P.E firm CDC says low oil exposure help defy economic odds …has no plan to ditch Nigeria

 

CDC, a UK development finance institution, says its little exposure to the oil sector means it is not as vulnerable to the slump in crude price as some private equity firms, which may have been dealt a lethal blow.

With investments in over 600 businesses across Africa and South Asia, the private equity firm identified its seven priority areas as manufacturing, construction, agri-business, education, health, financial institutions and infrastructure.

“The oil sector is not a priority area for us. Our investment in the sector is about 5 percent. Our mandate is to invest in sectors that trigger massive jobs creation and can engender inclusive economic growth.”

“If you invest in an oil field, you have more expatriates than natives, and the money goes to the Government and not the average person on the street. This inhibits our commitment to positively impact the lives of families and communities wherever we invest in,” Gozie Chigbue, an investment executive, Africa funds said.

Chigbue asserted that CDC would be investing less in fossil fuels and more in renewable energy, while adding that investments in the power sector will take pre-eminence this year.

Speaking at a media workshop organised by the firm, last week, the finance institution said it had no plans to ditch Africa’s largest economy stemming from the economic slowdown.

“Nigeria is not the only African country that has been hit by commodity price lows. Angola, South-Africa and others are also adversely affected.”

“The nations projected growth rate of about 3 percent is good enough for us when compared to other African countries which are projected to grow far lesser, at about 1 percent. For this, we can assure that we are not going anywhere,” Chigbue added.

Africa is the institution’s top geographical location for investment, making up to 47 percent of their portfolio. A trend poised to continue, going forward.

“Some estimates predict that the demand for capital will increase by 8 percent per annum between 2016 & 2018; and will soar to $50 billion in another decade,” Imoni Akpofure, CDC regional director for Africa, said.

Azura power, Indorama Eleme Petrochemicals company (IEPC), ECOM Agroindustrials, Swift networks and Synergy private equity fund; are the most recent investments of CDC in Nigeria.

Creating profitable businesses and sustainable jobs, which is at the heart of the company’s exploits, is faced with enormous challenges which range from limited access to funds, to poor corporate governance. However, CDC is committed to bridging the financial gap by providing patient risk capital in all its forms, and playing an active role in helping businesses improve operations and expand to new markets.

 

LOLADE AKINMURELE