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World Report

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The second fastest growing regionin the world and one of only tworegions to experience growth inforeign direct investment in

2012, Africa is becoming the place tobe for international investors; and asthe second largest economy behind SouthAfrica and with the largest workforceon the continent, Nigeria is powering theAfrican propulsion.

Once tainted by political instability,corruption and poor fiscal management,the West African nation is being trans-formed by President Goodluck Jonathan,who has introduced several reform mea-sures since assuming office in 2010. MrJonathan had served as vice-president toUmaru Yar’Adua, but took over the topseat following the death of Mr Yar’Ad-ua from a kidney illness in May 2010.

Economic growth has been impressivesince the end of military rule in 1999and the successful installation of democ-racy. GDP growth averaged 7.4 per centannually for a decade and it is expectedto grow by 6.5 per cent in 2013. Econ-

omists predict that between 2014 and2017, the economy will grow an averageof 7 per cent.

Nigeria’s ambitious long-term devel-opment plan, Vision 20:2020, envisagesthe country becoming one of the 20largest economies in the world by 2020.Goldman Sachs has included Nigeria inits list of the ‘Next-11’ economies to dri-ve global growth in the future.

Oil-rich Nigeria has relied heavily onthe oil and gas industry for revenues andeconomic growth. However, it is the non-oil sector that has driven the economyforward. Non-oil sector growth is being

driven by: the services industry, partic-ularly telecommunications and trade;publicly and privately financed infra-structure; agriculture; and a bankingand finance sector that has been reinvig-orated following the crash of 2008.

Investment in oil and gas has been be-low par of late as investors await the pass-ing of the Petroleum Industry Bill. Thisrevolutionary piece of legislation will seehuge improvements in transparency, ac-countability and governance; increasedlocal content and community involve-ment; and the deregulation of the down-stream industry.

Revenues from oil remain buoyantthanks to high oil prices and are beingpumped wisely into the Excess CrudeAccount and the sovereign wealth fund.These funds are being used for the much-needed development of infrastructureand to spur economic diversification.

“There are two things that are hold-ing the economy back: electricity andrail infrastructure deficits. With [thesovereign wealth] fund, there is a mini-mum allocation of 20 per cent for eacharea. The infrastructure fund can be co-invested with other investments. Oncewe have power and the right infrastruc-

ture in place, it will be a lot easier forus to develop different sectors of theeconomy,” says Minister of Trade and In-vestment Olusegun Aganga.

Agriculture, which employs 70 per centof the workforce, has and will remain amainstay of the economy. There is hugepotential as the country tries to bringmore of the value chain to Nigeria, con-verting agriculture to agribusiness.

The World Bank recently committedto $300 million (£197 million) to im-prove overall management of the coun-try’s rapidly expanding agriculture in-dustry and to support the growing ranksof agribusiness entrepreneurs in thecountry.

Nigeria’s banking sector will be key todriving growth in the real sector as itprovides the capital and finance for large-scale projects and medium-sized enter-prises, down to micro-financing for thegrowing number micro-businesses anddynamic entrepreneurs in the country.

Like the oil and gas industry under thePetroleum Industry Bill, the finance sec-tor has undergone huge reform aimedat improving transparency and account-ability following the financial crisis thatbegan five years ago.

Thanks to the efforts of award-winningCentral Bank Governor Sanusi LamidoSanusi, the banking industry is nowthriving again with most of the country’sbanks recording healthy profits last year.

Nonetheless, despite Nigeria’s im-pressive growth in recent years, elimi-nating poverty and inequality remainsome of its biggest challenges; aroundtwo-thirds of the population still liveson less than a dollar a day.

Mr Sanusi sees the banking sector atthe centre of these challenges: “Eco-nomic equality is one thing, but in anunderdeveloped economy, we have gen-der and economic inequality, sometimesamong classes. We have years of in-equality among classes, but also amongregions and this means among sectors.So we have to address how the financialand banking system locks into this. Weare talking about a banking system thatis wired to eradicate poverty.”

There are no doubts that Nigeria hasproblems – be they related to security,poverty, corruption, an over-reliance oncrude oil revenues or inadequate infra-structure. But the people of Nigeria haveworked diligently and will continue todo so for the continued, sustainabletransformation of their country, for thebenefit of investors and inhabitants ofthe nation alike. �

NIGERIA

“Nigeria, a greatcountry, is faced with

a number ofdevelopmental

challenges, which wehave tried to confrontsince the inception of

this administration”

GOODLUCK JONATHAN President of Nigeria

Fast growing Nigeria may be rich in oil, but it is the non-oil sectors that are driving growth

Powerful transformationswiden investment landscape

2 World Report


NIGERIA

“[Ours] is a growth thatcomes with challenges wemust address by...growing in a way thatcreates jobs for our youth.So we must look at sectorsbeyond natural resourcesand commodities”

NGOZI OKONJO-IWEALA, Minister of Finance

“We often say that there’sa value chain problemwithin the Nigerianeconomy. Once thegovernment can get intothe mindset of the people,we can then start to fixthe value chains”

SANUSI LAMIDO SANUSI,Governor of the Central Bank

AMCON gets bad banksback in the good booksSOMETIMES a crisis can lead to therevelation of the true nature of things;it gives an opportunity to assess the sit-uation, root out the bad and startafresh. This is what has happened to theNigerian banking system and it hasemerged from the financial crisisstronger and more transparent thanever, mainly thanks to the work of theAsset Management Corporation ofNigeria (AMCON) and the CentralBank of Nigeria (CBN).

The financial crisis left Nigeria’sbanks in turmoil. NPLs (non-performingloans) made up almost a third of theirportfolios.

“The degree of poten-tial bank failure com-pared to total bankingassets in Nigeria wasprobably greater thanmost countries in theworld. There was reallyno alternative but torescue the financial sys-tem,” says MustafaChike Obi, ManagingDirector of AMCON.

AMCON was estab-lished in 2010 followingthe CBN’s banking sec-tor intervention, in anattempt to restore financial stability.What the CBN found when they inter-vened was a situation much more direthan they had expected; the level of poorgovernance and risk management wasserious. The probe led to the dismissaland – in many cases – prosecution ofCEOs of the top private banks.

In a BBC News interview in 2011,the CBN Governor Sanusi LamidoSanusi said: “We wanted to make peo-ple accountable for their actions. We’ve

gotten a lot of the rotten apples out ofthe system. The system is much bettertoday than it was two years ago. Theage of impunity is over.”

AMCON was set up with three mainobjectives: buy up all the NPLs from thebanks, re-capitalise them, and finallyfind strong partners and buyers to runthe country’s lenders in a more trans-parent way.

Since its inception, AMCON hasbought almost 13,000 NPLs. In 2011alone, it bought N5.6 trillion (£22.6 bn)worth of bad loans. Now it has becomethe largest financial institution in the

country, with assets val-ued at N5 trillion. It hasbrought the ratio of NPLsin the banks from 30 percent to 5 per cent. Thebanks are turning profitsand, most importantly,they are lending to Nige-ria’s real economy again.

“Nigerian banks are nolonger in trouble,” statesMr Chike Obi. “We arenow in a situation wherethe banks are makingprofits, where they wereon the margin two orthree years ago. You have

all the measures of safety for banks,which is very, very strong in Nigeria.There is good liquidity and profits, so Ithink that now the foundation for bank-ing is extremely strong.”

AMCON managed to raise the moneyto buy the banks’ bad loans by issuingbonds, which are something that shouldreally interest investors, says the MD.“Investors should be interested in AMCON bonds, which are the same asFederal Government bonds. The differ-

ence is that we are hoping, and puttingthings in place, to make AMCON bondsavailable and extremely liquid. If youare an investor in Nigeria, then AMCON bonds are where you’ll want toput your money.”

Governor of the CBN Mr Sanusi waslauded internationally for his reform ofthe banking system and his battle fortransparency. His hard-line and decisiveactions led to London magazine TheBanker naming him ‘Central Governorof the Year 2010’.

So what about transparency in AMCON itself? Mr Chike Obi slates re-cent reports by capital markets statingthat AMCON is unregulated as “laugh-able”, adding: “AMCON is a very regu-

lated company. The AMCON Act speci-fies that AMCON be regulated and su-pervised by the CBN. We have gonethrough two CBN examinations so far,and they are very, very intrusive.”

A testament to the success of AMCONis the fact that its model has been repli-cated in even more advanced economiesaround the world. “What is uniqueabout the AMCON model is that all thebanks agreed to contribute monetarilyto offset the N2 trillion [of negative eq-uity] for as long as it takes,” says theAMCON boss. “In our modelling, it willtake between eight and 13 years. So thebanks will contribute a percentage oftheir total assets for as long as it takesto recoup that.” �

Mustafa Chike Obi, ManagingDirector of AMCON

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World Report 3


NIGERIA

In January 2012, Arunma Oteh, the Di-rector General of Nigeria’s Security andExchange Commission (SEC) was taskedwith the unenviable job of cleaning up the

Nigerian Stock Exchange (NSE), which wasrife with insider trading and other abuses.

Ms Oteh, nicknamed the ‘The Iron Ladyof Nigeria’, was adamant to reform theNSE and also end the days of impunity. Ina hard-line stance similar to that taken bythe Governor of the Central Bank of Nige-ria, she removed individuals or entities fromthe NSE accused of malpractice with somefacing civil and criminal charges.

Her job was not made easier by those with-in the system who were keen to underminereform. Some even tried to claim that theformer VP of the African DevelopmentBank and Harvard Business School MBAholder was not qualified for the job – aclaim she dismissed as “laughable” in a BBCinterview in 2010.

“I think the market was under-regulated.People now understand that integrity is thefoundation of any market. They must haveconfidence in the market. Part of what wedid in 2010 was to change the general psy-che. We sent out a message that our in-vestors are protected,” she says.

Another important task for the SEC bosswas finding new blood to oversee thingswithin the NSE. In January 2011, OscarOnyema, who had over 20 years of experi-ence in US financial markets, was appoint-ed as CEO. Mr Onyema was keen to makesure the NSE was “doing its bit” as a self-

regulator. “We believe that regulation formsthe bedrock from which you can get in-vestor confidence,” he says.

The reform policies of the Oteh-Onyemateam have, without a shadow of a doubt,transformed the NSE. In 2012, the NSEclosed the year with gains of 34 per cent, along way away from the collapse of the mar-ket in 2008 and 2009 by 45.7 and 33.7 percent respectively. “The NSE rediscovereditself and outperformed analysts’ forecastsfor 2012, posting an inspiring performancethat surpassed those of G7 countries led byGermany and 33 other frontier marketsaround the globe,” Mr Onyema adds.

Both Oteh and Onyema are firm believ-

ers in the capital markets as the driver ofthe Nigerian economy, which is alreadyflying high.

The NSE chief executive says that Nige-ria is preparing to assume a leadershiprole in contributing to world growth throughits own economic expansion.

“We at the NSE are positioning ourselvesto help drive that growth, by making surethat we facilitate appropriate capital andfinancing resources that are looking to makeinvestments in this area.”

More participation in the NSE from thosein the utilities, telecom and oil and gas sec-tors could bring even more gains to the NSEand subsequently more economic prosperity.

According to Ms Oteh, only 17 per centof the economy is represented on the capi-tal markets. “Can you imagine how it wouldbe when the 16 to 17 power generation anddistribution companies get listed? Not tomention those outside the power sector, thosein telecoms and oil and gas – strategic sec-tors in this country with a number of indige-nous players who are looking to list.”

Evaluating his work at the NSE, Mr Onye-ma comments that: “We want to positionourselves as the gateway to African mar-kets. If people are looking to participate inAfrica and they think of Nigeria first andaccessing the country through the NSE,then I will have done my job.” �

How the capital markets were reformed

NEXIM creates enduring trade links to develop the economyONE OF Nigeria’s greatest allies in eco-nomic diversification is the Nigerian Export-Import Bank, mandated with pro-viding financing, risk-bearing facilities,market information and advisory servicesgeared towards boosting export-orientedinvestments in non-oil sectors.

When Roberts Orya took the helm ofNEXIM in 2009, however, the bank wascrippled by non-performing accounts anda lack of money to provide new loans.

“NEXIM is owned by the Central Bankof Nigeria and the Federal Ministry of Fi-nance, yet the shareholders had forgottenabout the bank,” he recalls.

His first step was to establish a frame-work and a good corporate governancestructure, and from there on out, the bankhas been performing spectacularly.

“In 16 months, I was able to turn thisbank from a loss-making one to a profit-making institution,” he says, adding that2010 was the first year since 2003 thatshareholders received dividends.

Nowadays, the bank turns a profit to thetune of some £122.6 million, in spite ofbeing a development finance institution.

Profits aside, NEXIM is stepping up itseconomic diversification efforts, havingidentified four sectoral anchors of Presi-dent Jonathan’s Economic TransformationAgenda – namely, manufacturing, agro-processing, solid minerals and services.

“I was looking at sectors that have a lotof growth potential in terms of generatingemployment and foreign currency incomein Nigeria, as well as new creative markets,even for rural farmers,” points out Mr Orya.

NEXIM estimates it will provide N18billion (£72.7 million) to support Niger-ian exporters in 2013.

Yet it isn’t only goods that the govern-ment is focusing on; it recently authorisedN32 billion for the creative industries un-der the Nigerian Creative and Entertain-ment Industry Stimulation Loan Scheme,which NEXIM is managing.

The issue that the development bank iscurrently trying to address in this area, how-ever, is the financing for would-be entre-preneurs who lack collateral.

