4 BUSINESS DAY C002D5556 Monday <strong>26</strong> <strong>Feb</strong>ruary <strong>2018</strong> NEWS Netherlands pledges support for Nigeria’s agricultural growth ... Quality of Nigerian food produce falls short of international standards – Dutch experts CALEB OJEWALE The Dutch government is committing to providing support for Nigeria’s agricultural development, aiming to facilitate the creation of new jobs to support the economy, and stimulate economic growth. The Dutch mission in Nigeria which says it wants to deepen bilateral relations with the country has identified agriculture as the best way to provide support, owing to the Dutch track record in high productivity, and being the world’s second largest exporter of food despite being one of the smallest countries by size at 41,543 Km2. This commitment to find ways of helping Nigeria develop its agricultural potentials was demonstrated earlier this month when a Dutch delegation led by Robert Petri, Netherlands ambassador to Nigeria, in company of Michel Deleen, head of Netherlands Representation in Lagos, and Ilona Domanska, policy officer, West Africa Division, Netherlands Ministry of Foreign Affairs, visited the Wageningen University and Research (WUR) for series of strategic meetings on ways Nigeria’s agricultural development can be supported. <strong>BusinessDay</strong> correspondent was in attendance at some of these meetings, where the Dutch delegation met with several experts who have had experience with agriculture in Nigeria, some for the past two decades, researching on different areas of the sector and developing programmes to support local growth. In an exclusive interview with Petri after the meetings in Wageningen, the Dutch Ambassador told <strong>BusinessDay</strong> his country “would like to intensify collaboration with Nigeria, particularly in the field of agriculture, and this is because agriculture (appears to be) a priority for the Nigerian government.” According to Petri, with high population growth, Nigeria will keep importing more food so local production has to go up, and “I think as a country, the Netherlands has something to offer Nigeria. We are capable of producing high yields in a small piece of land and we have a lot of expertise in practising agriculture in a sustainable way. We are also the second largest exporter of food in the world. “We are a small country (in landmass) but in the area of agriculture, we certainly have something to offer Nigeria,” said Petri The Dutch Ambassador also noted that “Nigeria is a very big Banks’ $1.3bn Eurobonds set to mature in... Continued from page 1 more risk conscious. “GTBank has offered to redeem its loans while Fidelity Bank has already rolled over theirs last year. Diamond Bank may look to refinance theirs,” Okunrinboye said. “For Tier one lenders that are going to refinance, they will have to pay close to 9 percent while Tier 2 lenders will have to pay close to 10 percent given the rate at which they issued few years ago,” said Okunrubonye. Fidelity Bank a tier – two bank rated B- by S&P Global Ratings and Fitch Ratings, or six steps into junk territory, issued $400 million of five-year securities with a 10.75 percent yield in October 2017. Proceeds from the new Eurobond were partly used to repurchase $256 million of the bank’s $300mn Eurobond due in May <strong>2018</strong> (coupon 6.875%), implying new cash of $144mn and outstanding value of $44.50 million. “Fidelity was a beneficiary of the high interest rate environment that prevailed in FY17; however, we believe its Net Interest Income in 4Q17 will be pulled lower by the interest expense on its recently issued $400mn Eurobond (maturing in October 2022, coupon 10.5%). The new cash introduced from the bond raise will be used to drive trade financing activities, according to management,” Renaissance Capital analysts led by Olamipo Ogunsanya said in a <strong>Feb</strong> 5 report on the sector. Guaranty Trust Bank (GT- Bank), the largest lender by market value, has $276.93 million in outstanding Eurobonds due November 8 <strong>2018</strong> and Zenith Bank has $500 million in Eurobonds due April 22 2019. Diamond Bank has $200 million in 5 year unsubordinated unsecured Eurobonds maturing on May 21 2019 and First Bank of Nigeria Plc has $300 million in Eurobonds, maturing on August 7 2020. “I think the need for dollar liquidity has reduced considerably compared to the last 2 years, due to improved FX availability in the domestic market. So banks are not necessarily under pressure to re-issue these bonds as they mature,” said Kayode Tinuoye Portfolio Manager/Head of Research at United Capital Limited. “The outlook appears positive at the moment, and should ease any pressure on pricing, especially as most of the banks have decent credit risk ratings,” summed Tinuoye. The Nigerian economy is recovering slowly from its worst slump in around 30 years, triggered by the 2014 collapse in crude prices. Ratings agencies also downgraded the Nigerian sovereign at the height of the oil shocks. However, a rebound in oil production on the back of relative peace in the Niger Delta region and the adoption of a flexible