The London-based Head of Europe, Middle East and Africa Payments, Receivables, Treasury and Trade Solutions with Citibank, Mrs. Ireti Samuel-Ogbu, in this interview with Nume Ekeghe in London, recently said foreign investors are more cautious about returning to the country because of uncertainties around inconsistent policies, regulations and foreign exchange discrepancies. Excerpts:

Your department focuses on trade solutions and there have been concerns about Nigeria’s foreign exchange (FX) policies, how is Citibank able to cope since a lot of your customers are multinationals?

Part of the benefit we have as being a global institution means that we bank global clients and when you think of all the sources of foreign exchange that come into a country, some of those sources are multinationals investing and through the capital importation to invest. And yes we know that with the exchange rate, they are not investing and they are not bringing as much money as they have done historically. I think because we have a large client base, whatever funds that are inflows into Nigeria comes through Citi.

We also manage institutional clients, our client base are financial institutions, corporates and public sector so we have portfolio investors in Nigeria as well and those funds would come via Citi Bank. It is a challenge for the entire industry; we are not the only ones who are having a challenge. But what helps to mitigate the challenge a little bit is our global client base and their ability to bring in foreign currency.

You mentioned that foreign direct investments (FDIs) are not coming as much as they used to, do you foresee a reversal of this unpleasant trend?

I don’t really have the statistic in terms of what the FDI levels are now but clearly, from the size of our foreign capital reserves in Nigeria and the fact that we are short on foreign exchange suggests and also exacerbated by the oil prices those three things. I would say they are less.

Definitely, FDI is reducing. On how we can bring FDIs back, without really having a lot of firsthand knowledge, not like I have spoken to corporates and gotten their views, I am just giving a perspective of that and seeing what happens in other countries, I think uncertainty around regulations always causes a pause. Look at the recent US elections; just uncertainty on who was going to be elected caused the market to be volatile.

Anytime there is uncertainty, it always causes a response that clients are just a bit more cautious. I think uncertainty of regulations. The fact that there are many regulations coming out with rapid fire and some of them are not so clear and there are some regulations that are not articulated, which you need to comply with as well to be more cautious. I think regulation is probably a factor.

Also the fact that there is such a difference between the exchange rate banks offer and the parallel rate. If I’m an investor from outside and I want to maximise the naira I get, and I know that if I bring it through the bank channel I get a discount that would probably be a disincentive for me to bring the money in. I think it is because there is a discrepancy between the two that is probably what is challenging the flow of funds.

In the Fintech and solution space, Kenya has become the poster child for Africa, what should Nigeria do to catch up this evolution?

Kenya is the poster child but Nigeria has a lot to be recommended on. Nigeria payments system was late to the party and I remember the first Nigeria interbank settlement electronic funds transfer came in 2003-2004. From then till now, which is like 12 years, I think Nigeria has done an incredible job. Citi was part of the pioneering banks that helped the Central Bank to write the payment vision, it was 2010 and then it was extended to 2020. We worked with Mrs. Sarah Alade then.

So we worked with her and many of the banks to come up with the strategy. So for me, Nigeria is very dynamic and forward looking. The fact that they came up with a very innovative strategy and was documented and implemented. The second thing is the Nigerian Interbank Settlement System (NIBBS) is one of the most progressive that I have seen in all the countries.

I travel around in Europe Middle East and Africa, the NIBSS is very innovative. They have gone from starting electronic funds transfer 12 years ago and now they going for mobile payments. The whole breathe of solutions you have available is unprecedented; you have the ability to do instant pay. You can pay online if you are in Nigeria. You can pay online and you have the ability to pay from any bank structure and it goes into your account. And then recently they have launched the mobile payments.

I think that if Kenya is the poster child for mobile payment Nigeria is the poster child for payment innovation and they have done that so quickly in such a short period of time.
Then what about cards? There was a time when if you had to pay for anything you had to pay with cash, but now, I don’t know of any supermarket or any place you can go too without card payment options. So I would give Nigeria top mark for the transformation in such a short period of time and the way they have digitised all their processes.

What do you foresee in the Fintech space?

I think the next big shift in Fintech is new payment rails and that is moving to the distributed ledger phase and digital currencies. I think that perhaps, is the next leap. That would mean that exchange of value would not be through physical cash but potentially by using a digital currency and rail. And these are the rails Bitcoin uses but it is potentially possible that as more investment goes in and as security and skill come in, that potentially could be the payment highway of the future. So in a way, I think the Internet revolutionised communication and in the future, I think the distributed ledger could revolutionise payments.

What’s your take on the Nigerian economy now and what steps would you advise the Nigeria to take to come out of its present situation?

Tough one. What’s my take on the economy? I do know that inflation is high, exchange rates given the devaluation of the exchange rate has feed into the cost of products, there is high unemployment, there is a high number of unbanked, there is low receipts from the government from oil prices and generally, the quality of life of people in terms of the hardships that the populist is facing is quite significant. The advice I would give? First of all I would say in terms of export, it is to diversify and increase non-oil exports. I would say that would be a great way to start because that is part of our challenge. We are a rich country with many commodities apart from oil, but oil is still 90 per cent of exports.

So if we can diversify the export base. Also, we need to encourage manufacturing through allowing manufacturers import what they need to grow the industry. Then I would say the policy around exchange rate, they should try to come up with more of a market-driven exchange rate because that would encourage more inflow and more investment into the country. And then social welfare in Nigeria because I think the safety net in Nigeria is bad.

There is a large chunk of people who are disenfranchised and their level of living standards are very low. In South Africa for example, there is a minimum standard everyone has which is running water and electricity even in the shacks. And if you go to the townships, there is a minimum level. In Nigeria, that minimum level is too low. And of course power. If you believe Dangote’s estimate, it would put five per cent into the GDP. So if you deal with the power situation, it would enable more enterprise to flourish.