“We’re looking at overcoming the chal-lenge of collateral for young people becausewe know that the sector can create manyjobs and attract considerable foreign directinvestment. We have to unleash the huge po-tential in this industry,” says Mr Orya. �

Roberts Orya, Managing Director andCEO of NEXIM Bank

The NigerianStock Exchange is amillion miles awayfrom the days whenendemic corruptionwas the norm

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NIGERIA

World Report 5

When one of the oldest, largestand most successful financ-ing institution in the country– the Nigerian Industrial De-

velopment Bank – was financially and op-erationally restructured in 2001, it spawnedthe newly titled Bank of Industry, and withit the dawn of a more promising era forNigeria’s manufacturing sector.

Thanks to the fresh direction broughtby the Bank of Industry over the last 12years, the institution – which was origi-nally incorporated in 1964 – has beengradually transformed into a more effi-cient and profitable organisation.

Not only that, the BOI has also helpedresuscitate the country’s previously ail-ing industry by providing sound finan-cial and business support, and in turn,modernising and diversifying the sec-tor towards the production of morecompetitive goods on domestic and glob-al markets.

However, as CEO Eve-lyn Oputu explains, it hasnot all been plain sail-ing. Like with the stream-lining of any company ororganisation, there is arequirement for resource-fulness and inspirationto get things going again.

“After the bank wasrestructured and I camein, we had limited cap-ital, but we came upwith creative ways toensure that industriesthat required it wereprovided with funding,”says Ms Oputu.

“As we did more ofthat, the government re-sponded to us by giving us specialisedfunds to intervene in the areas theythought required urgent and immediateattention.”

And as the new management quicklydiscovered, innovation does not alwayshave to mean unusual ideas, but rathersimply enhancing focus on inherent at-tributes that are already present.

“We said that we wanted to get intosmall and medium enterprises...we foundthat Nigerians are very entrepreneurial,”Ms Oputu recalls.

“We were looking at areas where Nige-ria has a comparative advantage, and ifyou look all over the states, there are dif-ferent terrains and raw materials avail-able. So from 2006 we said we were go-ing to do SMEs that utilise raw materi-als because you create jobs very quickly

in this way. This would also substitute thesmall things that we import so we wouldmake savings on foreign currency andmaintain jobs. And we succeeded.”

As soon as this strategy was realised,the BOI also took on the mantle of train-ing-up those traditional traders with fewentrepreneurial skills or limited knowl-edge in the art of business, helping tocreate a more knowledgeable and adeptworkforce.

With the cooperation of state governors,it was then the BOI decided to start clus-tering SMEs into cooperatives and indus-trial parks towards addressing the infra-structural inadequacies that were ham-pering productivity, putting more of a co-hesive and efficient system in place.

“We decided to go further and look atthe value chain, looking at the big firms andencouraging them to work with the SMEs.”

However, with the larger companiesclaiming they couldn’t source raw ma-

terials from Nigeria be-cause of their notorious-ly poor quality, the BOIsimply inquired whattechnology was neededto produce better quali-ty supplies, then financedthe SMEs to buy them.

“We made fundingavailable to the SMEs topurchase these machinesand it worked to fill voidsin the Nigerian manufac-turing supply chain andkeep value added andjobs at home. That iswhat we have done at theBank of Industry.”

And it is a system thathas truly worked. Not

just in reinvigorating the manufacturingsector and reducing poverty in line withthe country’s development goals, but al-so helping the bank itself to turnover aprofit. From making just £423,000 be-fore tax in 2005, the BOI group was ableto grow earnings by more than 1,000 percent to £4.4 million in 2011.

Having also ramped up investment in-to the sector by 262 per cent in the sameperiod, Ms Oputu is now hoping new in-vestors will be further attracted to Nige-ria’s more robust industry.

“We are looking for partners for SMEsto allow them to scale up and add capac-ity. I can assure you there are many com-panies here who are making huge returnson investment. You cannot make thosemargins anywhere else in the world, I canguarantee you.” �

Financing Nigeria’sindustrial revolution

Bank of Industry focuses on long-termlending aimed at industrialising varioussectors and spurring SME growth

Evelyn Oputu, CEO of Bank of Industry


Ever since First Bank’s inception in1894 – when it first served the es-sential role of introducing modernbanking into Nigeria under the orig-

inal guise of Bank of British West Africa –the company has been a constant leader ofthe former British colony’s financial sector.

For many decades the bank was in factthe only one operating in Nigeria, and fora period following the industry’s boom inthe 1930s, it came under the control ofthe Nigerian government before subse-quently being acquired by the UK-basedStandard Bank.

Indeed, while the country’s banking sec-tor has developed, it is true to say thatthe First Bank of Nigeria (as it was re-named in 1979 after Standard sold theirshares to domestic investors) has posi-tively evolved with it.

From the continued growth of compe-tition to the various shake-ups the indus-try has suffered in more recent times –including when many of Nigeria’s biggestlenders faced bankruptcy during the 2009financial crisis – First Bank has not onlysurvived but remained at the forefront, be-coming known for its remarkable dy-namism, and as a symbol of great strengthand fortitude.

Post crisis, it is now with the country’sfast growing economy and revitalisedbanking sector (a recent IMF report de-scribed its major banks as “well capi-talised, liquid and profitable”) that healthyrivalry is thriving once more. And as aresult, First Bank has yet again neededto innovate and inspire to retain its posi-tion at the top.

“As the banking crisis in Nigeria is be-ing resolved, competition becomes tougher.So we believe that the only way we cancontinue to maintain a strong hold on ourtraditional segment of the market is to makesure that we put everything into that seg-ment to drive national innovation and ex-pand our market share,” says ManagingDirector and CEO Stephen Onasanya.

The presence of increased competitionin the mass market, as Mr Onasanya ex-plains, is the factor that fuels First Bank’sdrive for “national innovation” and itsstrategy of financial inclusion – the deliv-ery of affordable financial services to sec-tions of the disadvantaged and low incomesegment of society.

“The difference between First Bank andmost other banks – and a major factor be-hind our success – is the fact that we are ableto bank the masses and offer them bankingservices when other banks do not want them.

“We are a brand that is well loved and webelieve we need to give back to society partof what we have gained from it. Do not for-get that First Bank was at some point ful-filling the role of the Central Bank, not justfor Nigeria, but for the whole of colonial WestAfrica. So on that side we see it as a socialresponsibility to drive financial inclusion.”

According to the World Bank, only 24 percent of the adult population of sub-Saharancountries had a bank account in 2011, whilethere were, on average, 2.7 bank branchesper 100,000 adults. However, new innova-tions in information and communication

technology have transformed the sector inAfrica recently, with access to financial ser-vices becoming more widely available, large-ly through the vitally important develop-ment of mobile telephone banking.

This more convenient way of banking –for both customer and provider – has tak-en the market by storm, again helping toincrease competition for extending servicesto previously unbanked people with little orno access to formal methods, and in return,further stimulating economic growth.

For First Bank, continual investment insuch technological developments as thesehave not only propelled its financial inclu-sion strategy, but led to it being named the‘Most Innovative Bank in Africa’ at the2011 African Banker Awards, as well asreceiving the accolade of ‘Best Bank inWest Africa’ at this year’s ceremony.

“What we do is find cheaper ways of ser-vicing the customers so that they do nothave to have physical contact with the wholebanking environment,” says Mr Onasanya.

“We have no choice by way of our lega-cy as the people’s first choice bank oth-er than to continuously tinker with the

way we serve them. We constantly lookfor ways to let them access banking ser-vices using technology.”

Aside to the company’s massive suc-cess in improving its use of the mobile bank-ing and payment platform, First Bank hasalso pioneered through a “channel mi-gration strategy” that intentionally pro-files different customer segments andsends them through a passage most ap-propriate to their needs.

“That makes it effective for us to servethem at less cost and the customer doesnot see it as being pushed away,” addsMr Onasanya.

“What we strive for in everything thatwe do is to allow the customer to get thatservice without any form of interventionor interaction with a human being as muchas possible.”

And as the CEO spells out, this philos-ophy of creative-yet-careful managementhas had a financially beneficial impact forthe company as well as unlocking newbusiness opportunities.

“We have been able to reduce our ser-vice costs significantly in the last threeyears simply by improving technology.

“In addition to making it cheaper forus to serve the customers, it has alsoopened us up and endeared us to the youngand upwardly mobile segment of the mar-ket, who traditionally would not want tocome into a bank.”

Such shrewd implementation of corpo-rate strategy – and how the bank has re-focused and revitalised its provision ofcustomer services through taking advan-tage of the company’s privileged heritageand rich experience – is what Mr Onsanyaattributes the bank’s record 306 per centincrease in profit, from the $116 millionrecorded in 2011, to $473 million in 2012.

“That is the reason why up to today, andat every point in time we have alwaysbeen able to weather the storm, blitz ourcompetitors and still come out as the num-ber one bank.” �

6 World Report

A lasting journeyof evolution and innovation

As Nigeria’s longest serving financialinstitution, First Bank is not only primary bymeans of name, but has also become one of thecountry’s foremost and well-loved brands

First Bank of Nigeriawas named

Best Bank in West Africa at

the 2013 AfricanBanker Awards


World Report 7


NIGERIA

8 World Report

Ecobank’s growth since in its in-ception in 1985 has truly beenphenomenal. It is now the lead-ing pan-African bank with oper-

ations in 33 countries. Of course, being thepan-African regional leader was somethingits ambitious founders had envisioned sincethe bank’s humble beginnings in Togo al-most 30 years ago with capital of a mere£20 million.

“Historically, the bank had an ambitionto become a regional bank. It was not anafterthought – it started off originally likethat, because we felt that there was roomfor a regional bank to interconnect WestAfrica,” says Ecobank Nigeria’s Manag-ing Director, Jibril Aku.

That was the founding fathers’ dream –to start a regional bank that could begin topromote trade amongst West African coun-tries. We have dominated 15 countries inWest Africa and then we moved into East-ern and Central Africa, eventually becom-ing the pan-African bank we are today.”

With Nigeria being the regional finan-cial hub, Ecobank’s recent successes canmainly be attributed to its operations in thecountry. Ecobank Nigeria now accounts for42 per cent of the Ecobank Group’s totalrevenue. It is the epicentre of the bank’soperations and is the focal point for foreigninvestors in Africa, according to Mr Aku.

“South Africa has a more developed fi-nancial market, which has been around formuch longer, and they have more capi-talised banks. But in terms of the popula-tion and the market, Nigeria remains theeconomy of interest to all global investors.”

Up until 2005, Ecobank Nigeria was es-sentially a private corporate bank operat-ing in a niche market. Around that time itwas one of the top 21 banks in the coun-try. That year marked the first great changein the banking sector of Nigeria (the sec-ond followed the crisis of 2008). An over-saturated market with over 90 banks ledto the Central Bank of Nigeria’s (CBN) de-cision to increase the capital requirements,which led to numerous consolidations anda much leaner banking sector.

“CBN’s first consolidation in 2005 re-duced the number [of banks] to 25. Manybanks either merged or they did not makethe hurdle,” Mr Aku recalls.

The hurdles did not prove to be too highfor Ecobank Nigeria, and the consolida-tions of 2005 turned out to be a great op-portunity for it to expand and diversifyits operations.

“After the 2005 consolidation, it emergedas a very small and over-capitalised bank.So the strategy was developed to grow fastinto a fully fledged universal bank, and thenwe ramped up on retail banking growth.The first thing we did was start an acquisi-tion drive, with some of the banks that hadfailed the consolidation process in 2005. Todate, we have made four acquisitions.”

The strategy paid off as Ecobank hasmoved from the ranks of the top 21 to thetop six banks in the market, challenging someof the big international banks. And Mr Akuis very confident they can improve on thatposition: “Today we are one of the top sixbanks with a good chance to fight for thetop three in Nigeria; this is our currentstrategic goal.”

The most recent of Ecobank’s acquisitionswas in late 2011, when it took over defunctOceanic Bank International – one of the vic-tims of the financial crash of 2008/09 thathit Nigeria hard. This latest merger hasgiven Ecobank an even stronger footholdin the market and puts it in a prime posi-tion to take on the big three. Through Ocean-ic, it has acquired an additional 4.5 mil-lion customers, around N500 billion (£2 bil-lion) in deposits and has gained a compet-itive edge in the retail banking market.

Ecobank’s huge financial gains last yearwere mainly thanks to this acquisition.Profit before tax grew 65 per cent, whilerevenue increased 106 per cent. As the bankstabilises and fully integrates followingthe merger, the bank’s chief executive be-lieves that it will have “a much biggerplatform to be able to generate more rev-enue and business for our shareholders.”

As the leading pan-African bank,Ecobank is also leading the way in offer-ing the latest IT services, be it for its busi-ness or individual customers. In 2012 forexample, the bank entered an agreementwith MoneyGram, which will give the di-aspora the chance to make hitch-free mon-ey transfers.

It also launched Ecobank Mobile Mon-ey, promoting Nigeria’s cashless policyand financial inclusion for the unbanked,particularly in rural areas. Those evenwithout a bank account will now be ableto make simple financial transactionsthrough their mobile phones.

“In terms of product innovation andthe IT platform for collections and pay-ments, we are strengthening our existingplatforms,” says Mr Aku. “We are look-ing at differentiating our trade products,because we are not restricted to just onecountry. So we bring in different featuresto make the products more attractive nomatter the market.”

So why should foreign investors look topartner with Ecobank? Mr Aku statesthat Ecobank offers a unique entry pointinto Africa and unrivalled expertise in themarkets of the 33 African countries inwhich it operates, as well as its vital sup-port and counsel which are grounded inalmost 30 years of experience of theAfrican business environment.

