NIGERIA Invest in 2012-13 - Newsdesk Media

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the economy and finance
also required them to abandon the
universal banking model and instead
obtain licences for ‘core’ businesses,
such as investment, commercial or
mortgage banking, with non-commercial
operations being divested.
Funding revival
The rekindled desire to finance has
already started to show. Last year, the
$265 million NLG2 project, sponsored
by NNPC and ExxonMobil, brought in
five Nigerian banks during syndication.
Meanwhile FHN 26, the project company
of First Hydrocarbon Nigerian, which is
part-owned by oil company Afren, closed
a $180 million debt package arranged
by Stanbic and FCMB Capital.
“Because of the consolidation in
the banking industry, Nigerian banks
now have the muscle to finance large
projects,” Bickersteth says. “There is
certainly more interest in traditional
oil and gas, and telecoms. In recent
times, power has also attracted
international interest.”
invest in niGeRia 2012-13
Nigerian banks are not capable of
funding the proposed investments by
themselves. Deals involving solid
international sponsors with global
backing will play an important role in
delivering the capital required.
International sources of financing
are also starting to emerge. Last year,
the CBN finalised rules allowing Islamic
banking, owing to the country’s large
Muslim population and a growing
interest from investors in the Middle
East. It also granted to Jaiz Bank the
first licence to operate as an
Islamic-compliant organisation.
The balance of risk (Shariah-
compliant financing is more similar to
leasing deals, where the financier holds
the assets until the borrower fulfils the
payment) is attractive to banks, with
Western banks also starting to embrace
Islamic finance products.
International capital markets are
also providing financing facilities. There
was little movement from Nigerian
companies following a boom in the early
Funding projects such as new highways will
help Nigeria to develop into a centre for
international business and investment
1990s, until 2007 when Guaranty Trust
Bank issued a $350 million Eurobond.
In 2011, Afren issued $450 million of
senior secured notes, while the
government placed a $500 million bond
– its first-ever sovereign bond.
Other recent developments include
the CBN launching a $3 billion power
and aviation infrastructure fund, and
Macquarie and Old Mutual closing a
$500 million fund – operated out of
Lagos and Nairobi – to target
infrastructure in sub-Saharan Africa.
Such a diverse set of investments
by domestic and international sources is
central if the government is to deliver its
pledges and attract more trade and
investment. If strong financing can be
put in place, Nigeria will finally have the
infrastructure it requires to become a
genuinely global economic centre. �
Antony Collins is a freelance journalist
who has held a number of roles including
acting editor of Credit Today and senior
reporter at Project Finance International