Benson Adenuga, coverage director and head of Nigeria office at British International Investment. In this interview with Josephine Okojie, he spoke about the country’s investment landscape and what should be done to unlock more investments.
Nigeria is in dire need of foreign exchange, and much of this can be realised through international investments, what hope does an organisation like BII offer?
During challenging economic cycles such as these, British International Investment (BII) provides countercyclical funding to help improve access to finance through commercial banks and other financial institutions that can on-lend to SMEs and entrepreneurs in need of expansion and working capital to keep their businesses trading. This helps create jobs, sustain incomes, and stimulate the flow of essential goods and services.
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Since 2015, our trade finance facilities have supported nearly 7,000 trades, responsible for approximately $30 billion of trade. We recently provided Stanbic IBTC Bank with a $50 million trade finance facility – injecting systemic liquidity and strengthening import and export capabilities of businesses across the country.
Our ability to increase access to trade finance boosts the earning potential of businesses trading within and beyond Africa, encourages regional integration through cross-border transactions, and improves access to markets. Our work with local banks and financial institutions in Nigeria include First Bank, Ecobank, Stanbic, Standard, Absa, and beyond.
What can be done to unlock more foreign investments in view of Nigeria’s present situation?
Our strategic investments back private-sector-led growth by empowering entrepreneurs and businesses to scale, innovate and advance economic progress. A productive and supportive business environment creates jobs, improves working conditions, and generates tax revenues for governments to fund essential public services. This helps build investor confidence and unlocks a more significant and sustainable flow of foreign investments into the private sector.
The complexity of doing business has long been regarded as a deterrent to investors and companies establishing a presence here in Nigeria. More emphasis could be placed on policies to open up investment. The difficulty of repatriating investors’ funds to their home countries is a challenge that can make our country a less favourable place to establish a company or invest in a business. Simplifying the processes involved in applying for a work permit or visa, starting and running a company, and improving transparency will also encourage commercial investors to allocate more capital to Nigeria.
Mobilising more resources to address our infrastructure gap would help attract foreign investment into a range of strategic sectors. Prioritising the development and rehabilitation of roads, power plants, ports, and telecommunications networks improves connectivity, mobility, enhances productivity and would help modernise several industries in Nigeria. Well-developed infrastructure is essential for growing businesses and helps companies operate more efficiently, compete on a global scale, and attract investment.
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3. Why is Nigeria a top investment priority for BII and how?
BII has a long track record of investing in pioneering businesses in Nigeria; we have invested in the country for 75 years. Our current portfolio in Nigeria is valued at $619 million, supports 103 companies, and provides over 44,000 jobs across the nation.
The country has significant agricultural potential, a rising middle class, and a large segment of the population is of working age—which can be advantageous to economic development. An expanding labour force means Nigeria is where investments can improve livelihoods, stimulate output and inclusive growth.
We are excited about the growth opportunities presented by the food and agriculture sector, as well as Nigeria’s energy transition – particularly the prospects brought about by investing in renewable energy and green industrialisation. The financial services industry also offers investment prospects across the banking, insurance, and fintech sectors. Nigeria’s fintech landscape is recognised as one of the most dynamic in Africa. We are proud to have supported several investments across Nigeria’s financial services sector to strengthen commercial banks’ ability to spark growth in local SMEs’ business.
BII’s $100 million finance facility to First Bank supports SMEs and women-owned and led businesses and promotes financial inclusion nationwide. As a committed partner to homegrown companies across the country aiming to achieve the extraordinary.
Nigeria has huge untapped agricultural and food resource potential; what can the country do to make the output from the sector significantly greater?
Investing in rural infrastructure such as roads, provision of high quality input and the uptake of modern farming techniques to unlock more precise agricultural practices are important ways to boost yields and improve resource management. Irrigation systems and modern storage facilities are also areas that can help reduce post-harvest losses and facilitate an increase in the movement of goods and maximise the output from the agriculture sector.
BII is proud to have committed $26.5 million to AFEX – Africa’s leading commodities platform, to support the building of 20 modern warehouses in strategic locations in Nigeria, Kenya, and Uganda. The additional warehouses will provide 230,000 MT of storage capacity, enabling up to 200,000 more farmers to access low-cost storage and maximise sales from crop harvests, potentially helping increase farmer incomes by more than 200 per cent.