He adds: “We always tell investors thatwe are like a single entry into Africa, par-ticularly Nigeria. We can guide youthrough that process to make you hit theground running faster than you would ifyou went through another bank.” �

The emerging pan-African leaderEcobank, withits almost 30-yearexperience ofAfrican markets,offers a single entrypoint for investorsinto Nigeria andaccess to the widerflourishing continent

“We have dominated 15 countries in WestAfrica and then we movedinto Eastern and CentralAfrica, eventuallybecoming the pan-African bank we are today”

JIBRIL AKU, Managing Director of Ecobank Nigeria

More than 40 per cent of the Ecobank Group’s revenue comes from its largest branch, Ecobank Nigeria


NIGERIA

Throughout its history, Sterling Bankhas focused more on solutions thanbranding and consequently built up abase of extremely loyal customers.

The bank was originally established in 1960as NAL Merchant Bank. Being Nigeria’sfirst merchant bank, it took on a significantportfolio of corporate customers.

“It is safe to say that there is hardly anycorporate name that we do not have on ourbooks today. All the mega-deals in the 1960s,70s, 80s and 90s were completed here,” saysYemi Adeola, Group Managing Director andCEO of Sterling Bank.

NAL Merchant Bank operated as a pri-vate company until 1972, when the Niger-ian government took ownership. Two decades

later, it was partly privatised and then in2000 the government sold its remaining as-sets. Over the next few years, the bank wasvigilant about balancing its books and main-taining good corporate governance. Thismeant that by the time the banking sectorconsolidation phase came along in 2006, itwas a strong player that merged with fourothers to become Sterling Bank.

When the financial crisis came to a headin 2011 and the Central Bank (CBN) insti-gated far-reaching reforms in the banking sec-tor, Sterling not only passed the stringentstress tests with flying colours, it also ac-quired the undercapitalised Equitorial TrustBank, thus enhancing Sterling Bank’s posi-tion in the hierarchy of major players.

“When Sterling Bank survived the CBNreview, people asked how that was possible.We were one of the smallest banks with thehighest costs of funds,” says Sterling Bank’sChief Financial Officer Abubakar Suleiman.“I said it was because we always believed thatthere would be a crisis somewhere down theline. And we were ready for it.”

The bank’s strengths lie in a very low non-performing loan portfolio (3 per cent), a ro-bust enterprise risk management frame-work, a credit assessment process, highlyefficient international payment systems,having one of the best trade services organ-isations in Nigeria and its ability to find andstructure flexible solutions.

“We do not have so many customers, so

we don’t have the luxury to invest willy-nilly,” says Mr Suleiman. “It is also abouthow you structure the loan deals, and the ad-ditional value involved, that means our cus-tomers are best served in the industry.”

Priding itself as the “one-customer bank”that celebrates each and every customer asa unique individual, Sterling Bank’s strate-gy nowadays is to focus on retail banking.

“Our strategy in essence is to simplify bank-ing at the retail end,” says Mr Adeola. “Ineach of our regions, we have a hub where allshades of transactions take place. However,we have come to realise that most people inthe retail segment just want to do plain vanil-la banking. We are helping to make this hap-pen in various ways, such as providing easy-to-do, same-day account opening. We offervarious electronic payment solutions, includ-ing internet banking and a wide range ofcards that allow payments at millions of storeoutlets as well as withdrawals from ATMsworldwide.”

Mr Suleiman adds that Sterling Bank is con-servative yet innovative, an example being itsoutlook on financial inclusion and bank prof-its. “We decided to go into the lowest levelsof the market with the objective of building themarket – it is not just about making profit.You have to begin to treat some of your assetcreation as investments. Not all lending willbe at market rates, so we will be discountingthe rate we charge for some things.” �

The banking solutions specialistsYemi Adeola,Group MD and CEO ofSterling Bank,says the bankencourages aDIY approachin many of itsbranches,wherecustomers cando everydaytransactionson their own

Sterling Bankis a small yet smartbank, carefullytending to its clientswhile growing bothorganically andthrough strategic andselect acquisitions

World Report 9


10 World Report


NIGERIA

World Report 11

Amid a very successful 2012across the whole of Nigeria’s fi-nancial sector, Guaranty TrustBank – GT Bank – was one com-

pany that in particular turned a few heads.GT Bank, named 2013 African Bank

of the Year at the African Bankers Awards,enjoyed enormous takings last year withprofits after tax amounting to over N86billion (£348 million) compared to N52billion in 2011.

Despite such impressive figures, Manag-ing Director and CEO of GT Bank SegunAgbaje says that the high profits are a re-flection of the company’s efficiency, whichhas over the years been characterised by atried and tested, straightforward approach.

“We have a very simple strategy andvision. We do not reinvent the wheel – evenwhen we leave Nigeria, we take a busi-ness model that has worked for us,” saysMr Agbaje.

Indeed while the bank’s model may be“simple”, recent results have shown it tobe an extremely resolute and econom-ically resourceful one that strongly tar-gets lending to the high-end market.

“We are the most cost-efficient bank inNigeria and graphically what we present isa bank with a large retail base and low costsof funds, lending to the high-end side of themarket, so non-performing loans are low.

“We also have a low cost-to-income ra-tio, our human capital is very strong andthe organisation is young and vibrant.”

The company has also shown that it islikewise not afraid to find new ways tocompliment an already well-oiled machine.

“We were recently named number sev-en in the world in terms of credit institu-tions and banks involved in social media,a platform on which we are servicing overa million people,” proclaims Mr Agbaje.“We are using a lot of alternative chan-nels in this regard such as mobile, inter-net and social banking to drive a very ef-ficient business model.”

This pragmatic yet dynamic style is whatdrives the bank forward, contributing toits rise from a small and newly establishedbusiness in 1990 to becoming one of themost well respected and highly profitablebanks in Nigeria today.

In 1996, the Guaranty Trust Bank plc

became a publicly quoted company andwon the Nigerian Stock Exchange Presi-dent’s Merit Award in the same year, hav-ing gone on to receive the same accoladea further seven times since then.

After undergoing a major rebrandingin 2005, the bank made history two years

later by becoming the first Nigerian com-pany and first African financial institu-tion to be listed on the main market ofthe London Stock Exchange, followed bythe launch of a $500 million bond last year.

While such moves have seen significantheightening of confidence between the in-ternational finance community and share-holders, the bank is currently continuingwith its aggressive expansion strategy byincreasing the depth of its operationsthroughout West Africa and Europe.

In line with the company’s vision to makethe bank one of the most prominent on thewhole of the continent, GT has also recent-ly ventured eastwards to Kenya, Tanzaniaand Uganda. As Mr Agbaje explains, suchexpansion is essential for ensuring the fu-ture growth and prosperity of the business.

“Part of what we decided to do when Ibecame CEO was break into the top threein Africa and you cannot do that by remain-ing just in Nigeria. Our goal is that by 2016,our subsidiaries should account for about10 per cent of the group’s profit, and to dothat, you will need some high impact coun-tries...We think East Africa is such a zone.”

Indeed while GT Bank points to a sim-ple strategy as a reason for its success, thisevident ambition indicates a company notjust content on conquering the local mar-ket, but one that is intent on going places,and fast. �

A ‘simple’ way to soaring profitsGuaranty Trust Bank is a prime exampleof how a simple strategy can result in big success

“Our human capital isvery strong and theorganisation is youngand vibrant”

SEGUN AGBAJE, ManagingDirector and CEO of GT Bank


NIGERIA

12 World Report

When racking up its N100 bil-lion (£407 million) worth ofprofit after tax in 2012 – a106 per cent increase from

2011 figures – Zenith Bank became the firstever in the country to pass the massiveN100 billion milestone in a financial year.

With gross earnings also standing atN307 billion – up 26 per cent – Zenithhas really set down an important markerto cement its position as a true leader inthe Nigerian banking industry.

In accordance with the company’s tra-dition of generating more value for itsshareholders, the bank’s directors haveproposed a dividend payout of N1.60 pershare, while investors and financial an-alysts alike have heaped praise on its re-markable performance.

Zenith, however, is certainly no strangerto setting itself apart from the rest. Sinceits inception in 1990, the bank has con-tinually been raising the bar of the coun-try’s financial sector, ultimately leadingto its outstanding rate of growth.

“When we started the bank 23 yearsago, the banking industry in Nigeria wasstill in its early stages of development,”explains Group Managing Director andCEO Godwin Emefiele. “So to differen-tiate ourselves, we said we would like torun a bank where people do not have acrowded banking hall. We were the firstbank in Nigeria to employ graduates ascustomer service and cash and teller peo-ple because we felt they would take theinitiative to work hard and in turn speedup processes within the banking halls.

“Again we were the first bank in Nige-ria to introduce online real-time banking,and we were the first bank in Nigeriawhere when you walked into the bankinghall, you had access to internet facilities.So for the last 23 years we have focusedon excellent customer service and cutting-edge technology.”

Through such commitment to innova-tional development, combined with a pru-dent corporate governance and solid riskmanagement, Zenith shot to profitability

within its first decade of operations and hasretained this prime position as an industryleader to date, continuing to grow organ-ically and becoming an institution of choicenot only in Nigeria, but around the Africancontinent, as well as having a presence inthe United Kingdom.

Through such commitment to innova-tional development, combined with a pru-dent corporate governance and solid riskmanagement, Zenith shot to profitabilitywithin its first decade of operations andhas retained this prime position as an in-dustry leader to date, continuing to groworganically and becoming an institutionof choice not only in Nigeria, but aroundthe African continent, as well as havinga presence in the UK.

With the bank’s customer base well inexcess of 1.6 million accounts and grow-ing, Zenith offers financial services to Nige-

ria’s major corporate entities, many ofwhich are subsidiaries of multinationalcorporations and large indigenous compa-nies that cut across all of the country’s mainsectors, from oil and gas, to power, infra-structure and real estate.

Now, amid such a rapidly rising repu-tation, Zenith is looking to further add toits mounting international prestige. Thisyear the bank listed on the London StockExchange (LSE), taking a major step to-wards improving liquidity in its stockthrough global depositary receipts (GDR).

“The listing of $850 million (£560 mil-lion) worth of shares at $6.80 each is a ma-jor step by the bank at improving liquidi-ty in its stock through GDR. We are con-fident it will give us access to a wide rangeof major institutional investors and signif-icantly raise its international profile,” saysMr Emefiele.

The bank, clearly in a confident moodabout the potential of the listing, believesthe decision will help open a lucrativepath to the deepest international pool ofcapital in the world, with the LSE cur-rently holding more than $1.8 trillion ininternational equity assets. And while thecompany’s expectation is that stock willbegin to appreciate worldwide, given theincreased confidence of prospective in-vestors, this will inevitably begin to re-sult in higher dividends for shareholders.

Indeed the move, which was given full ap-proval by shareholders at the end of 2012,is a sure sign of the public limited compa-ny’s strong stability and its astonishing jour-ney from local bank to global brand.

Having won a World Finance award atthe LSE last year for Best Corporate Gov-ernance, it is clear to see that Zenith Bank’sglobal goal is not just purely aspirational,but their star is truly beginning to rise ininternational finance circles thanks to ahistory of shrewd management and a com-mitment to creativity and transparency.

Under the leadership of Mr Emefiele –who has sat on the bank’s executive teamsince its incorporation – Zenith has alsorecently been honoured by such respect-ed institutions as Capital Finance Inter-national (Best Commercial Bank in Africa)and FTSE Global Markets, who named itan Emerging Global Super Brand.

In light of this remarkable success sto-ry, going forward, Mr Emefiele believesthat having set the standard for the Niger-ian banking industry over the last twodecades, his company once again standsapart from the rest as the ideal businesspartner for foreign companies looking toinvest in the country.

“I think Zenith Bank is a natural choicebecause it is a bank with strong liquidi-ty, strong capital adequacy, it is run onthe best corporate governance structureand because we take risk managementvery seriously. And ultimately if you lookat our track records and return on invest-ment, Zenith is among the most stable andbest investments in Nigeria.” �

The largest Nigerian bank listed on theLondon Stock Exchange

Zenith Bank, Nigeria’s third largestlender by market value, raised the bar lastyear, posting record-breaking profits

NIGERIA IND pp10-13 copia 3.qxd 6/8/13 17:08 Página 12

World Report 13

NIGERIA

After having experienced a difficultfew years following the onslaughtof the financial crisis of 2008, UnionBank of Nigeria (UBN) has bounced

back and recorded an impressive 2012. In 2009, the bank’s executive manage-

ment team was removed following the in-tervention of the Central Bank of Nigeria(CBN) – a move that was mirrored in manyother banks in Nigeria at the time.

An interim management team was broughtin by the CBN to stabilise and recapitalisethe bank. The Asset Management Corpora-tion of Nigeria (AMCON) – which was es-tablished by the CBN to buy up NPLs andrecapitalise Nigerian banks amid the crisis– pumped almost N47 billion (£193.2 mil-lion) into UBN to get its net asset value backto zero. This was followed by another cashinjection of around N80 billion by the ma-jority stakeholder, Union Global PartnersLimited (UGPL), in December 2011.

In 2012 Emeka Emuwa joined UPN af-ter spending 25 years with Citibank, andthe new Group Managing Director hastruly turned the bank’s fortunes aroundsince his arrival.

The 2012 figures speak for themselves:gross earnings for the bank totalled N96.5billion, up 35 per cent from year-end 2011;profit before tax was N8.1 billion, up froma loss of N102.6 billion the previous year;and customer deposits hit N482 billion bythe end of 2012, a 21 per cent increasefrom 2011.

