Okpala: Fuel Subsidy Removal Should Be Done Gradually
Nonso Okpala is the Group Managing Director/Chief Executive Officer, VFD Group, which is an industry-agnostic proprietary investment company with portfolio of over 40 businesses across different sectors and geographies, creating innovative products and solutions for the African market. In this interview, he speaks about certain issues on the economy. Excerpts:
The federal government recently deferred the implementation of the Petroleum Industry Act which was described as a game changer for the economy, what is your take on that?
It is a necessary step that needs to be taken and we will only be able to defer it for so long. Eventually, actions must be taken.
In your opinion, how best do you think the fuel subsidy conundrum can be resolved?
Firstly, it is not one that can be solved easily, and it should be treated that way. The ideal situation would be a complete removal of the subsidy considering the cost implications on the economy and already thin government revenues. However, the implication on the average Nigerian is bound to be more telling than imagined and should be considered too. A gradual removal would do well to ease Nigerians into the cost implications of the decision.
With the country gradually entering an electioneering season, what advice will you give policymakers to ensure that the economy doesn’t suffer?
With the current situation of things, policymakers will do well to keep an eye on the macroeconomic indicators, particularly inflation which is set to remain on the rise in the coming months. Unless measures are put in place to cushion the effects of the drivers and drags of inflation and other variables, the economy will likely suffer.
What are the key drivers of the strong rally we have seen in the stock market since this year?
Corporate actions on some of the large cap stocks in the market have been key to the performance of the market so far in the year and is expected to a key driver of market activities. Expectedly, the monthly performance of the market has slowed down just as corporate announcements have slowed. In January when there was a flurry of activities, the ASI returned over 9%. By February, market return had slowed to sub 2% and MtD return currently stands at just +0.07%.
How can the positive trend in the stock market be sustained?
Sustaining the positive trend in the market will be a tall order given that the key drivers of market activity are either waning or non-existent even. From what we have witnessed so far this year, only corporate actions have impacted the market positively and that trend will probably remain so in the near term.
Can you tell us about your digital bank, V bank and how it is doing in the market?
In 2019 we launched the Vbank app, a fully digital bank that offers a wide range of financial products and services to professionals and entrepreneurs across all sectors. Some of its features includes proximity payments, advanced & smart budgeting, debit card management, QR Code, recurring transactions, among others.
There has been remarkable growth across key metrics and impressive feedbacks via user ratings and reviews on the app stores. We have recorded over 350,000 in registered customers, over N8.75bn in customer deposits, monthly average transaction count and value has also grown by c.15000% and 2700% respectively as at end of January 2022.
What are the expectations from VFD Group in 2022?
Currently we are building Africa’s first truly diverse business ecosystem. Looking ahead, one of our key aspirations is to be a global proprietary investment firm listed on one of the world’s leading exchanges, and we are already in the process of building this. This year, we are focusing on expansion along key strategic pillars. We will be deepening our Energy and Power Sector play with additional investments, while we also seek to expand our African footprint with cross border expansion into new markets. Another critical outlook for the year is to support our portfolio companies’ expansion plans for increased contribution to the bottom-line
We have designed a roadmap to take us there, with industry and cross boarder expansion plans staggered along the way, and I am positive that given our trajectory and the support of our stakeholders, we will achieve this.
The other time you said you were aiming at obtaining a commercial banking license. Where are you on that? Our aspiration for a commercial banking license remains in the works. We are actively engaging key stakeholders to map out the best way of achieving this. We are considering the most efficient option to execute this and we will keep our stakeholders abreast of developments