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BII partners with a range of businesses in the food and agriculture value chain and offers flexible funding in all its forms: equity, debt, mezzanine and guarantees. We offer patient capital to companies that produce high value crops, agricultural inputs, affordable protein, forestry and food processing. We also invest in enabling infrastructure for agricultural ecosystems to flourish.
BII is focused on establishing progressive capital partnerships that increase Africa’s agricultural output and support food security across the continent. In 2021, we invested $100 million to the agricultural conglomerate, ETG to support over 550,000 farmers in Africa to improve farmer productivity, livelihoods and crop yields. We also invested $15 million in Valency International to support the expansion of its agro-.processing capacity in Nigeria.
Recently, we have added a venture capital vertical, to invest into promising early-stage companies in the agritech space that are working on new technological platforms towards productivity, sustainability and inclusivity in the agriculture space.
How does BII operate within its investments and what value does it add in terms of governance and ESG performance?
Our name defines us as a British institution working to bring not just capital, but the highest levels of ethics, standards and transparency to the markets where we invest. As a responsible investor, BII plays an important role in pioneering best practices for ESG. Our ESG and capacity-building initiatives seek to add value to our portfolio companies and investment partners, helping them mitigate risks, achieve long-term sustainability and greater impact. BII Plus augments this work, by providing technical assistance programmes targeting specific solutions to challenges faced, and focuses on sharing lessons learned with commercial investors and the development finance community.
As Africa’s largest climate financier, we are taking the necessary steps to ensure that our portfolio companies’ activities are aligned with the Paris Agreement. We offer support to assist portfolio companies integrating climate action strategies into their daily operations. We have set a target for our portfolio of 1,450 companies across 64 countries to reach net zero by 2050 and dedicate 30 percent of our commitments to climate finance.
As a leader in gender and diversity finance, we provide technical assistance and in-house advisory services to help portfolio companies prioritise initiatives and solutions that meet targets and outcomes for improving diversity and gender equality. We also assist our partners to implement action plans and monitoring systems to track progress. These efforts complement our role, as a founding member of the 2X challenge – a multilateral drive to elevate women-led and owned businesses in emerging economies.#
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What are some of the challenges BII has faced in implementing its investment strategy in Nigeria?
BII’s 75 years of successful investing in Nigeria is a testament to our commitment to overcoming challenges and tough economic cycles through adaptability, collaboration, and a deep understanding of local dynamics. Our investment strategy in Nigeria reflects our ability to navigate complexities, mitigate risks, and engineer growth with home grown players, in a dynamic, unique and promising market.
Nigeria’s economic landscape has also been susceptible to external factors, including commodity price fluctuations and dynamics around security. BII’s risk management expertise plays a crucial role in developing strategies that withstand market volatility and safeguarding our investments and partnerships. Building strong local partnerships and a permanent presence has been fundamental to overcoming operational obstacles, and forging alliances with local entities facilitates our ability to navigate the intricacies of the Nigerian market.
What are the peculiarities you’ve observed in the Nigerian market compared to other countries across Africa and Asia that BII also invests in?
Our strategic location makes the country a gateway to many other African markets. We hold a leading position as a financial hub with a relatively advanced and growing financial services sector, our country has an enormous population – many of which are youths in search of opportunities for work – our size also offers a great consumer base for companies interested in tapping into our increasing purchasing power.
Nigeria is Africa’s largest economy with abundant natural resources – we are excited about innovation and growth across many sectors. Among Nigeria’s high-potential sectors, agribusiness, manufacturing, and digital entrepreneurship are a few of many areas that can facilitate economic diversification and help unleash the creative potential that abounds.
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The economy is expected to grow at an average of 3.4 percent between 2023 and 2025, benefitting from the recent reforms undertaken by the current administration and a recovery in the agriculture and services sectors. One undeniable characteristic is the resilience of its economy, and people. We are optimistic about its future and deeply committed to supporting the country in returning to a high-growth environment.
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