Earnings per share also improved – 46

kobo (0.2 pence) in 2012 compared tonegative 12.51 kobo the year previous.

“Our 2012 results have fully incorporat-ed all costs relating to the recently conclud-ed recapitalisation and clean up of our loanportfolio,” Mr Emuwa said in April on therelease of the 2012 results. “Our transfor-mation roadmap is well under execution aswe upgrade and strengthen our operating plat-form so that we can serve our customers bet-ter. We are pleased to enter the new finan-cial year on an encouraging note.”

This year is sizing up to be another greatone for UPN. In early June it announced afirst quarter pre-tax profit increase of 40.33per cent to N7.69 billion, compared withN5.48 billion in the same period last year.Mr Emuwa is confident that these figurescan be improved upon over the coming years.

UPN has implemented a transformationprogramme that is made up by seven pil-lars: business model; people and culture;risk management; finance and performance;operations; information technology; andcost management.

At a presentation given at the NigerianStock Exchange (NSE) in early June, theGMD of UBN said: “Reliability is at the coreof our strategy and transformation pro-gramme. We will leverage the rich heritageof the past into the future by modernisingour brand and platforms. We will ensurethat products, systems, service, people,processes and financial reporting are reliable.We will provide reliable service to existingcustomers and be seen by stakeholders andcustomers as trusted partners.”

UBN certainly has a rich past in Nigeria.First established in 1917, the bank was orig-inally called Colonial Bank, before beingtaken over by Barclays in 1925, and subse-quently being renamed Barclays Bank (Do-minion, Colonial and Overseas). It becameBarclay’s Bank of Nigeria (BBN) in 1969.

The Nigerian government acquired 51.67per cent of BBN, leaving Barclays with 40per cent following the enactment of theNigeria Enterprises Promotion Act of 1972.Barclays finally gave up the remainder ofits shares in 1979, all of which were tak-en up by Nigerians. It assumed the nameUnion Bank of Nigeria in 1990 and is nowowned by UGPL (65 per cent), AMCOM(20 per cent), and consortium of investors.

In July 2009, it was rated the 556th

largest bank in the world and the 14th largestbank in Africa. It has also established op-erations in Britain; Union Bank UK has beenoperating from London since 1983. �

Union Bank’stransformation iswell under way

Formerly owned by Barclays, Union Bankof Nigeria is under new leadership that hasreversed its fortunes in as little as one year

Union Bank’s profits were up 35 per centin 2012 from the previous year


NIGERIA

Nearly 50 years ago at the UNConference on Trade and Devel-opment, it was agreed that a sol-id national insurance sector is a

vital tool in enabling economic growth andgenerating employment. Even though Nige-ria has unquestionably enjoyed strong growthof late, its insurance sector has remainedstagnant. The National Insurance Com-mission (NAICOM), the industry’s regulat-ing body, is making huge efforts to increaseawareness and penetration, with the cer-tainty that a larger insurance industry willfacilitate more sustainable and widespreaddevelopment.

Five years ago, NAICOM launched theNigeria Insurance Market Developmentand Restructuring Initiative (MDRI), amedium-term plan to reform the areasof industrial capacity, market effi-ciency and consumer protection. Thedesired result was that by 2012,the insurance industry’s gross pre-mium income would rise to N1trillion (£4.1 billion), from abase of N164.5 billion in 2008.At the end of the MDRI period, it stood ata mere N300 billion.

Adetola Adegbayi, Executive Directorof General Business at Leadway AssuranceCo Ltd, explains why the initiative fell short.

“The MDRI focused on compulsory in-surances basically in order to improve in-surance penetration within Nigeria,” shesays. “As the commission, you would con-sider that if all these compulsory policies– for example, motor third-party insur-ance, builder’s liability insurance and com-pulsory group life – were effected, thenthere should not be any reason why wecould not hit the set target.

“The problem is that when it comes tocompulsory liability policies, there’s thequestion of enforcement. Because enforce-ment drives legal compliance, if there’s nocompliance and if nobody is enforcing it,then you’re not going to have anybody re-ally wanting to buy these products.”

Ms Adegbayi is optimistic, however,

adding that thanks to NAICOM’s efforts,the insurance industry has definitely beenimproving.

Leadway is one of Nigeria’s oldest insur-ance companies, having been establishedin 1970. As the majority of insurance firms,Leadway is well diversified in all types oflife and non-life products. What makes itstand out from the competition, however,is its focus on claims payments over prof-its – an aspect that has made it a favouriteamong brokers.

“In the 1980s, Leadway presented itselfto brokers,” says Ms Adegbayi. “When itcomes to brokers, they judge you on howquickly you settle your claims and provideservices and what other value additions youput in the policy to make it worthwhile for

the insured. Because of our claims pay-ing ability, we have been able to es-tablish ourselves in the minds ofbrokers that we’re a company theycan depend on.”

With the largest branch net-work in Nigeria and under theguidance of CEO Oye Hassan-

Odukale, Leadway is reaching out to theuninsured markets – especially in rural ar-eas where it has to come up with “inge-nious new ways of doing things”. It is alsotargeting private-sector power companies,who are contributing to the creation of amore dynamic and self-reliant economythroughout the country.

Leadway is also positioned as an excel-lent partner for British clients, offeringhighly personalised services. “We offer ourviews of the economic and business envi-ronment, and on what you need to do. Peo-ple are more comfortable with that becausewhen you come into a new country youwant someone to talk to you confidently,”says Ms Adegbayi.

“Some clients also probably have a glob-al insurer like ACE for example, who moreor less hand them over to us saying thatthere is a partner in Nigeria, so why don’tyou work with them. They are more com-fortable dealing with us too.” �

Insurance to bringhigher growth

With just 1.5 million Nigerians havinginsurance, Leadway is targeting expansion

Anew era for the banking sectorin Nigeria means the banks willhave a huge part to play in pro-viding capital to the real sector

to promote stable growth and a diverseeconomy, particularly by supporting in-digenous SMEs and entrepreneurs overthe coming years.

The banking reform that was imple-mented following the 2008-09 financialcrash by the Central Bank of Nigeria(CBN) has brought more stability andless irresponsible lending and speculativerisk taking. There isa new focus on lend-ing to the real sector.

“In 2013 and2014 it’s going to bea larger economy. Wewill be able to havethe benefits of at leastthree to four years ofstable monetary pol-icy and management,and hopefully a sta-ble fiscal regime andfiscal policy,” ex-plains Managing Di-rector and CEO of Fi-delity Bank ReginaldIhejiahi.

“For the bankingsector the challenge ishow to actually partic-ipate in sponsoring thegrowth of a stableeconomy. It takes a bitmore to understandthe risks of the realsector; it takes a dif-ferent attitude not toexpect ready-madeprojects or proposals.You are participatingin the making and the structuring of thoseproposals in a way that the risks are at alevel where they are manageable.”

Fidelity Bank is ranked amongst thetop 10 banks in the country and it is ac-tively supporting the growth of the realeconomy through smart lending and in-vestment (evident from its low NPL ra-tio of 4 per cent). Although it is a uni-versal bank, 70 per cent of its loan port-folio is concentrated in corporate lend-ing. The bank’s current focus is in the oiland gas, agriculture and SME sectors.

Oil and gas companies made up 13 percent of its loan book in 2012. “We couldsee that rising in 2013 to perhaps 20 percent or more,” adds Mr Ihejiahi.

“Within oil and gas we are diversify-ing into several areas; we are doing someinteresting things in upstream and mid-

stream. We are dealing with engineeringcompanies who want to elevate to largerlevels of transactions. There is a risk in-volved but we have the capacity to real-ly make sure that they themselves areprobably able to make that transition.”

Another stalwart of the economy andarea of interest for Fidelity is agriculture.It is a sector generally perceived as nothaving ample investment opportunities asit has traditionally been driven by the pub-lic sector. But all that has changed ac-cording to the Fidelity MD: “Those walls

have come down andthe government sec-tor is trying to comeup with a better pol-icy by encouragingthe capacity for fi-nancing.

“We’re looking forwhat we call the newgeneration of agri-business entrepre-neurs who have beensuccessful in otherlines of business.They are people whoknow how to managerisks and then theproposals become fi-nanceable.”

SMEs will be cru-cial to sustainablegrowth and reducingunemployment inNigeria and Fidelityis doing all it can tosupport viable microand medium-sizedenterprises. “We aredoing two things. Inthe micro-businesseswe are servicing de-

mand of our branches; we have a stan-dard pricing format for them so theycan actually predict what the cost of ser-vices is going to be. Secondly, we’reputting in place the kind of credit struc-ture to support that,” Mr Ihejiahi says.

“On the medium-scale side and themore active high-level entrepreneur busi-nesses we are also supporting themthrough our advice service.”

With regard to foreign investors look-ing to invest in Fidelity, the MD urgesthem to look at the balance sheets andits capital adequacy and liquidity ratios.He assures that the bank has given div-idends for 10 consecutive years and thatthey have superior local knowledge, whichhe says “is what people are mostly look-ing for in a country like Nigeria. We knowNigeria inside out.” �

A new mindset forreal sector lending

Fidelity Bank is a prime example of alender that is supporting a more stable economy

“It takes a differentattitude not to expectreadymade projects orproposals”

REGINALD IHEJIAHI, Managing Director and CEO of Fidelity Bank

14 World Report

The modern offices ofLeadway, one ofNigeria’s oldest

insurance companies

NIGERIA IND pp14-17 copy copia 2.qxd 5/8/13 18:12 Página 2

NIGERIA

Global investment banks, as wellas multinational corporationsand high net-worth individuals,have their eyes fixed on sub-Sa-

haran Africa essentially because of onemain reason: growth.

The collective GDP of Africa is project-ed to reach $1.6 trillion by 2020 (5 percent of global GDP), compared to 2.4 percent in 2010, and the IMF has estimat-ed that seven of the world’s top-10 fastest-growing economies over the next few yearswill be in Africa.

Nigeria’s Central Bank has striven toensure better governance and greaterliquidity and transparency in the coun-try’s banks to strengthen its investmentbanking sector.

“It has also focused on ensuring that

the appropriate amount of capital is sup-porting different types of businesses,”says Sola David-Borha, CEO of StanbicIBTC Bank. “As a result, you then havea much stronger banking sector that hasbetter risk management and is well-poisedfor growth.”

Stanbic IBTC Bank is part of one of themost recognised banking brands on the con-tinent: the Standard Bank Group, whosehistory dates back to 1862 and is Africa’slargest bank by assets and earnings.

Through its wholly owned stockbrokingand asset management subsidiary, IBTCAsset Management Ltd, Stanbic IBTCBank has several excellent mutual fundson offer, such as the IBTC Nigerian Eq-uity Fund, which is Nigeria’s largest mu-tual fund. It is also the only bank with a

Investment bankinghas continental reach

Yield-hungry investors can take advantage oflocal expertise backed by global quality standards

Since Nigeria became a democra-tic republic in 1999, one admin-istration after another haslaunched reforms – some sweep-

ing, others more subtle – to turn what wasa closed, government-controlled economyinto a flexible and open one, more attrac-tive to foreign investors and with the mech-anisms in place to spur ever-increasinglysustainable economic growth.

What are some of the recent more ground-breaking reforms and what opportuni-ties have opened up within the Nigerianeconomy?

Constitutional rule since 1999 has madeit possible for us to embark on reforms thathave looked to put the country on a pathof growth. Under military rule, reformswould only last a few years, and then theywould be set aside. But now we have a pre-dictable exchange of rule of government.

The Nigerian economy of 2012 is com-pletely different from the Nigerian econ-omy of 1999. Back then, several sectors,such as telecoms, were state controlled,and there were laws banning companiesfrom participating in those sectors. Atthat time there were no mobile telephonesin Nigeria, and that was holding other eco-nomic sectors behind.

Between 2001 when the reforms start-ed and now, we have had growth from about50,000 analogue lines to close to 90 mil-lion telephone lines today, with big networkoperators such as MTN and Vodafone com-ing in to provide world-class services.

The cement sector also underwent funda-mental reform. The government privatised

most of its holdings in the cement compa-nies. Now Nigeria has the biggest cementproduction in Africa, and is approachingself-sufficiency for the domestic market. Inanother few years or so, given the number ofnew cement plants that are coming up, wewill be able to produce cement for export.

That is a key sector where reform hasworked, because the government is pre-dictable, democracy has continued andpolicies have been sustained.

Another sector that was state controlledand underwent fundamental reforms waspower. Most of the problems we have inthe power sector are because until today,the power sector has been controlled bythe government. Since you could not setup a power project or distribute powerand because the government was an inef-ficient manager of businesses, our powersector stagnated over the years. Now re-forms have completely opened up the sec-tor. We now have independent power plantsand people can set up independent gener-ating sites. We are now privatising pow-er transmission and distribution, becauseprivate companies are more efficient.

The other sector that has become a gold-mine for investors from around the worldhas been infrastructure: road construc-tion and transport networks across thecountry and waterway transport on our two

big rivers. We have set up the Infrastruc-ture Concession Regulatory Commission(ICRC) to create an enabling environment,laws and procedures for private compa-nies to invest in infrastructure.

Aviation, solid minerals and agricul-ture are other sectors in need of invest-ment that hold huge potential.

How is your Ministry getting the word outabout Nigeria’s new image?

