Welcome Address at the 4th edition of the Annual Standard Bank West Africa Investors’ Conference

Distinguished Guests, Ladies & Gentlemen,
 
It is with great pleasure that I welcome you to the fourth edition of the annual Standard Bank West Africa Investors’ Conference, which continues to be the conference of choice for investors seeking to establish and/or strengthen their ties with/in Nigeria.

This year’s conference has been aptly themed ‘Nigeria: Enabling the next level’. We at Stanbic IBTC believe that Nigeria has achieved several important milestones in its economic transformation agenda since I welcomed you all to our 2012 conference about a year ago. It is however interesting to observe that many analysts (domestic and international) appear to be oblivious of some of these developments. At Stanbic IBTC, we believe very firmly that the Nigerian economy is on the cusp of a tipping point. Of course we all know that a tipping point only becomes unmistakably clear after the fact when one has joined the ranks of those who are left to ponder how they could possibly have missed out.

Some of you may recall that last year, we were joined at this Conference by the Coordinating Minister for the Economy and Minister of Finance as well as the then Minister of Power and a representative of the Ministry of Agriculture. They all emphasised some critical levers of change within the economy that could deliver greater output, higher productivity levels and wider income distribution, all of which would help to take Nigeria to the next level.
 
So how far have we come in the last 12 months? With respect to the power sector, we now have preferred private sector bidders for 10 out of the 11 distribution companies and 4 out of the 5 generation companies that were slated for privatisation. We also have a contract in place for the private sector management of Nigeria’s transmission network by a world class operator (Manitoba Hydro International of Canada) – a set of milestones that have never been attained before in the history of power sector reform in this country.

We expect new owners to start to take possession of these power sector assets in mid-2013 and also expect significant investment upgrades to follow suit. I will be talking to you in greater detail about progress within this critical sector as the conference progresses.
 
Within the agricultural sector, we have seen greater effectiveness in the dissemination of fertilizers to farmers within Nigeria as the Federal Government is no longer a part of the procurement and distribution process. Farmers typically received only 11% of the fertilizers that were procured under the previous regime at the subsidised price and this is now steadily rising. Government reforms have now cut out the middle man and farmers are able to receive subsidy vouchers directly through their mobile phones. In addition, ongoing efforts to share risk within the sector has resulted in increased levels of credit flowing through to agriculture. The banking sector now extends 3.5% of total lending to agriculture, up from around 1.5% in 2010, with a target of 10% of total lending by 2017.
 
Our ports are also undergoing a quiet revolution, now operating 24 hours a day after decades of operating between 9am and 5pm. We have significantly reduced the number of government agencies represented there leading to reduced clearing times from around 40 days to less than a week as government reforms continue to drive greater efficiency.
 
Within the capital markets, we have seen a doubling of the daily trading band from ±5% to ±10%, the introduction of Market Making as well as the prospect of improving company fundamentals, all of which have helped boost liquidity in the equities market. The average daily value traded in the first six weeks of this year is up 82% versus the values achieved in the same period a year ago. In the fixed income space, the announcement of the inclusion of selected Nigerian local currency bonds into JP Morgan’s GBI-EM index in October last year, in addition to effective currency stabilising measures taken by the Monetary Policy Committee last summer, prompted a flurry of inflows into Nigeria, as investors were drawn by compelling yields. We also note that 2012 was the first year for IFRS reporting for many of the companies that you will meet during this conference. This will enable easier comparisons between Nigerian companies and their contemporaries in other frontier markets going forward.
 
Despite these important steps, we acknowledge that there is still much to do. Consequently, we believe it is imperative that all stakeholders in Nigeria’s future economic development begin to look beyond the broad themes and focus increasingly on the details of execution. We will therefore start this Conference with an interactive session between investors and key regulatory bodies; we have representation from the CBN, DMO, SEC, PENCOM and NSE as well as a voice for the Nigerian institutional investor community from Shell Closed Pension Fund to lead discussions on critical next steps to enable us to attain the next level of capital market development.  We will have the opportunity to listen to insights from the vastly experienced Dr. Christopher Kolade, CON, Chairman of the FGN SURE- P program, Nigeria’s former High Commissioner to the United Kingdom, former Chairman of Cadbury Nigeria plc and a champion of higher corporate governance standards in Nigeria. You will, once again have the opportunity to engage with senior management teams from many of Nigeria’s top corporates to enable you to improve your understanding of the strategies that their respective institutions are pursuing towards attaining that next level.

We are confident that this few days of high quality interaction will enable you all to further deepen your understanding of our rapidly evolving market and the opportunities herein. Once again, I am delighted to welcome you to Standard Bank’s Fourth West African Investor Conference and to remind you that our market leading equities brokerage and research teams are on hand to guide and support you during your stay in Nigeria.
 
I thank you for your attention.

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