NIGERIA Invest in 2012-13 - Newsdesk Media

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the economy and finance
has been subject to volatility over recent
years, which has dented investor
confidence. Although the All-Share Index
depreciated by 17 per cent over the
course of 2011, the Exchange’s chief
executive, Oscar Onyema, is driving
forward plans to revitalise the market.
In 2011, a review of market
performance showed that the total
turnover value of shares had fallen from
N797.55 billion ($4.9 billion) in 2010
to N622.60 billion ($3.9 billion).
However, new listings increased from
31 to 33. “The deregulation of the
downstream oil and gas sector... will
encourage a number of companies
operating in that sector to access the
capital market and be listed on the
stock exchange,” said Onyema.
Key initiatives for 2012 include the
expansion of the stock market’s product
range from two (bonds and equities)
to five. These include the gold-backed
Exchange Traded Fund, which was
launched in December 2011.
A series of initiatives is under way
to strengthen and expand Nigeria’s
fledgling, but fast-growing bond market.
The market is fairly developed, with the
maturity of obligations ranging from
three to 20 years. The 20-year bond is
the longest-tenure debt instrument ever
offered in Nigeria. It was first issued in
November 2008 in an attempt to
deepen the bond market.
In 2011, the government issued a
$500 million bond that pays interest in
US dollars for the first time. Called the
Eurobond, it was aimed at investors
who would like to minimise the risk of
currency fluctuation. It struggled
throughout the year, but rallied at the
start of 2012, as investors bet that oil’s
surge to a 32-month high would help
investors to overcome their jitters.
The Federal Government revealed
through the Debt Management Office
invest in niGeRia 2012-13
(set up in 2000 to centrally manage
Nigeria’s debt) that it intends to raise
up to N240 billion ($1.5 billion)
from the capital markets in the first
quarter of 2012. It plans to do this by
auctioning 10-year sovereign bonds that
mature before the end of March, in order
to plug the revenue gap.
Fund for new projects
The Central Bank of Nigeria (CBN) has
taken the lead in financing the real-estate
sector and infrastructure projects by
establishing a N500 billion ($3 billion)
fund, of which N300 billion ($1.8 billion)
is for the power/infrastructure and
aviation sectors, and N200 billion
($1.2 billion) for the refinancing and
restructuring of banks’ loan portfolios
to manufacturers and small- to
medium-sized enterprises (SMEs).
Also, a N200 billion ($1.2 billion)
Small and Medium Enterprises Credit
Guarantee Scheme has been created to
complement the earlier, N200 billion
Commercial Agricultural Fund for loans
to farmers. So far, the CBN has released
over N190 billion, of which N130 billion
has been distributed to SMEs at a fixed
rate of seven per cent.
Following in the footsteps of all but
two other members of the Organization
of the Petroleum Exporting Countries
(OPEC), Nigeria launched its own
Sovereign Wealth Fund (SWF) in January
2012, to help the country save for the
future, invest in strategic infrastructure
projects and act as a buffer against
volatile oil prices.
It is hoped that the fund, which
was launched with government seed
capital of $1 billion, will help ordinary
Nigerians benefit from the billions of
dollars of oil revenues that the nation
has seen over the past half-century, and
Ngozi Okonjo-Iweala was reappointed as
Nigeria’s finance minister in July 2011
also respond to criticism that savings
have been detrimentally affected by
years of mismanagement.
Many analysts have welcomed the
introduction of the fund, but believe that
because of its long-term nature, it is
more appropriate for investing in local
equities on the Nigerian Stock Exchange,
rather than investing abroad. This will
help to build up a debt profile more
safely while deepening the market.
On a more regional level, there has
been a big increase in local finance
initiatives. At the end of 2011, the First
Bank of Nigeria and its investment