We want a sustainable PR relationshipwith one or two organisations abroad,who can take up the issue of the daily man-agement of Nigeria’s image, working insync with the Ministry of Information.Secondly, we want to see if there is an op-portunity to organise regular forums inEurope, America and other influentialdestinations around the world, where weset up platforms to discuss Nigeria andopportunities here with selected, target-ed audiences – businessmen and influen-tial politicians who make policies and de-cisions to influence the direction of busi-nesses, investments and so on.

We’re also looking at running TV ads andcampaigns in the press, so that the worldwill begin to look at Nigeria in terms of itssize, potential, capacity and market, andso that we will look at the opportunitiesand look at the challenges we have, sideby side. At the moment, I think people arelooking more at the challenges.

Also, you have got to change the men-tality of looking at Africa as a continentwhere you can extract raw materials. Youhave to look at Africa now more as a busi-ness partner. �

Building the image of NigeriaMinister ofInformationLabaran Makuspeaks about thechanges Nigeria hasinstigated and themyriad opportunitiesthat await globalinvestors

“You have got to change thementality of looking at Africa as acontinent where you can extractraw materials. You have to look atAfrica now more as a businesspartner”

LABARAN MAKU, Minister of Information

Present in every state, Stanbic IBTCBank now has 177 branches and morethan 200 ATMs

direct subsidiary that is a pension fundadministrator, through the market-lead-ing IBTC Pension Managers Ltd (IPML).

“We are a full service financial ser-vices institution; we have a very stronginvestment and corporate banking busi-ness, and we also have a growing retailbusiness and a business bank,” says MrsDavid-Borha.

“We also have a wealth business, whichcomprises pensions fund management andnon-pensions fund management, as wellas our trustees business. So our revenuebase is diversified.

“We have the largest investor servicesbusiness. Investors need a custodian tokeep their funds: we are the largest, withover 70 per cent market share in the cus-tody business. Also, we have a presencein every single state, and over a millionretirement savings accounts spread acrossthe country.

“As we are part of the Standard BankGroup, we comply with all of the group’spolicies and risk framework, etc. So youhave the comfort of international bank-ing standards, plus you get a full serviceoffering locally, and that is what makesus unique.” �

World Report 15


NIGERIA

After the banking sector’s consoli-dation in 2006 and the central bankintervention five years later, Nige-ria’s surviving banks can proudly

boast stronger than ever fundamentals thatwill enable them to operate above board, trans-parently and successfully for many, manyyears to come.

Diamond Bank is no exception, thoughmaking the grade has been far from easy.According Dr Alex Otti – appointed GroupManaging Director and CEO at the heightof the AMCON and CBN stress testing – thebank had to go on a sort of rampage to clear

out all bad and overly risky loans. Two yearsago, it was facing grave liquidity problems,but Dr Otti’s spring cleaning – of both non-performing loans and non-performing em-ployees – helped the bank live to tell the tale.

“When I joined the bank in March 2011,I was surprised by the quality of the loanbook,” he explains. “Nonetheless, I still be-lieved we had a good bank. The first thing Idid was to sit with my colleagues and lookat the fundamentals from a critical point ofview, to learn and make sure that we do notcommit the same mistakes.”

What he discovered was a weak risk man-agement department, so he told the bank’sBoard of Directors that he needed a highlyqualified, independent executive director torun the risk management function.

“Our ED was tasked to populate the placewith skilled and qualified people – some ofwhom were from other banks. There werealso expatriates,” he says.

His next step as Group MD and CEO wasto examine Diamond’s largest loans, rang-ing from N500 million (£2 million) to N12billion.

“We then went to market and disclosed avery challenging risk asset portfolio. In termsof stock price, we must have lost 75 to 80per cent. We took it in our stride and madeprovisions. At the end of the year, we wroteoff bad loans close to N45 billion and soldalmost N60 billion to AMCON,” recalls DrOtti. “We had to do it in one fell swoop.”

“Having done that, with the help of thenew risk management directorate, we set clearstandards, indicating the kind of loans wewanted and were able to do. We establishedsectorial limits, did score cards, and boughttechnology to deploy our retail proposition.We did a lot just to make sure we did not re-vert to where we were.”

Consequently, 2012 was a year of tremen-dous growth for Diamond Bank. Gross earn-ings and total assets rose to N13.8 billionand N1.178 trillion from N102.7 and N796billion, respectively, in 2011. More impres-sively, operating income jumped 149.4 percent to N96 billion, while profit before taxsoared 252.6 per cent to N27.5 billion. Itscoverage ration as of September last yearwas well over 128 per cent.

Established in 1991 as a private limitedliability company, Diamond Bank was con-verted into a universal bank in 2001. In2005 after a successful private placementshare offer, it became a public limited com-pany listed on the Nigerian Stock Exchange.

Early in 2008, the bank made Nigerianbanking history when it listed its global de-pository receipts on the Professional Secu-rities Market of the London Stock Exchange(LSE).

Today, Diamond Bank operates three dis-tinct business segments, namely retail bank-ing, corporate banking and the public sec-tor. Dr Otti remarks that the bank’s approachto retail has been especially successful.

He says: “We’ve been in retail banking forthe last 24 years. Literature would tell youthat it’s risky. However, I think the risk de-pends on the mindset you enter the marketwith. If you enter with a corporate bankingmindset, you are going to lose money. Youneed all the requisite skills and technologyproposition. We spent money developingthose. That is why we are better in retail bank-

ing than anybody else in the market today.It is the sector of the future, so we cannotignore it.

“We had an expat over who had retiredfrom Barclay’s Bank. He had done retail bank-ing all his life. He helped us set up what wehave today. He was also able to train a lotof people here.”

One area Dr Otti is certainly proud of isthe investments Diamond Bank has made intechnology and people.

“We have clinics for those interested inbuilding viable small and medium-sized en-terprises (SMEs) – retraining them and help-ing them articulate and formulate their ideasinto a profitable business. We’ve moved theseclinics from one location to another, andwe’ve received great support from the Inter-national Finance Corporation (IFC), En-hancing Financial Innovation & Access (EFI-nA) an other multilateral partners who likewhat we’re doing,” he says.

“We charge a little fee that does not cov-er our cost; it just makes sure that we onlyget those who are really serious about train-ing. So far it was worked very well.”

Attendees learn how to prepare balance

sheets, understand figures, separate person-al and business finance, among other things.

In terms of larger-scale banking, DiamondBank is quite active in Abia State, where itis funding Geometric Power Systems Ltd(GPSL), the first indigenously owned privatepower-sector company. GPSL has built theAba Integrated Power Project with 141 MWof capacity in what is now deemed a casebook study of how the private sector canhelp alleviate Nigeria’s power shortages.

Also in Abia, Diamond Bank in collabo-ration with the government is revitalising ashoe factory and putting the pressure on thestate government to rehabilitate the roadnetwork.

Looking further afield, the bank’s plansto establish a presence in Europe will sooncome to fruition, thanks to Diamond’s re-cent 100 per cent acquisition of Interconti-nental Bank’s UK subsidiary. “If we get itright in London, then ultimately it is DiamondBank’s customers in West Africa that willfeel the benefit of that, and they will want todo more business through this channel,” saidDiamond Bank’s UK CEO Rollo Greenfieldin a recent interview. �

‘Spring cleaning’ and an improved riskmanagement strategy

Diamond Bank hasinvested heavily inskills training andmodern bankingtechnology

Diamond Bank has shed its bad loans andis ready to finance more, worthier projects

“We are better in retailbanking than anybodyelse in the market today. It is the sector of thefuture”

DR ALEX OTTI, Group Managing Director andCEO of Diamond Bank

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World Report 17


NIGERIA

Just 100 kilometres east of Lagos,Nigeria’s largest city and foremosteconomic centre, the Olokola FTZ(OKFTZ) is under construction.

Located in the Ogun and Ondo region,the 10,000-hectare state-of-the-art devel-opment will become the first of Nigeria’s25 free trade zones to offer a deepseaport, making the area a gateway to theworld and the hub of West Africa.

In doing so, the project – a public pri-vate partnership with the European com-pany IPEM – looks to contribute to thecountry’s continual development, while al-so becoming one of Nigeria’s leading FTZs.

Since the passing of the 1992 FTZ act,over 1,800 jobs have so far been createdowing to the 25 FTZs that are currentlybeing planned or constructed.

“Let’s first say that theidea of creating FTZs inNigeria is very positive,”says the Managing Direc-tor of OKFTZ, Luk Hael-terman.

“The competitive ad-vantage of FTZs in Nige-ria is simply the neigh-bourhood of the huge mar-ket, and the possibility ofminerals and other basematerials that are avail-able to a heavy extent.

“I really believe thatis the way to industriali-sation, which leads to em-ployment, better skilledjobs and the rise of a re-al middle class.”

However, despite being one of the lat-est projects in a number of developmentspopping up all over the country, Mr Hael-terman believes the answer to successfulindustrialisation doesn’t rely on the cre-ation of yet more FTZs, but in making surethe existing ones are fully functional.

“To get them working, there are basicneeds. The first is access; if you produce,you have to be able to bring in your rawmaterials and evacuate the end products.If we talk about infrastructure, and par-ticularly the infrastructure leading to theFTZs, none of them has a decent port.”

Indeed under plans for their own deepseaport project, OKFTZ looks to change this.Outlined for completion in 2019, the portwill contain, amongst others, a service portfor oil and gas businesses, bulk loadingand unloading quays, liquid jetties and a

fully integrated container terminal, whilealso becoming a valuable alternative tothe congested Port of Lagos.

“A deep sea port is a very long-term in-vestment,” explains Mr Haelterman. “Soon our side, we decided to cut it into phas-es. Every side of the port will be a sepa-rate financially viable project.”

The vital infrastructure will eventually be-come a very welcome addition to the statesof Ondo and Ogun, situated in one of Nige-ria’s major oil producing territories. To-gether, the area has about 54 kilometres ofcoastline on the Atlantic Ocean and borderabout 60 per cent of Nigeria’s offshore oiland gas fields in the western Niger-DeltaBasin. Immediately inland, there is exten-sive exploitation of varied natural resourcessuch as rubber, timber and solid minerals.

According to recent news reports, theprospect of the port is already having apositive impact, with rumour suggestingDangote Group – owned by Africa’s rich-est man, Aliko Dangote – is willing topropose the construction of a £5 billionoil refinery to be located in the OKFTZ.

While such a scenario would provide anextremely exciting outlook for the project,aside to this, Mr Haelterman stresses oth-er than the area’s advantage of stablecrude oil supplies, the OKFTZ will alsobe looking to broaden its horizons in thetrue spirit of Nigeria’s push for econom-ic diversification.

“The services we attract can be of a di-verse nature. Once your economy startsto grow and you really attract investment,then you also fit new industries. We be-lieve this is certainly a possibility for manyof the FTZs out there.” �

Free trade zonesto boost economicdevelopment

The OKFTZ looks to be the first of 25 newfree trade zones that will enhance Nigeria’strade and sustain growth for the future

The OKFTZ will be the first Nigerian free trade zone with adeepsea port, set for completion in 2019

A one-stop shop forinvestorsSet up following the establishment ofthe NIPC Act in 1995, the NigerianInvestment Promotion Commissionhas been encouraging and facilitatinginvestment and the launch of businessenterprise in the country for 18 years.As a governmental organisation, theagency assists in the grant of busi-ness entry permits, licenses and au-thorisations in a so-called “one-stopshop” environment.Through its One Stop InvestmentCentre (OSIC), theNIPC looks to providemore coordinated andefficient support forthe stimulation of pri-vate sector investmentfrom within and out-side the country.“It is essentially acentre which cuts offbureaucracy to makeentry into the econo-my much quicker and easier as wellas enhancing confidence in doingbusiness in Nigeria,” says CEOMustafa Bello.“We have a variety of governmentagencies which either approve orprovide information, or both, so thatwhen you come in, you do not needto hop from one agency to another.”It is largely through the good workof Mr Bello in the last 14 years,serving as Minister of Commercebefore taking charge at the NIPC in2003, that the institution has be-come a resounding success. Namely, the CEO has strongly pushedfor reforms of investment related laws,

which have over time seen the liberali-sation and strengthening of conditionsfor foreign investment in the country.This year for example, the NIPC hasfurther demonstrated its commitmentto facilitating the ease and reducingthe cost of doing business in Nigeriaby cutting the price of business regis-tration by 70 per cent.Meanwhile, Mr Bello has alsohelped pioneer the Corporate Af-fairs Commission’s project that has

helped to revolutionisethe service of the OSIC, making it possi-ble for its clients toregister a company on-line, as well as accessa range of other ser-vices on the internet.Through such innova-tive measures and pro-jects, including the de-velopment of sector-

specific investment policies and in-centives, the NIPC has ensured thesubstantial enhancement of the coun-try’s national competitiveness as aforeign direct investment destination,with Nigeria recently becomingAfrica’s top recipient of FDI.“The establishment of the OSIC hasgreatly restored the confidence of in-vestors on receiving a prompt andtransparent service,” claims Mr Bello.“I must say that NIPC has played avery important role in all the effortsthe government has made to improvethe economy. We have been instru-mental because there is continuity inthe NIPC.” �

The NIPCinitiates andsupportsmeasures thatenhanceNigeria’s business climate

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NIGERIA

Investors have been arriving to Nige-ria in their droves over the last fewyears, drawn mainly by the coun-try’s lucrative oil industry. Howev-

er, plentiful opportunities also abound ininfrastructure, power and manufacturing.

Olusegun Aganga, the Minister of Tradeand Investment shares how the Nigeriangovernment is now making increased ef-forts to improve the business environ-ment and diversify the economy.

