develop commercial agriculture.”
Adoption of the Nigeria Commercial Agriculture Development Programme by the government; Growth Enhancement Support Scheme aimed at improving efficiency in the fertiliser value chain; encouragement of private sector participation; establishment of several agriculture credit initiatives including, Commercial Agriculture Credit Scheme (CACS) for promoting commercial agriculture enterprises; Nigeria Incentive-Based Risk Management System for Agricultural Lending (NIRSAL) aimed at the agriculture value chain and provision of incentives and technical assistance to providers of finance and Agriculture Credit Support Scheme (ACSS) to provide low interest rate loans to farmers and agro-allied businesses are part several initiatives to develop commercial agriculture.
Counting on Nigerian banks to provide necessary support, he said that regulatory reforms combined with rapid economic expansion have swept in a tidal wave of change in the banking sector.
“Positive global liquidity, asset reallocation among institutional investors (pension funds) is seeing greater market confidence in the banking sector,” he said.
He disclosed that FirstBank Holding is the largest and most enduring financial services institution in Sub-Saharan Africa with unparalleled reputation for leadership, strength and stability.
With extensive network of over 650 branches and cash centres, more than 1,800 Automated Teller Machines(ATMs) and International locations in London/Paris/Johannesburg/Abu Dhabi/Beijing/DRC, Onasanya maintained that FirstBank is at the forefront of leading Infrastructure projects changing the landscape across Nigeria.
“We have been leading the way in supporting indigenous players in the Nigerian Oil and Gas sector. We’ve also been part of the largest deals in the telecommunications sphere in Nigeria.”
The 2013 WEFA featured an agenda built around three major pillars: accelerating economic diversification, boosting strategic infrastructure, and unlocking Africa’s talent under the theme “Delivering on Africa’s Promise.”
The 23rd World Economic Forum on Africa thus provided an important platform for regional and global leaders from business, government and civil society to deepen the continent’s integration agenda and renew commitment to a sustainable path of growth and development.