All posts by Michael Patotschka

Nigeria

Oyebola: Nigeria is West Africa’s Most Viable Investment Destination

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15 Jun 2015

By Obinna Chima

The Managing Director and Chief Investment Officer of FBN Capital Asset Management Limited, Mr. Michael Oyebola, has highlighted Nigeria’s position as the top foreign institutional funds destination in West Africa.

He made this known in a presentation titled: “Nigeria: West Africa’s most viable destination for US institutional funds,” during the 2015 edition of the Africa Institutional Funds and Managers’ Series (AIFMS), held in New York recently.

Oyebola stated that Nigeria has a compelling investment business case, despite the socio-economic challenges she is contending with.  He noted that Nigeria continues to show great potential in core areas of interest to traditional institutional fund managers, while her burgeoning middle-class and status as Africa’s largest economy following her Gross Domestic Product (GDP) rebasing, establishes her as the sub-region’s most viable investment destination.

He also highlighted the country’s ongoing revival in agriculture, its vast and untapped power resources, a progressive financial services sector, the untold potential which remains in oil and gas, as well as a vibrant telecoms and ICT industry, among other investment-stimulating factors.  According to him, “in agriculture the investment opportunities which exist in food processing and storage facilities, crop production, and animal husbandry due to a huge domestic demand are many, while in the power sector, the nation’s gas agenda facilitates a potential for aggressive gas-based industrial growth.”

Furthermore, he noted that crucial to the successful performance of institutional fund investment from the US and other continents to Nigeria, was partnership with leading investment and asset management firms in the sub-region to ensure knowledge and expertise of the local operating environment.

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Nigeria

Nigeria’s Economic Ambitions

It is time to plan for a highly diversified post-oil economy

When the Muhammadu Buhari Administration comes to power later this month, it will be confronted with a perfect storm of economic conditions. The price of oil is currently just over half of where it was in June 2014.Foreign exchange reserves are falling. The excess crude account has dwindled to the point of being nearly empty. The government debt portfolio, especially the domestic component, is on the rise. It will be a mistake to attribute all these problems to the out-going administration alone. Nigeria’s current economic problems have accumulated over a long period and the change of administration offers an opportunity to reflect and act on Nigeria’s economic ambitions. The current dismal economic trends can be traced to many sources, but one reason stands out above others: Nigeria’s continued high dependence on oil. Although the rebasing of the economy in 2014 has revealed significant growth in the gross domestic product, estimated at US$510 billion, the government still depends on oil for about 65 per cent of its revenue (the 2015 federal government budget is based on the assumption that oil will account for 53 per cent of government revenue) and over 90 per cent of its foreign exchange earnings. The boom in oil prices from 2000-2008 had one insidious effect on economic policy-making, the expectation that Nigeria could power its way to economic greatness through projected trends in oil and gas production and growth in population size. That expectation was particularly fuelled by Goldman Sachs reports which predicted that Nigeria would be among the top 20 economies by 2020 and which included Nigeria in the so-called NEXT 11 countries after the BRICs: Bangladesh, Egypt, Indonesia, Iran, Mexico, Pakistan, South Korea, the Philippines, Turkey, and Vietnam. More recently, Nigeria was included in a sub-set of the NEXT 11 called MINT, which stands for Mexico, Indonesia, Nigeria and Turkey. Continue reading Nigeria’s Economic Ambitions →

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Nigeria

Economic Diversification and Non-oil Export Growth Back on the Front Burner

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A peaceful outcome of the 2015 presidential election was the desire of the generality of Nigerians and the international community. Thankfully, we got it; and more. President Goodluck Jonathan converted his loss of the election to something remarkably positive for the country and for his legacy. His concession of defeat and early call to congratulate General Muhammadu Buhari, who emerged as President-elect, is surely an indelible mark in our strides to entrenching a democratic culture in Nigeria. It also serves as a needed point of reference for Africa, where a number of elections are lined up for this year. Structural Transformation The latest general election cycle coincided with a period of serious slump in the price of crude oil at the international market. From trading at well over $100 per barrel a year ago, the Nigerian grade Brent Crude now trades below $60 a barrel. This has translated to revenue shock for the government. The slump in the price of oil has also repressed foreign reserves. In line with its responsibility for financial stability, the Central Bank of Nigeria (CBN) has had to regularly draw down on the reserves to defend the local currency. It is therefore evident that, while we deservedly celebrate the peaceful outcome of the election, we are confronted with the harsh economic realities imposed by lower oil prices. However, this immediate challenge advises on the path for long-term economic management.
Continue reading Economic Diversification and Non-oil Export Growth Back on the Front Burner →

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Nigeria, Rwanda, South Africa

Africa: The world’s new powerhouse

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The just concluded 60th anniversary of the Asian-African Conference featured more than 100 countries that were retracing the historic path of an event that changed the world.
Today, countries like South Africa, Nigeria and Rwanda lead Africa’s rise in the global economy and international stature.
Africa has all the ingredients to be a dominant economic engine for decades to come, according to demographers, economists and industrial and agricultural experts.
With more than 1.1 billion citizens, Africa has huge potential. About one-third of Africa’s 54 nations have a yearly gain in gross domestic product (GDP) of more than 6 percent, making the continent the second highest in economic growth after Asia, which is growing at 4.7 percent per year.
One main factor is because Africa is at last getting its share of peace and good governance since Benin set the mainland trend in 1991.
Population trends could also be improving these developments. More better-educated young people are entering the job market and birth rates are beginning to decline. As the proportion of working-age people to dependents rises, growth should get a boost.
Asia enjoyed the “demographic dividend”, which began three decades ago and is now tailing off. In Africa it is just starting. Continue reading Africa: The world’s new powerhouse →

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General

Malaysia is the largest Asian investor in Africa

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Three reasons why we should do business with Singapore. However, Singapore has already reached a developed nation status. Malaysia is still developing (some call it semi-developed, because, absent a few economic indicators, it has all the markings of a developed nation). Therefore, it has more in common with Nigeria. It’s also not Singapore, but Malaysia that has the largest Asian investment in Africa. It’s also Malaysia, not Singapore that sends aids and its people to help Africans. Nigeria will also benefit from how Malaysia is able to keep its cost of living so low; one example, oil prices are 60 percent cheaper in Malaysia than Singapore and Thailand.
Malaysia is ahead of China in terms of the size of its direct foreign investment (FDI) into Africa and the gap is widening. A survey of foreign investment into and out of the five BRICS countries, published on the eve of their summit in South Africa and while new Chinese President Xi Jinping visits the continent, revealed that China’s march into Africa has lagged behind the flow of cash from Kuala Lumpur. In 2011, Malaysia was third largest investor in Africa overall, only behind the United States and France. China came fourth and India fifth.
… France and the Malaysia is ahead of China in terms of the size of its direct foreign investment (FDI) into Africa and the gap is widening United States also have the largest historical stock of investments in Africa,” Reuters reported, “with Britain in third place and Malaysia in fourth, followed by South Africa, China and India.”
India has $14 billion invested in Africa; China 16 billion and Malaysia, $19.3 billion (about 24% of its FDI).

Source: Weekly Trust, April 18th 2015

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