With Nigeria becoming the King of Africain terms of FDI, what are your thoughtson the recent outstanding results for thecountry in terms of investment?

Nigeria is a vibrant and dynamic econ-omy, having attracted $8.9 billion of invest-ment in 2011. That is a good story to tell,and because of that, Nigeria is the numberone destination for investment in Africa.

There is money to be made here. In-vestors are looking for countries with amarket and the raw materials, so that thecosts of production are lower. If you lookat the market, we have 167 million peoplein Nigeria, and this figure is growing at 3per cent per annum. We are also the gate-way to ECOWAS, and ECOWAS in totalhas 300 million people. The market is there.

As you say, Nigeria has certain naturaladvantages, namely oil. The $1bn Sov-ereign Wealth Fund was created last year,not just to safeguard oil revenues but al-so help diversify the economy…

The fund is actually a creative solutionto the problems we have been experiencingin the country, but it is also an instrumentfor diversifying the economy. It has threedifferent sections. One, oil is a depleting as-set and young Nigerians have a right to ashare in that wealth, so we need to save forthe future generation. The second area issupposed to be for budgetary adjustment.The last section is an infrastructure fund.There are two things that are holding theeconomy back: electricity and rail infrastruc-ture deficits. With this fund there is a min-imum allocation of 20 per cent for each area.

Once we have power and the right in-frastructure in place, it will be a lot eas-ier for us to develop different sectors ofthe economy.

So what are you doing to attract invest-ment into these key areas?

The way to do that is first of all createan enabling environment in all sectors.

For example, we as a country are goingto privatise power generation and distri-bution. We have a regulator and havederegulated the tariff regime to make iteasier for investors to come in.

When you talk about infrastructure,again you need to create the right en-abling environment. There is no shortageof investors in that sector. Every sophis-ticated investor wants to invest wherethey are going to get a minimum returnof about 20 per cent. You cannot gener-ate that in any developed economy today.

We also have competitive and com-parative advantages, which is the bedrockof our industrial revolution plan. The ideais that in agriculture, we have 4 millionhectares of land, and that means thatthere are industries we can focus on, in-cluding food processing, textiles, gar-ments and sugar manufacturing. In anyof these sectors, I expect us to be amongthe top 10 in the world at some stage.

So what are you doing to attract invest-ment into these key areas?

We are working with the Organisationof Economic Development and using theirpolicy framework for investment, whichthey have used in 16 other countries. Itwill look at investment policy, tax poli-cy, public and private sector governance,trade promotion, competition and con-sumer protection. By the time we haveall those in place, I think there will benothing stopping us. �

Africa’s number one for investment,two years running

Overtaking South Africa for the first timein a decade in 2011, Nigeria has become thecontinent’s top FDI destination

Olusegun Aganga, Minister of Trade and Investment

With its huge resource base,large population and favour-able climatic conditions,Nigeria’s agriculture sector

has huge potential for development andis playing a fundamental role in the coun-try’s push for economic diversification.Akinwunmi Adesina, the Minister of Agri-culture, outlines how the government isnow acting to make sure this great promiseis finally being realised.

Professor Adesina, how would you sumup your vision for the agriculture sector?

Simply put, we have 85 million hectaresof land and 263 billion cubic metres of wa-ter, we have vast amounts of cheap labour,and we have plenty of sunshine and goodweather. Therefore Nigeria has no businessimporting – in fact we should be a power-house of food. So we have launched an agri-culture transformation action agenda,which will revolutionise agriculture as abusiness. We want agriculture to becomethe main driver of the economy.

Such potential, yet Nigeria remains thelargest importer of wheat and rice in theworld, spending billions each year on bring-ing food into the country. As minister, howare you addressing this problem?

My job as minister is straightforward –my job is to make the sector come alive.We are focused on a number of commodi-ties, including rice, cassava, cocoa, cotton,maize, soya beans, livestock and of course,fish, as we have a lot of capacity. With this,we are focused on producing 20 millionmetric tonnes of additional food and addingthat to domestic food supply.

However, as our population rises, it isan economic issue. It is expected to increasefrom 160 million to 450 million by 2050.This means that if I just take rice alone,today we are spending about $3 billion onrice imports, but by 2050 we will be spend-ing $150 billion. So we absolutely mustmake major changes.

Firstly, it is about taking a full value-chainapproach, and not just about producing. Sec-ondly is an investment-focused approach –attracting the private sector into the agri-culture and agribusiness sector. Thirdly isensuring that Nigeria becomes competitiveonce again in other food markets.

So what positive changes have you madetowards implementing this strategy?

Firstly, for over four decades in this coun-

try, the government controlled fertiliser andseed, and when I took this job, I found thatonly 11 per cent of farmers were gettingthe right fertilisers. We have now sorted thatout, and all seed and fertiliser is sold by theprivate sector directly to the farmers.

Secondly, we have put improved agricul-ture infrastructure in place and we are es-tablishing what we call ‘staple crop pro-cessing zones’. These are basically large ar-eas where the government is providing pri-vatisation for power, water and roads, mak-ing it easier for the private sector to movein and invest in processing value addition.

The third area we are working on is in-centivising investment. For example, if youbring agro-processing equipment into Nigeria today, there is no duty, becausewe want to encourage private investorsto get involved.

We are attracting private sector in-vestors everywhere to unlock the power ofthe value chain and add value to everythingwe are producing here, and it is working.

With things evidently changing for thebetter, what do you think this means forthe future of the sector?

I want investors to know that thingsare happening in the agriculture space.We are unlocking Nigeria’s potential.Yes, the sector is changing a lot, and Ithink a more structured sector that is ableto attract financing for the private sec-tor will make Nigeria a major player inglobal food markets. �

Agriculture,planting the seedsfor growth

Through the agriculture transformationagenda, the Nigerian government envisagesthe sector as the future driver of the economy

World Report 19

Agriculture accounts for about three-quarters of Nigeria’s non-oil exports


NIGERIA

20 World Report

The Nigerian government is invest-ing and encouraging public-privatepartnerships (PPPs) to develop trans-port infrastructure surrounding the

ports, such as road and rail links, whilst al-so cutting down on bureaucracy within theports in an effort to reduce clearance times.

Nigeria has six main ports – at Lagos,Tin Can Island, Rivers, Delta, Calabar andOnne. The ports of Lagos and Port Har-court are forecast to see an increase intonnage of 5.9 per cent and 7.2 per centrespectively by 2016, and with their facil-ities already stretched, new ports in the vicin-ity would help lessen the burden.

According to Habib Abdullahi, ManagingDirector of the Nigerian Ports Authority(NPA), most of the country’s ports are over30 years old and as such have their limits.Fortunately, four new ports at Olokola,Lekki, Badagry and Ibaka are either un-der development or in the early to mid-phases of planning, and should help con-solidate Nigeria’s strength and capacity asshipping hub.

An initial due diligence report has al-ready been carried out for a greenfield 16-metre deep sea port at Ibaka, which couldbecome the next most strategic port inNigeria. There are also plans to build aself-sustaining industrial city alonside,complete with independent power plants,a refinery and industries.

Located in a peaceful region in the south-eastern state of Akwa Ibom, the $2 billionIbaka port will be well connected thanksto the nearby airport and a four-lane ex-

pressway (currently under construction). Mr Abdullahi also states that the NPA

is carrying out a channel depth developmentproject at its other ports. “Bigger shipsmean more cargo and more activity, and

therefore more revenue for the government.As a result, we will have more money to de-velop the ports. It’s cyclical,” he says.

In recent years, the NPA has alreadydredged channels up to 13 metres; this morethan quadruples the cargo that vessels canbring into ports, from 1,000 TEUs (twenty-foot equivalent units) to 4,500 TEUs.

Nigeria has also made great strides inimproving port operations, even within justthe past seven years. In 2006, the govern-ment initiated various maritime sector re-forms, the most important of which was theopening up to the private sector.

“We invited the private sector to comein and take over the operation of the ports,”says the NPA head. “The government de-cided to adopt a model where we offer con-cessions to interested parties and quite alot of people applied.

“We reviewed about 114 applicationsand about 24 were accepted. A lot of theterminals in the ports were concessionedand companies were given the chance tocome in and operate. We as NPA play aregulatory role where we look at the op-erators and provide infrastructure, secu-rity and basic services.

“We collect revenue and pass it on fordevelopment. We also try and encourageothers to come in and develop greenfieldareas in the ports.”

As for speeding up cargo clearing timesand freight forwarding, an important stepwas taken last year when the Ministry ofFinance cut the number of governmentagencies operating at the ports by morethan half. Today just six agencies remain,among which are the NPA and the Niger-ian Maritime Administration and SafetyAgency (NIMASA), the seven-year old en-tity mandated with ensuring safe, secureshipping, a cleaner environment and en-hanced maritime capacity.

At the time, Minister of Finance Dr NgoziOkonjo Iweala said, “We know that with-out an efficient port system, there will bea high cost in the economy. What we’re do-ing now is to reduce those costs so that ourbusiness people will have the wherewithalto create more jobs.”

To clear the final hurdle and ultimatelyachieve a 48-hour turnover, however, theNPA has its work cut out. There is a degreeof pessimism among shippers and traders,as some 80 per cent of imports arriving atNigeria’s ports undergo a 100 per centphysical examination.

What Mr Adbullahi envisions is greaterinterconnectivity among agencies as a wayto simplify procedures. Last fall, the portauthority submitted a letter to the Ministryof Transport, he says, and now “the port com-mittee system is coordinating the activitiesof all relevant agencies within the ports.That will give us a one-stop shop.” �

NPA boosts port numbers and operationsAs the majorityof Nigeria’sinternational tradeis done through itsports, it isimperative thatthese be in shipshape

Nigeria has six main ports in operation, with an additional four in the pipeline

In recent years, the NPAhas dredged channels upto 13 metres deep, raisingcargo capacity loads from1,000 to 4,500 TEUs


Thanks in large part to its petroleumexports, Nigeria enjoys a trade sur-plus of some $27 billion. Its othermajor exports are cocoa and rub-

ber, while major imports include machin-ery, chemicals, transport equipment, man-ufactured goods, food and live animals.

Keeping check on the comings and goingsof products is the Nigeria Customs Service(NCS), an institution dating back to 1891when the British colonial administration setup the entity for the collection of inland rev-enue in the Niger Coast Protectorate.

Today, the NCS is a full-fledged 21st cen-tury institution that utilises the most mod-ern computing systems, including ASYCU-DA++ (Automated System for Customs Da-ta, the original of which was created by theUN Conference on Trade and Developmentin 1981 at the request of ECOWAS).

Its central server system, in use sinceearly 2011, enables the agency to warehouseall import, export, excise, transit and tran-shipment data, and provides interconnec-tivity with terminal operators, the Ministryof Finance, the Central Bank (CNB), theNational Bureau of Statistics and the Fed-eral Inland Revenue Service, among oth-ers. Moreover, all designated banks, de-clarants and cargo carriers can also tap in-to the central server.

Other technological conveniences includee-payments through designated banks,

e-submission of various forms to customs,e-remittance online in real time from du-ty collecting banks to the CBN, and SMSinformation to the National Agency forFood and Drug Administration and Con-trol (NAFDAC) for regulated cargoes fornecessary certification.

These improvements have produced thedesired results – a noticeable increase inrevenue collection, a reduction in clearancetimes, lower transaction costs, and of course,better utilisation of human resources – andNigeria has the Comptroller General of theNCS to thank.

Upon entering the NCS as CG in 2009,Abdullahi Dikko Inde sat with his manage-ment team to articulate a road map withthe aim of reforming customs proceduresto improve efficiency and compliance –smuggling was, and remains, one of themain challenges the agency faces.

Among the first things they did was tobuild capacity (between 2009 and 2011,more than 12,500 employees underwenttraining both locally and internationally),change the mindset of workers by instillingin them a greater appreciation for trans-parency and integrity, and provide improvedwelfare packages for workers.

For Mr Dikko, the issue of problematichuman resources is simple: “The right peo-ple should be in the right place and thewrong people should be out of the system.

So, we either change it or we remove thebad ones.”

Another important step was to launch ageneral awareness campaign, as many peo-ple involved in smuggling do it out of igno-rance, says Mr Dikko.

“One way to fight smuggling is to hold abig stick and talk with a soft voice. You havepeople who are ignorant of the procedures;they do not know and they are illiterate.They are pushed into smuggling by some-one else who will benefit more,” he adds.

The NCS has published a long list of pro-hibited import items, which at first glancemay appear arbitrary to the casual reader.However, goods like poultry, pork, beef, birdeggs, refined vegetable oils, cocoa butter,noodles, fruit juice and cement are there forgood reason – to protect national industries.

Though not on the list, rice smugglingalone has been resulting in a yearly loss ofan estimated N110 billion (£452 million),a figure on the rise as of January due to anew hike in rice import tariffs. However,the tariff is, again, a tool in protecting thenational rice-growing industry.

“I want to see large-scale farming takeplace,” says Mr Dikko. “If you can do that,nobody will want to import rice. When thegovernment decided to ban the importationof juice, local producers rose to the chal-lenge. They started producing fresh juice thatis better than what was coming from Spain.Imported juice often loses quality afterspending a long time in the containers intropical countries like ours. If you importjuice to Nigeria now, you will not have amarket because local companies are total-ly in control.

“If you bring in imported noodles, nobodybuys them because you can produce themhere. If we have mechanised farms that pro-duce and process rice in large quantities, therewill be no market for imported rice. Do weneed to import cement now? No, the facto-ries here are producing 800 bags per minutenow, which is more than the current de-mand. So, we export the excess.”