exchange rate policy that eased dollar shortages were responsible for the country existing a recession as GDP expanded by 0.55 percent and 1.42 percent in the second and third quarter of 2017, accord- country and very important for not only West Africa but is an economic engine for the rest of Africa. If it goes well in Nigeria, it will go well in the rest of Africa and this will be to the benefit of Europe. “Employment will be my primary focus and that of the Netherlands, because we know that there are many job seekers that come to the market every year in search of employment, and now the oil sector and the oil age is slowly coming to an end. “As long as job seekers remain unable to secure employment, this will invariably lead to unrests and chaos which we do not want,” Petri said. The prospects of attracting more investors to Nigeria, is according to Petri, somewhat limited owing to the country’s less known potentials. “We have to explain very well, how beautiful your country is, what the potential of the country is, because there isn’t very much that is known, frankly speaking,” noted Petri, adding that “but you can start with big awareness campaigns, and it sometimes works better to focus on one sector; in this case agriculture, so people can see that it can work, and that will help companies in other sectors to also come in and make their decisions (whether or not to Diamond Bank reduces losses as oil rally aids bad loan recoveries LOLADE AKINMURELE & MICHEAL ANI The rebound in global oil prices and local production is helping Diamond bank, Nigeria’s sixth largest commercial bank; recover nonperforming loans (NPLs) that swelled in the thick of low oil prices in 2016 and militant attacks that cut oil production by a third. “In the past few months, we have had cash flows from at least three clients that had been docile since 2016 when the slump in oil prices and damages inflicted on the Forcados terminal constrained chances of loan servicing,” Caroline Anyanwu, the bank’s deputy managing director and chief risk officer told <strong>BusinessDay</strong> during an interview at its Lagos headquarters on Friday. She declined to name the oil companies in question. Thanks to the upswing in global prices and local production in Nigeria, oil exploration companies have now gone back to work and owners of rigs and vessels are getting new jobs, according to Anyanwu. That has breathed life into the bank’s NPLs which had a 36 Continues on page 46 L-R: Oluwatoyin Ashiru, director, First City Monument Bank (FCMB) Group plc; Ibikunle Amosun, governor, Ogun State, and Adam Nuru, managing director, FCMB, during a courtesy visit by the management of the bank to the governor in his office at Abeokuta, Ogun State. stay in Nigeria).” “The country is known but not the investments opportunities,” said Petri, “I think it has to be explained better, and that will help in showing good examples. It is also important for companies coming into Nigeria to prepare to be in it for the long haul.” Other experts who attended the sessions with the Dutch delegation, mentioned several areas Nigeria needs to improve so as to record increased productivity, and also on quality of food, not only in targeting exports but to ensure Nigerians are not being ‘slowly poisoned’. Louise Fresco, president, Executive Board of Wageningen University & Research, noted that if Nigeria hopes to one day become an agricultural exporting country, there has to be a monitoring system in place. “Nigeria like other African countries needs to build up the expertise to effectively monitor quality and standards in food production,” said Fresco, also explaining that if this is not part of a national strategy, risk becomes imminent with changes in people or institutions, and building that national capacity is very essential. •Continues online at www.businessdayonline.com ing to the National Bureau of Statistics (NBS). Nigeria’s external reserves have hit a 4 year high of $42.50 billion, according to recent data from the Central Bank of Nigeria (CBN). Benchmark sovereign bond yields have fallen to 13.10 percent as at <strong>Feb</strong>ruary <strong>2018</strong> from 17.10 percent high of 2015 as the economy continues to improve. Ayodeji Ebo, managing director and CEO of Afrinvest Securities Limited says based on the expected rate hike by the U.S Federal Reserve, they expect that any re-issuance by banks will be more expensive. “So banks will now have to decide whether to pay off the loans as at maturity or if they have the dollar lending opportunity, they may decide to reissue new ones at the prevailing rates,” said Ebo. Since the dollar is a global reserve currency, changes in its valuation can have a tremendous impact on everything from foreign reserves at global central banks to corporate balance sheets containing dollardenominated debt. “GTBank says it will only redeem and they may not issue new ones. But Diamond Bank is bit of a worry. Recently, they issued a $200 million Eurobond,” said Okunrubonye.
Monday <strong>26</strong> <strong>Feb</strong>ruary <strong>2018</strong> C002D5556 BUSINESS DAY 5
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