• Sunday, May 19, 2024
businessday logo

BusinessDay

“One pillar left to unleash financial market development in Nigeria is Abuja Commodity Exchange”

businessday-icon

Nigeria’s financial market is deepening but still requires a lot of infrastructure that relate to development. Tayo Onadele, the managing director of FDHL, a full fledged consulting firm in financial markets told Daniel Obi in this interview that FDHL which plays active role in harnessing the relationships between the CBN, other regulators and market operators wants to ensure that Nigeria’s market develops and becomes the cynosure where people begin to find Nigeria as a place to begin.

The presence of AMCON tried to reduce the risk in the market, would you say that this has been achieved and what do you see ahead

Contrary to the latest pronouncement that AMCON is done and should wind up, I will say it is not yet uhuru. We are happy now to see the PDO level has come down to the acceptable near 5 percent and to this extent we should ensure that the culture remains in the market and not that the banks will go back to ramp up again the non performing credits. To that extent, AMCON should still stay. I think that the 10 years set may just be ideal. By and large what I am saying is that they have done well so far.

What do you think IMF saw and say AMCON should wind up

It is probably from the information available that if there was a huge non-performing loan there and by December 2012 and it is looking like the result is glaring it might still say that it is all over for them to go. But we know that there will still be some spill-over effect.

Not much has been heard about Abuja Commodity Exchange since it was established, can FDHL play a role in the reactivation of market exchange

One pillar that is left to unleash the financial market development in Nigeria is interestingly the Abuja Securities and Commodity Exchange. By the time we are able to get the privatization done, we don’t need to set up a new one but get it resuscitated. It looks like it is moribund but it is going to come back life. I can tell you from the intelligence that a lot is going on there. What matters is for it to be in the right hands of people that have vision.

Intelligence report also indicates that the financial market has about 4 percent contribution to GDP, how can this be deepened.

It can be deepened. Whether we will be able to deliver on the 20-20-20 I cannot tell. But if we can build the financial market hub there will be a big leap. Imagine a scenario where all transactions, even it is Africa alone has to pass through Nigeria, you will see the huge leap we are talking about. But we need to put the necessary infrastructure in place.

What gaps did FDHL discover in the market that it came to fill?

The firm was established 12 years ago. Our focus has been financial market with a vision to empower and deliver value in the market and our mission is to ensure that we are a respected change agent in Nigeria. We have been supporting the financial market ever since in terms of market development which to us has become a creed. If you look at market players, often times most people are involved in the market for different reasons. But FDHL has come to make a difference and act as a catalyst to make that change. That is why we have that mission to be the respected change agent. If you look at history we have been there assisting with infrastructure issues that relate to market development and also handle some interesting land shaping mandate. Now we want to have a focus at non bank financial and corporate sectors. One of the things we did in December, 2012, that saw us supporting eminent corporate like MTN, Chevron and Dangote is for them to have umbrella association where they will have one voice and can challenge the market in terms of asking for best practices, product, designs. We were able to midwife that. We were able to form the association of corporate treasurers of Nigeria since December. This is what we will focus on in the next years. 12 years down the line, no regrets. We have started adding the other areas of the business –consulting, data was a major gap we observed then, so we started adding the market intelligence to it. Also advocacy has been going on.

How would you rate FDHL in the market?

I can tell you that we have achieved a lot and FDHL has become a household name when it comes to financial market. It is a niche market and we are recognized as leader in that area. We are not resting because there is a whole lot to be done in the market. Our plan is to stir us to best practice at all times. The market refers to us as the bridge that connects the market and the regulators. We are very objective, there is nothing we are chasing in the market in terms of profitability, and we just want to benchmark our market with developed markets. We want to make our market such that people find it attractive and make it running like developed markets.

What further roles do you see yourself playing in these platforms

FDHL is not an operator but we are referred to as a bridge. What we do is try to harness the operators and the regulators to come together on a level where they will see themselves not as one stronger than the other but ensuring that every aspect we have seen and identified as a value chain begins to work. We are involved in technology, infrastructure, knowledge, so we are what you refer to as the catalyst. We are here to make that change happen which is in alignment with the vision we created to be the respected change agent. We are not in this for profit but we are here to ensure that the market develops and becomes the cynosure where people begin to find Africa especially Nigeria as a place to begin. As it is said if you are not in Nigeria it might be obvious that you are losing. This tells you that the market is getting ready.

Taking it from there, what is your view on corporate governance in the Nigerian financial market

Prior to the excellence coming in, you will observe that one didn’t really know where corporate governance is. But I must commend the authorities for the bold efforts in the reforms. These are the issues we start seeing after the crisis from 2008 and the regulator showing that the market has to adopt some seriousness. There were some tough decisions that were taken but I think we are beginning to reap the benefits and the confidence is coming back and investors are looking towards Nigeria. Even in the Stock Exchange the market is coming back and stocks are performing and every thing is following fundamentals. Risk management is also looked at seriously.

Are there some other measures we can introduce to ensure speedy return of confidence in the market

I would say that the current SEC Director General approving the licence to get OTC platform registered has earned her a rich accolade in her career. This is what we believe to be that platform that will bring that transparency, confidence and she is for knowledge to make sure people are more aware compared to before. There is limit to all the regulators and rating agencies can tell you, but what is more important at the end of the day is for that investor, whether individual or corporate entity to know your risk capital and understand what you want to put every Naira into. I believe that there will be a lot in terms of awareness and knowledge sharing so that people don’t witness the kind of thing we saw before.

Could you tell us about your technology innovations and how can Nigeria deploy technology to deepen financial inclusion

Rightly put, it will be agreed that the kinds of clients we interact with are big and almost every leg of process of operation is automated. There is no way we are not going to add technology to it. Take for instance in the area of risk management, you even hear the regulator say some of the processes or returns from your performances cannot be done manually. So where does FDHL come in, we would determine some business solutions packages that are robust and have the capability to support such businesses. Because we know what the capabilities are, in the course of our advisory work we are beginning to tell our clients that if they engage in such business solution packages they would be able to meet up the demands of the regulator or even other stakeholders they would like to show their activities to. By and large it is important and there is no bank that is doing manual today and these are core of our clients. Now the sweetner we bring on board is that some of our clients who are not as big as the banks also have that responsibility to showcase the risk management they are undertaking. On their own, they may not be able to afford what the banks infrastructure can be, so what do we do. FDHL will therefore ensure there are those robust platforms that give every one a co-location easy access and fractionalizing the cost to them. Because we are not playing in the same business like them, there will be no issue where data is hosted, so this will allow them meet up with what is required of them. There is nothing we are doing without thinking of security implications. As I mentioned, we were practitioners also, we have been in the market and have that forthright to think ahead where the limitations and challenges are. We try to ensure that all these are put in place. So we demand from the technology partners we work with some standards because we know what it means if data goes into wrong hands, we must make the market trust us.

 

DANIEL OBI