FOCUS ON AFRICA
As part of its Focus on Africa series of programs, EMTA presented a seminar in London on November 9, 2006 focusing on Nigeria’s financial markets. The seminar, which was sponsored by Standard Bank and held at Simpson’s-in-the-Strand for a standing-room only crowd of bankers and investors, featured presentations by representatives of Nigeria’s official and regulatory sector, followed by a panel discussion by local and international practitioners.
EMTA Vice Chair Dean Menegas of Spinnaker Capital made the initial welcoming remarks followed by Brad Koen, Head of Global Markets for Standard Bank. The introductions highlighted that this is Africa’s decade for growth and opportunity.
The official sector presentations began with remarks by Dr. Mansur Muhtar, Director General of the Debt Management Office of Nigeria (delivered by his colleague Yakubu Aliyu), discussing how Nigeria can build a liquid yield curve to meet long term demand for Nigerian government bonds and assist in the pricing of other fixed income assets. This was followed by a presentation by Dr. Sarah Alade, Director of Banking Operations for the Central Bank of Nigeria, who discussed how the country was managing its monetary policy to keep inflation in check in the face of excess liquidity resulting from windfall oil profits. Next, Bode Agusto, Director General of the Office of the Budget of the Nigerian Ministry of Finance, explained how fiscal policy was made, highlighting the fact that the oil price used for budgeting was significantly lower than real oil prices, and projecting the likely effect of elections planned for the Spring of 2007 on spending. The final speaker of the first part of the seminar was Mr. Bolaji Shenjobi, President of the Money Market Association of Nigeria, who gave a report on the state of the banking consolidation program that was undertaken in Nigeria just about one year ago.
Each presentation highlighted that Nigeria is in the midst of reforms, which, even with a change of government, or lessening of the ruling party’s majority, will very likely continue. Issues of concern to the audience, which were brought out in the Q&A session following the official presentations, focused on how Nigeria could meet demand for more fixed-income assets in the current environment of excess liquidity and improve its infrastructure and legislation to support a growing domestic fixed income market.
Nigeria is currently looking at permitting securities lending and repo transactions to improve liquidity in the domestic market.
The private practitioners panel was moderated by Francis Beddington, Head of Research at Standard Bank, and included Dan Agbor, a local Nigerian lawyer from the law firm Udo Udoma & Belo-Osagie; Vicente Pons, Credit Derivatives trader with Citigroup; Konrad Reuss of Standard & Poor’s; Godwin Obaseki of Afrinvest West Africa Ltd.; Jan Dehn of Ashmore Investment Management; Segun Agbaje of Guaranty Trust Bank and John Oshilaja of Standard Bank.
This eclectic and highly distinguished panel covered a number of important and provocative topics including special regulations of importance to foreign investors, a recent interruption of trading in the local market that caused consternation amongst foreign participants, the upcoming elections and the role of political risk in evaluating Nigerian exposure, whether Nigeria should raise money in the international bond markets to provide investors with a pure credit exposure void of currency risk (despite its current buy-back program of London Club debt) and which countries it could be compared to in the roster of Emerging Markets.
During the cocktail party which closed the event, local and international seminar participants continued the lively debates.
Focus on Africa: The Nigerian Financial Markets
London, November 9, 2006
Proceedings subject to the Chatham House Rule