For those who ignore the appeal to pro-tect national industry, the NCS also high-

lights that it is ultimately cheaper and eas-ier to import goods the legal way ratherthan evading dues through bribes.

In line with his strategy to thoroughlymodernise and revamp Nigerian customs,Mr Dikko is forming strategic collabora-tions with other agencies within Nigeria,such as the Economic and Financial CrimesCommission (EFCC), and abroad. The mostnotable of late are the Customs Mutual As-sistance Agreements (CMAA) with theUSA and Argentina, both signed in April.

The bilateral agreements will allow thecountries’ customs agencies to prevent,repress and investigate customs offences,as well as to combat illegal cross-bordersmuggling, financial crimes and terrorism.

According to the Nigerian Comptrol-ler General, Nigeria is now in talks withChina and India to arrange a similaragreement.

With a firmer grip on smuggling con-trol and a smoother, more efficient flowof import-export traffic, the NCS will beable to significantly raise tax revenues,which will in turn be reinvested by thegovernment in developing a stronger, morediversified domestic economy. �

Best foot forward incustoms regulations

The Nigeria Customs Service isstepping up efforts to control smuggling andenforce payments, whilst creating a betterwork environment for its employees

World Report 21

Abdullahi Dikko Inde, ComptrollerGeneral of the NCS

NIGERIA

This year in May alone, the Nigerian Customs Service seized £627,500-worth of contraband


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World Report 23


NIGERIA

24 World Report

Nigeria boasts reserves of 37 billion barrels of oil and 187 tcf of gas

With a reserve base of about 37billion barrels, Nigeria is thelargest oil producer in Africa.It is the sixth largest gas pro-

ducer in the world with estimated re-serves of 187 trillion cubic feet (tcf).However, it is now facing stiff competi-tion for foreign investment from otherAfrican countries.

“More countries are discovering sourcesof oil and gas. Only three countries pro-duced oil in sub-Saharan Africa 20 yearsago. Today, there are more than 10. Wecannot sit on these resources for a very longtime. We have to take action and add val-ue,” says Osten Olorunsola, Director of theDepartment of Petroleum Resources (DPR).

Investment in new explorations has driedup as investors await the highly-anticipated Petroleum Industry Bill (PIB)(see page 28). “Things will start to pickup once the PIB issue has been settled. Peo-ple have taken a more prudent stance asthey wait for the PIB to be implementedbefore making major investments. Big oilcompanies are maintaining their produc-tion, but they are not going for explorationactivities,” says Simone Volpi, ManagingDirector of INTELS, a logistics companyworking within the sector.

With the big multinational oil compa-nies traditionally dominating Nigeria’s oiland gas market, a focus on local contentis vital for the growth and sustainabilityof the economy. “[Local content] has re-ally moved forward very well,” says MrOlorunsola. “Even in terms of the oper-ating companies, gone are the days whenproduction was only coming from inter-national joint ventures.”

Ernest Nwapa, Executive Secretary ofthe Nigerian Content Development Mon-itoring Board (NCDMB), explains that theNigerian Content Act, created in 2010, is:“not only targeted at increasing partici-pation, but at growing the knowledge andability to use the oil and gas resources forin-country value – in terms of the spend-ing in Nigeria, and the capacity and ca-pabilities developed in Nigeria both with-in and beyond the oil and gas industry. Thatcapacity can also be used in telecommu-nications, agriculture or automotive.”

Oil and gas will galvanise other sectorsA focus on local content will not onlyboost Nigerian participation in oil and gas,but will equip Nigerians with the skills todevelop other hi-tech industries

Ninety per cent of the country’s forexreserves and 80 per cent of its export rev-enues come from oil and gas. Thereforethe need to diversify revenue sources iscrucial. Increased government revenuesfrom hydrocarbons following the passingof the PIB will be invested in other partsof the economy.

“We need to reinvest these oil revenuesto stimulate the rest of the sectors andstrong state policies will ensure that wedo. This includes the associated activitiesthat come out of oil. For example, ratherthan simply selling crude oil, we can aug-ment downstream activities by setting uprefineries, which will increase employmentfour-fold,” states Anthony Chukwueke, Di-rector of the Transcorp Energy Limited.

“We are focusing on manufacturingthe real sector. There is no way to havesustainable growth if we keep importingand installing things. We want to refo-cus and build on sustainability, which isthe most important aspect,” says Niger-ian Oil & Gas Man of the Year 2011,Ernest Nwapa.

“If I can get the NCDMB to work withthe industry and establish two or three pipemills and implement the framework, andif I begin to see manufacturers servicingindustry needs and Nigerian manufactur-ers producing some spare parts, then I willstart accepting more awards.” �

Local content in actionLocal content has been a buzz-phrase inthe Nigerian oil and gas industry forsome time now, but the man who pio-neered the idea was Dahiru Mohammed.

“I started the campaign for localcontent because I realised that therewere so many Nigerian firms in the oiland gas sector, but the oil and gascompanies were not patronisingthem,” he says.

“It grew to such a magnitude that itwent beyond my team and the Niger-ian National Petroleum Corporation(NNPC). The government took overand it became a law.”

Mr Mohammed is the CEO of Dam-agix, a company that is a shining ex-ample of a Nigerian company servingthe needs of multinationals and in-digenous companies operating in theoil and gas sector. Damagix suppliespipes for onshore, offshore and deep-water operations.

“We have been part of local contentdevelopment from the very begin-ning,” says the CEO.

The main obstacle for local compa-nies initially was credibility. Beforethe Nigerian Content Act became lawin 2010, Dahiru Mohammed led twodelegations – comprised of Nigerianbusinessmen, oil companies andbankers – to the US to “workaround” the credibility issue.

“We had to show them we were se-rious,” he says.

The next obstacle for Nigerian com-panies was finance and technology, butthe Damagix chief assures that therehave been a lot of improvementsthanks to the work of the Central Bank

Governor, Sanusi Lamido Sanusi. “Access to capital through bank

loans was difficult, but now it is dif-ferent. You could get billions of dol-lars now,” says Mr Mohammed.

Damagix itself secured a $5 billionloan to expand its operations.

The next natural step to local con-tent development is locating morelinks of the supply chain to Nigeria,so that more money is retained in theNigerian economy. Damagix is a ser-vice company that procures its pipesfrom abroad. The next natural stepfor the company is to manufacturepipes itself in Nigeria.

The company will build its ownthreading plants and pipe mills in thenear future.

“We have been contemplating pipemanufacturing for four years; 70 percent of the equipment is already hereand the land is available,” the CEOexplains.

“We are absolutely poised to buildthis pipe mill and threading facility.” �


NIGERIA

World Report 25

Nigeria is the fifth largest produc-er of liquefied natural gas in theworld, with natural gas estimat-ed reserves of 187 trillion cubic

feet (tcf) and a further 600 tcf in potentialreserves. It produces an average of 19.2million tonnes of gas per year with only 15per cent of this utilised domestically.

Nevertheless, the country struggles tomeet the domestic demand for power. Acountry with a population of 160 millionand a large industrial base, Nigeria cur-rently generates only 4 GW of electrici-ty. Energy security is paramount to sus-tained economic growth.

With all of this in mind, the governmentintroduced the Gas Master Plan (GMP)in 2008. Its main objective is to increasethe domestic supply and use of naturalgas, mainly for power. Apart from powergeneration, gas is being used in agricul-ture for the production of fertilisers. It isalso being used to power vehicles. Infra-structure development – pipelines and gaspower and upstream processing plants –is a major focal point for the government.

One of the main issues surrounding thedevelopment of this domestic gas market,and the oil and gas sector in general, issecurity. There have been instances ofcostly vandalism and destruction ofpipelines and flow stations, particularlyin the volatile Niger Delta region.

However the situation has improvedgreatly since the introduction of the AmnestyProgramme in 2009, which sought to giveamnesty to militant groups and training toyoung people in return for giving up arms.So far more than 3,600 militants havebeen disarmed and over 30,000 young peo-ple from the Niger Delta have gained newskills. Other initiatives have also been im-plemented which have successfully miti-gated the security threat.

Here, the Group Managing Director of the

Nigerian National Petroleum Corporation(NNPC), Engineer Andrew Yakubu, discuss-es the gas sector, the GMP and efforts attackling the security problem.

What is the potential of the gas sectorto be the driver of economic growth inNigeria?

There is great potential for the gas in-dustries in Nigeria, particularly as thegovernment’s transformation agenda is an-chored on the utilisation of this abundantresource. The industry is to be galvanisedthrough effective linkages to the agricul-tural sector by enhancing domestic man-ufacturing of fertilisers with the aim ofenhancing food production and food pro-cessing industries. This will also create jobopportunities through various secondaryand tertiary industries. All this is in linewith the GMP.

The GMP has jumpstarted the domes-tic gas market by moving a virtually non-existent sector to one that is market dri-ven. It has so far addressed the commer-cial framework for domestic gas and pre-

scribed development of an infrastructureblueprint which is being pursued aggres-sively. With these infrastructure projects,gas transmission from major supply sourcesto key demand centres across the countrywill significantly improve.

Domestic gas supply is currently at anall-time peak of 1,500 million cubic feetper day, most of which is dedicated to thepower sector. There is sufficient gaspresently, which is projected by year endto support over 5 GW of generating ca-

pacity, with a view to increasing to almost10 GW by 2015/16.

Gas-based industrialisation is also pro-gressing with the Ogidingbe Industrial Parkproject which envisions petrochemical, fer-tiliser and independent power plants anda central processing facility on a 2,700-hectare location in Delta State, jumpstart-ing major gas-based industrialisation.

Further to gas for power and industrial-isation, good progress is being made in thedeployment of gas for automotive usethrough compressed natural gas (CNG).Over 2,000 cars have so far been convert-ed to run on CNG and this conversion iscontinuing steadily. Overall, the effort innatural gas is creating a sustainable plat-form for positioning gas as the preferredfuel for the domestic market.

What has been done to mitigate the se-curity issues surrounding the oil and gassector?

Security concerns and other related ac-

tivities have been a serious threat to ouroperations, especially in the upstream seg-ment of our business. These security chal-lenges, which once stemmed purely frommilitancy in the Niger Delta, grossly im-pacted on our production.

Nigeria’s production dropped to as lowas 1 million barrels per day (mbpd) priorto the Amnesty Programme, due to a com-bination of factors not limited to pipelinevandalism, crude oil theft and communi-ty hostilities. The economic consequences

of these security chal-lenges are reflected inproject cost escala-tions and delays. Inaddition, vandalism,especially of pipelines

and flow stations, results in significant en-vironmental damage which in itself re-sults in costly remediation efforts.

These issues still linger, although not inthe same proportion as in the last decade.With the implementation of the AmnestyProgramme production increased to an alltime high of 2.7 mbpd sometime in August2012. We are still stabilising our produc-tion after the long period of instability.

In addition to the amnesty initiatives,all the tiers of government are makingconcerted efforts to effectively addressthis challenge. All the security agencies arecollaborating in this effort and PresidentJonathan has taken this campaign to ourinternational friends, especially the USAand Britain, who have extended hands offellowship in stemming these unwhole-some activities. Other efforts being em-ployed in tracking stolen crude interna-tionally include the possible use of finger-printing technology in identifying stolencrude oil from Nigeria. �

Gas to power the nation

Before the 2009 Amnesty Programme, Nigeria’s oil production had dropped to 1 million bdp. Last August, it hit a record 2.7 million bpd

Atlas Cove Depot is Nigeria’s largest petroleum product storage and distribution platform

Leveraging thegas resource basefor unprecedentedeconomic growth isone of the NNPC’scardinal objectives

The Gas Master Plan, introduced in2008, aims to increase the domesticsupply and use of natural gas

NIGERIA IND pp24-27 copia 2.qxd 6/8/13 13:54 Página 25

26 World Report


World Report 27


NIGERIA

The long-awaited Petroleum IndustryBill (PIB) is set to completely over-haul Nigeria’s oil and gas industry,by effectively entrenching transpar-

ency and accountability in the conduct of oilbusiness. The bill will introduce a new fiscalregime that will see the state reap larger ben-efits from the lucrative sector. It will also as-sure that transparency, accountability andgood governance are the order of the day,and that more indigenous companies andpeople are involved in the industry.

Investment has been stagnant, but it isexpected that once the PIB is passed, wavesof foreign capital will once again pour in-to Nigeria and new explorations will kickstart again.

The bill has been the centre of heated dis-cussion and intense debate for five yearsnow, with the government, international oilcompanies (IOCs), indigenous companiesand local communities all seen as stakehold-ers. It is hoped that the bill will be passedsoon for the benefit of all.

“It has been at the heart of government.Oil is the mainstay of the economy and itis important to focus reform on this,” saysthe Group Managing Director of the Niger-ian National Petroleum Corporation(NNPC), Andrew Yakubu, who is certainthat the PIB will result in a “win-win sit-uation” for all involved.

There has been some understandable op-position to the bill from IOCs already oper-ating in the country. They worry that the newfiscal regime and focus on local content couldsee them lose more of their profits throughhigher taxes and fewer incentives, as well asweaken their foothold in the market.

But Mr Yakubu believes that the IOCshave no justifiable reason to worry as theiroperational environment under the proposedlaw is still favourable for profitable busi-ness. He noted that the IOCs have, over theyears, benefited a great deal from their op-erations in Nigeria under various oil regimesand that it is time they started to give a lit-tle more back to the country and communi-ties in which they operate.

