Author: OBG Admin

Nhon Luc Ly-CEO-AIA Myanmar; Son Nguyen-Country President-Chubb Life Insurance Myanmar; Daw Zarchi Tin-CEO

Nigeria reworks its debt profile in the years since 2006 relief

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Eight years after securing $18bn in debt relief from the Paris Club and multilateral creditors, Nigeria has firmly repositioned itself on international debt markets. Having staged its second eurobond auction in as many years in 2013, with plans to return regularly to the dollar-denominated offshore bond markets, Nigeria is rebalancing its debt profile by paying down part of its local-currency exposure. While the rebasing of its GDP gives the country more room for additional issuances, it will need to sustain upward momentum in its sovereign credit re-ratings as it works to control subnational debt issuance by state governments. Debt Profile Following Nigeria’s paying off of

Stuart Tait-Regional Head of Commercial Banking-Asia Pacific

Nigeria tries to transform its challenging demographics from a liability into an asset

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A central conundrum of Nigeria’s past decade of 7% average annual GDP growth has been the consistent rise in unemployment, poverty and inequality of distribution of wealth. Although the conclusions of the rebasing exercise, unveiled in April 2014, lifted per-capita income from $1555 to $2689, this new accounting will no doubt sound hollow to the more than 60% of Nigerians living in absolute poverty. The world’s seventh-largest population is expected to rise from its current 170m to 213m by 2020 and 440m by 2050, according to UN forecasts. With more babies to be born in 2015 than in all of Western Europe, according to McKinsey,

Daouda Coulibaly-Managing Director-Société Ivoirienne de Banque

As Nigeria’s banks build their risk assets, new data on customers may help rejuvenate lending

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With regulatory reforms threatening to curb banks’ traditional sources of profit, lenders will need to create risk assets to maintain and expand their margins. Chief among these will be lending to retail customers and small and medium-sized enterprises (SMEs), which carry significantly higher interest rates than the limited and heavily banked blue-chip corporate market. While such higher-risk lending has been constrained by poor visibility and a general lack of information on applicants, the availability of credit data is gradually improving. Existing credit bureaux are expanding their coverage just as a new registry for movable collateral is being established. In parallel to the national identification initiative,

David Gledhill-CEO-Port of Salalah

Kick-start: The government launches new efforts to boost access to mortgages for the middle class

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Despite a housing gap estimated at 17m units, the provision of affordable long-term financing has remained virtually non-existent. By 2013 there were a mere 20,000 mortgages outstanding, according to the Ministry of Finance (MoF), at best-case interest rates of 19% over 10 years. In parallel to government efforts to promote the construction of more affordable housing, authorities are radically restructuring the housing finance segment. Having raised the capital requirements for primary mortgage institutions (PMIs), the Central Bank of Nigeria (CBN) is supporting government efforts to create a mortgage refinancing mechanism to tap long-term funding from capital markets with a focus on lower rates and longer

Stuart Tait-Regional Head of Commercial Banking-Asia Pacific

New owners of privatised electricity assets seek to meet arrears and fund their expansion

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The final transfer of privatised electricity assets to successful bidders in November 2013 marked a key moment in demonstrating that Nigerian banks can provide significant long-term funding to a structurally important sector. The acquisitions were financed primarily through debt, while international investors and banks largely stayed on the sidelines. Indeed, of the more than $3.2bn that was spent to acquire the 14 successor companies to the Power Holding Company of Nigeria and the Egbin power plant, more than $2.8bn was financed through debt. As loans to Nigerian banks began reaching maturity in 2014, the sector is facing its first great test since the last banking

Pham Hong Hai-CEO-HSBC Vietnam

A policy shift brings new challenges to profitability in Nigeria’s banking sector

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Nigerian banks have been undergoing a structural shift in their business models since 2013 – the first full year since the end of bad debt sales to the Asset Management Corporation of Nigeria (AMCON). The new rules issued that year have significantly affected traditional sources of profit for commercial banks, including net interest margins and fee revenues, and are prompting lenders to find new ways of driving profitability over the medium term. This will likely entail a stronger focus on lending, though banks will eventually have to examine their relatively high cost base and low efficiency if they are to remain competitive in a crowded

IT solutions

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The Company Computer Warehouse Group (CWG) was incorporated as a private limited liability company in 2005 and fully commenced operation in 2011 following its 2010 acquisitions of 100% stakes in CWL Systems, DCC Networks and ExpertEdge Software. The company is currently a leading IT solutions provider specialising in the supply, installation, integration, maintenance and support of computer equipment, e-payment hardware and ancillary equipment. The group became a public liability company in 2013 following a listing on the Nigerian Stock Exchange through a private placement exercise. Though incorporated in 2005, its operations in Nigeria’s ICT industry date back to the incorporation of its forerunner, CWL Systems,

Stuart Tait-Regional Head of Commercial Banking-Asia Pacific

Reforms in Nigeria’s capital markets boost prospects for investment in pension funds

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While the assets of Nigeria’s main pool of domestic institutional investment – pension funds – have grown rapidly since reform was enacted in 2006, their investment mix has remained very conservative, clustered overwhelmingly in government securities with a so-called risk-free rate of return, which funds have bought to hold. Indeed, asset growth has been driven by the expansion in contributions rather than return on investment. Yet, as the profile shifts towards younger-aged contributors, pension fund administrators (PFAs) will need to rebalance in favour of investments that consistently beat inflation over the course of several decades. Prompted by the Securities & Exchange Commission (SEC) and the

Banking

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The Company Guaranty Trust Bank, with its many businesses covering Anglophone West Africa and the UK, has grown into one of Nigeria’s most respected and service-focused banks. The bank, along with its subsidiaries, is organised into three business segments: retail, corporate and commercial. It currently has over 29.43bn shares outstanding, translating to a market capitalisation of more than N763bn ($4.7bn). Its asset base has grown to about N2trn ($12.2bn), with a shareholders fund of over N200bn ($1.2bn). In 2007, the bank became the first Nigerian financial institution to undertake a $350m “regulation S” eurobond issue and a $750m global depositary receipts offer. The bank is

Pham Hong Hai-CEO-HSBC Vietnam

Encouraging corporate issuance on primary and alternative exchanges

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With issuance on the primary market remaining far below the levels seen during the heydays of the mid2000s, attracting new supply will be key if the Nigerian Stock Exchange (NSE) is to meet its goal of a $1trn market capitalisation by 2016 – up from N12.14trn ($74.05bn) in early April 2015. NSE management has mentioned some 500 firms in which it sees potential for listing, despite modest results in recent years. Equity raising has taken the form of secondary rights issues by already listed firms, as well as listing by introduction rather than through initial public offerings (IPOs). Nonetheless, both the regulator and the exchange