Upbeat investors outline headline reform route for Buhari Government

Following the victory of Muhammadu Buhari in last April’s general election, some of the world’s biggest investors gathered in Lagos yesterday at the Renaissance Capital 6th annual Pan-Africa 1:1 Investor Conference, to discuss the economic outlook for Nigeria and challenges before the new government.

The conference was deemed timely, amidst growing concerns on where the next government would find funds to finance growth going forward.

The mood among the investors was upbeat, with most saying that they are encouraged by Buhari’s body language on tackling corruption, the country’s very low debt profile, which is way below the 30  percent of GDP that its peers currently carry, and with the political developments in the last couple of months.

“If we compare this development with the country where I grew up and the country where I am currently based , we didn’t have such an example of transition of power from one leader to another and that is a huge compliment to the people of Nigeria and to the political leaders” said Igor Vayn, chief executive officer, Renaissance Capital.

Igor said the prospect of reforms by a new administration implies significant upside potential for Nigeria over the medium term.

“We think Nigeria is at the cusp of a recovery, and the low oil price, combined with a change in the government provides the best investment opportunity in years,” he said.

Charles Robertson, global chief economist at Renaissance Capital, echoed similar sentiment.

He said “following the April elections, the new government represents the best opportunity in recent years to push forward reform for Africa’s largest economy.”

Most of the chief executives, including private equity players betting huge on Nigeria, shared similar sentiment but highlighted some headline actions that must be taken by the Buhari administration immediately, to begin to realise the country’s growth potential over the medium term, beginning with firm steps against the numerous revenue leakages in the oil sector.

“Take out the subsidy, stabilise the gas to power issues, unbundle the Nigerian National Petroleum Corporation (NNPC) separate policy from regulation,” said Cyril Odu, executive and partner, Africa Capital Alliance, who was in a subsequent discussion panel at the conference that included Kamar Bakrin, partner, Helios Investment Partners, Dave Uduanu, chairman, Pension Fund Operators Association of Nigeria, Ayo Teriba, CEO, Economic Associates and Micheal Buitelaar, managing director, Smile Communications.

Other immediate to-take-steps listed by the panelists include, putting in place efficient systems that will deliver decent revenues from the non-oil sector, taking a very bold ambitious move towards infrastructure financing- working with existing funding institutions, effectively managing critical stakeholders in the transition phase and rethinking the current frequency distribution system to increase broad band usage, which has the potential to accelerate development in the country.

Investors admit finding funds to finance the reforms will be challenging, but pointed at corporate profits, the local pension fund, foreign lending like the China$1.2 billion rail funding for Nigeria, foreign direct investments (FDIs) as well as equity investments, as possible funding sources to explore.

Some 150 investors representing both global and frontier funds and some 50 companies from across the continent were represented in the conference.

Charles Ike-Okoh