“We have looked at the regimes in othercountries, and we have come up with what webelieve should be a win-win situation. We be-lieve that the PIB should be viewed as a com-prehensive and holistic document by all stake-holders. If this is done, each stakeholder willfind out that they have a lot to gain. For ex-ample, the benefit of running a transparent,predictable and accountable oil regime, whichthe PIB will entrench, more than compensatesfor any marginal losses the IOCs may sufferfrom the proposed fiscal regime. It is impor-tant that we create a conducive environmentfor all stakeholders to participate, and bene-fit from their participation,” he explains.

Apart from the restructuring of the indus-try, the bill will also see the restructuring ofthe NNPC itself. This is one of the “key ob-jectives” of the PIB, according to the NNPCboss, which will “separate policy from reg-ulation and from commercial activities.”

“I believe that this is a very positive thingto do, namely to separate these functionsclearly, so that NNPC will be a clear com-mercial entity. In so doing, we can clearlydevelop our model and define our inputs andour expectations. Decisions will be taken ina purely business-like manner. I think thatis a very positive side of the PIB.”

The NNPC will be restructured into threeseparate entities: a vertically integrated na-tional oil company with a clear focus on bothupstream and downstream activities, a na-tional gas company, and a national assetmanagement company. According to theGMD, the gas company will be a joint ven-ture project with IOCs.

Further deregulation of the downstreamsector under the bill will also be a welcomemove for investors and is also encouragingmore indigenous enterprises to get involvedin the value chain.

Speaking on deregulation, the NNPC MD

says: “Currently, we operate in a regulatedpetroleum product market. The partial dereg-ulation of the downstream has also witnessedan upsurge in indigenous players in the sec-tor. You will recall that private refineries andpetrochemical plants are being developedand we are seeing on the horizon significantincrease in private sector participation inthe downstream and mid-stream sectors.”

The PIB is a clearly positive step for lo-cal companies and communities as they willbecome more involved in the industry. Astronger focus on local content, which be-gan in 2010 with the creation of the Niger-ian Content Act, is one of the main objec-tives of the bill.

“We have a growing and vibrant pool ofindigenous exploration and production com-panies contributing about 10 per cent ofNigerian crude oil production,” states MrYakubu.

“NNPC and the government have consis-tently encouraged development of indige-nous companies through various schemes.Wider participation of Nigerians in the in-dustry was further strengthened by earlierlegislations and the recent enactment ofNigerian Content Act.”

The PIB will also obligate IOCs to hire andtrain more Nigerians and to take on a greaternumber of local contractors.

This focus on community development andinvolvement will also help to quell the secu-rity threat even further. Community hostili-ties which have led to instances such as van-dalism of pipelines were spurred by localcommunities feeling alienated from the in-dustry. There has also been the general sen-timent that the huge revenues are complete-ly bypassing them and that they are seeingno benefits from the lucrative industry.

“The good thing about the PIB is the com-munity aspect of the bill. There is a clear fo-cus on involvement of the community. Webelieve that this is a very good direction. Thecommunities of the oil producing areas arestakeholders, and they are also direct bene-ficiaries of investment,” says Mr Yakubu.

“So it is win-win for the investor, govern-ment and the community. That is a verystrong tripod.” �

The PIB, a “win-win situationfor everybody”

The Petroleum Industry Bill willtransform the Nigerian oil and gas industryfor the benefit of all stakeholders

Today, around 10 per cent of Nigerian crude oil production is undertaken by Nigerian exploration and production companies

The PIB aims to increase the involvementof Nigerian workers and companies

28 World Report


NIGERIA

The 2.4 million-strong northeasternstate of Gombe describes itself as a“forward looking state with signif-icant economic resources and min-

eral resources potentials.” Indeed, it isrich in human talent – which it is propellingforward through strategic investments ineducation – as well as abundant arableland. Agriculture, in fact, employs morethan three-quarters of the state’s work-ing population.

Elected governor in a landslide victo-ry in 2011, Ibrahim Hassan Dankwamboleft his post as accountant-general in thefederal government, where he had servedsuccessfully for six years. As governor,he is implementing an agenda of educa-tion and infrastructure development, thuscreating a solid basis for growth in allother sectors.

How would you like to see the federal gov-ernment’s revenue streams diversified, andin particular what steps are you taking inGombe?

In order to encourage people to paymore revenue in the form of taxes or ofcontributions to growth, we must be ableto provide services like education, waterand healthcare, and promote sectors likeagriculture. These are the issues we areaddressing in Gombe.

When the necessary infrastructure –like rural roads and access to water – isput in place, there will be a rise in agri-cultural production, thereby increasingthe revenues of the farmers and the state.If we develop infrastructure, the cost ofdoing business will be reduced.

But businesses also require technologi-cal advancements as well as investment ineducation to have a workforce that is pre-pared and affordable. We are investing alot in education to ensure that our prod-ucts are competitive. When we succeed thelevels of income will go up and graduallythe ability to pay taxes will too.

We have potential in the area of min-ing of solid minerals; we are one of theleading cement producers, and we alsohave mineral resources like limestone andgypsum. Without the development of in-frastructure, education and an improve-ment of health services, the cost of exploit-ing our resources and the cost of businesswill be very high and we won’t attract in-vestment.

We are investing in bringing down thecosts of doing business, and in increasingaccess to our products to the people livingoutside the cities. We are also enhancing

security to guarantee the safety of ourcitizens of Gombe and of any investor thatwants to come to Gombe.

How has the violence in northern Nigeriaaffected foreign investment in your state?

Due to the security issues that affectour neighbouring states we have experi-enced a set back. There is the perceptionthat all states in the northeast are affect-ed by violence, even though Gombe is safe.

What, then, are the sectors that wouldprove most attractive to UK investors?

We’re looking at establishing partner-ships to develop some of our solid miner-als, like limestone and gypsum. Gombehas one of the finest coal deposits in thecountry. There’s a cheap and availablesource of energy. The minerals here arevery close to the surface so the cost of ex-traction is very cheap.

I always say that the state of Massa-chusetts in the US doesn’t have agricul-ture and much industry, but they do have

education, and that iswhy we are developingeducation so Gombe canbe an educational hubof talent development.We want to export tal-ent from Gombe, andthere is much potentialin this sector. Gombe of-fers many opportunitiesand our experiencedteam is ready to estab-lish partnerships withany investor; we want toconvince investors to come here and tosee for themselves our commitment as agovernment and as a people.

Gombe is a predominantly agriculturalstate. Our approach to the agriculturalsector is to encourage farmers to increasetheir production. Our yield per hectare hasgone up by 50 per cent compared with lastyear, yet it is still lower compared with theyield of other states. We’ve implementedincentives and farmer support programmes,

supplying them with fertilisers, trainingprogrammes and making arrangementswith NGOs, especially with Sasakawa – aJapanese programme that teaches farmershow to increase production.

Our objective is that all agriculturalproducts find their way to the market andnot to the hands of middlemen. We’re de-veloping a trading platform that will even-tually become a commodities market forevery person with a product to sell. It willbe centralised and regulated by law. Thisis an ongoing process and we’re lookingfor investors to develop this market.

What is your administration currently do-ing to increase the quality of education inGombe?

When we came to office the educa-tional system was a little backward, sowe brought together a group of expertsin education to develop a programme for

revitalising the educa-tion systems in Gombe.A report was submit-ted and with the infor-mation in the report wedeveloped a road mapfor the implementationof programmes and ac-tions.

The key factor for thesuccess of the pro-gramme is that it re-flects where the peopleof Gombe want to go

and how they want to develop the edu-cation of the state, and that is why theprogramme is being very successful.

There are more classrooms and we areincreasing the teacher-student ratio, pro-viding more textbooks, encouraging girlsto attend school and offering literacy pro-grammes for older people. Within a yearwe have experienced many successes, andthe percentage of students attending sec-ondary education has increased. �

Gombe State, the ‘Jewel in the Savannah’

The Education Trust Fund (ETF) Community Education Resource Centre in Gombe serves five other neighbouring states

Gombe has agovernor at the helmintent on building onthe state’s strengthsand creating a neweducational hub

“We are investing inbringing down thecosts of doingbusiness”

IBRAHIM HASSANDANKWAMBO Governor of Gombe State

World Report 29


30 World Report


NIGERIA

Nigeria’s lagging power sector couldfinally be on the verge of a long-awaited turnaround. The country

needs to dramatically increase its power gen-eration and upgrade its distribution networkif it is to unlock its full economic potential.

The current installed capacity of 8,425MWis only just over 20 per cent of the govern-ment’s goal of generating 40,000MW by2020, with the actual capacity available atthe moment only 50 per cent of the installedamount. As such, massive expansion of Nige-ria’s electricity generation, transmissionand distribution infrastructure is needed, ata cost of an estimated $100 billion over thenext decade. Faced with such a challenge,the government is reforming the power sec-tor and introducing private-sector partici-pation to meet its ambitious targets.

Until 2005, the National Electric Pow-er Authority (NEPA) held a monopoly of thesector and suffered from minimal investment,obsolete infrastructure and inefficient man-agement. Since the Electricity Power Sec-tor Reform Act 2005, the Nigerian Elec-tricity Regulatory Commission has been es-tablished and the Power Holding Companyof Nigeria (PHCN) created to take controlof NEPA’s assets and liabilities.

The Act also laid out the unbundling ofPHCN into 18 successor companies – sixgenerating, 11 distribution and one trans-mission company – that has led to the pow-er sector’s privatisation process currentlyunder way. Furthermore, two special pur-pose entities have been established: a lia-bility management company and a bulktrader, the Nigeria Bulk Electricity Trad-

ing Company, to build trust between the gen-eration and distribution companies.

“Through the bulk trader, the World Bankis providing a partial risk guarantee, whichgives confidence to the generation compa-nies in case the distribution companies donot pay for the power,” says Bolanle On-agoruwa, Director General of the Bureauof Public Enterprises (BPE), the govern-ment’s reform and privatisation agency.

“Our process is to ensure that we puteverything in place to create an enabling en-vironment to attract investors to any sectorthat we want to privatise.”

Over the past year, the authorities have re-ceived interest from bidders around the worldfor the unbundled companies. “We stipulatethat if you are coming in to buy a distribu-tion or generation company, you will havehad to run one yourself. We are not lookingfor equipment manufacturers, but opera-tors,” says Mrs Onagoruwa. “This is thefirst time we have gone out to invite peopleto Nigeria to invest and we have been ableto attract some measure of interest.” �

Powering the industrial revolutionReforms and privatisation are transformingthe power sector and drawing in investors

Diversification of the economy gains pace

World Report 31

The ongoing push to diversify Nigeria’s econ-omy away from its dependency on the dom-inant oil and gas industry is highlighting op-portunities in an array of other sectors.

In the underserved and rapidly expandingretail and real estate market, the PersianasGroup has developed the country’s first in-ternationally specified, purpose-built shop-ping mall: The Palms Shopping Centre in La-gos. The largest shopping centre in the coun-try, the company has built on the success andpopularity of the $50-million project to cre-ate the Polo Park Mall in Enugu State, withKwara Mall in Kwara State and IbadanMall in Oyo State also under development.

The group’s interests involve the proper-ty development, asset management, retail,investment and hospitality sectors. Lastyear, the International Finance Corporation(IFC) announced its intention to invest N20

billion ($124 million) in the group to sup-port its growth strategy. IFC Regional In-dustry Director Oscar Chemerinski stated:“IFC’s partnership with Persianas supportsa rapidly growing, more diversified econo-my and encourages private investors in theNigerian retail and commercial property in-dustry. Persianas’ property developmentsprovide a platform for smaller businessesto expand their retail operations.”

President of the Dangote Group, one of themost diversified business conglomerates onthe continent, Alhaji Aliko Dangote believesthat there has never been a better time to in-vest in Africa than now. He has also affirmedthat Nigeria is “one of the best places to makemoney” and that in Nigeria alone, his groupis investing $8 billion in oil refining and $2billion in fertiliser over the next five years.The Lagos-based group is also involved in

cement manufacture, food production, agri-culture, logistics and real estate.

The Dangote Group’s annual turnover hasrocketed from $200 million in 1998 to nowexceeding $3 billion. “Others only looked atthe difficulties of doing business in Nigeria,whereas we saw the opportunities,” commentsKnut Ulvmoen, Group Managing Director ofDangote Cement. The company’s Obajana Ce-ment Plant is the largest in Africa and ex-pansion plans to boost capacity to 13 mil-lion tonnes per annum by 2015 will make itamong the largest in the world.

One of the most experienced operating-asset buyout investors in Nigeria, Transcorpfocuses on the agribusiness, hospitality andenergy sectors, and is also investing heavilyin infrastructure. It recently won a $300-million bid for the rights to the Ughelli pow-er generating plant, which was thrown open

to private tenders and in need of moderni-sation. “The privatisation process has lookedat all the links in the chain and we are allready to move forward together. Nigeriashould be looking at an extra 500-700MWwithin five years from this plant,” says Obin-na Ufudo, Transcorp’s President and CEO.

In Benue State, the company has set upthe only juice concentrate plant in the coun-try, with the capacity of processing 26,500metric tonnes of orange, mango and pineap-ple per year. “The benefits for everybody willbe immense,” says Mr Ufudo. “Farmers inthis region currently live off selling about 50per cent of what they produce, with the restgoing to waste. While trading with us, theywill find they will be able to sell a larger stakeand possibly all of their produce, thus increas-ing their wealth and incentivising them toincrease the volumes they produce.” �

The expansion of Dangote Group’sObajana Cement Plant will make itone of the world’s largest by 2015

Current installed capacity is just over 20 percent of the 2020 target of 40,000MW


32 World Report


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