Lilian Olubi is the chief executive officer of EFG Hermes Nigeria. The company, earlier this year, expanded its global presence into the largest economy in West Africa through the acquisition of Primera Africa Securities Limited. In this interview with HOPE MOSES-ASHIKE, Olubi said that any sector that contributes to infrastructural development should be of interest to economy watchers. She also spoke on other economy-related issues. Excerpts:
May we know about your company, EFG Hermes?
EFG Hermes Nigeria Limited is licensed by the Securities and Exchange Commission and the Nigerian Stock Exchange to carry out brokerage and research coverage services and is the Nigerian arm of EFG Hermes Group, a 30-year old, full-fledged financial services corporation with a footprint spanning eleven countries and four continents, listed on both the London and Cairo Stock Exchanges.
As the CEO, I have the responsibility of providing effective leadership for the work force, directing and participating in growth activities to support the business objectives and mission to be the choice broker for unprecedented access to Sub-Saharan business opportunities. The path to the top isn’t always easy but you have accomplished a great deal. What’s the greatest hurdle you’ve encountered, and how did you overcome it? Running a business in a mercurial market such as Nigeria has certainly been an insightful and challenging experience thus far. Every day presents its own unique complexities but steering the firm through the market downturn, subsequent recession and successful acquisition exercise proved to be quite a tasking period.
Tell us about EFG Hermes’ operations in Nigeria; your plans for Nigeria and other markets for the year 2020?
Earlier this year, EFG Hermes expanded its global presence into the largest economy in West Africa through the acquisition of Primera Africa Securities Limited which we now know as EFG Hermes Nigeria Limited. EFG Hermes Nigeria is key to the group’s drive to expand into other frontier & emerging markets in the region and will position Nigeria as a strong platform to manage the growing volume of business in Sub-Saharan Africa. In 2020, we intend to consolidate our position as a leading Capital Market operator in Nigeria with a view to expanding on our product and service offerings in the near future. What is the strategic importance of the Nigerian market for your operations in Africa?
Nigeria is the largest economy in West Africa in terms of population and this has an expansive multiplier effect. Having a local base of operations allows us leverage Nigeria’s geographical location and economic relevance to gain a unique spread across Africa and strategically enhance our footprint. In addition, with the international investor appetite towards the Nigerian market, being a very active component of the frontier index allows us to drive much needed liquidity in the market which will in turn accelerate our expansion into and help broaden our coverage of the West African region.
In your view, what are the main challenges experienced in Nigeria’s capital markets as well as the opportunities?
The challenges that continue to plague the Nigerian capital markets include limited liquidity, the performance of some stocks and indexes and general investor apathy (particularly the retail segment) towards the market following the market crash in 2008. There has been a limited number of equity capital raises in the last few years and this can largely be attributed to the perceived risk aversion of prospective investors. In addition, the very necessary compliance with capital market regulations may also dissuade all but the most dogged investors from listing. However, the fixed income side of the capital market has been active with commercial paper issuances, government debt and notes, and recent sukuk and green bonds. The good news is that this shift towards comparatively lower risk financial instruments has spurred financial product innovations that cater to all levels of clientele and it is expected that this diversification will enable our capital market compete favourably with its global counterparts.
The Nigerian Stock Exchange recently released its monthly broker performance report for the 1st – 31st of October 2019 and EFG Hermes Nigeria was ranked as the Number 1 broker by volume and value for the month.
Kindly share insight into some of the factors that contributed to this ranking?
EFG Hermes has a competitive advantage owing to an over 30-year track record of providing stellar brokerage and compelling research services to a widespread client network. Simply put, our clients know that their best interests are our driving force. This, as well as our commitment to increasing the depth of the market and enhancing Nigeria’s attractiveness to investors, has driven the company to serve as a gateway to local opportunities and to provide a platform through which our broad international and local client network can support active stocks and initiate dormant equities that are of interest to them. We also have a well-seasoned sales and trading team whose expertise in the Capital markets has enabled the firm achieve its enviable ranking within a short length of time.
The Nigerian Stock Exchange (NSE) is currently one of the least performing in Africa. Do you see any possibility of a rebound in 2020? If so, what factors would bring about a positive change?
The possibility of a rebound certainly exists from a few perspectives such as government policy directions. For instance, the recent directive of the Central Bank of Nigeria excluding individuals and local corporates from participating in OMO investments is expected to spur local corporates with liquidity to explore the possibility of investing in the equity market where dividend yields for some top listed names are above 14percent. Another factor that could affect the market positively is that a number of IPOs are expected in the market in the coming year. Notwithstanding general investor apathy, investors remain quite keen to invest in companies where exponential growth is expected. The market reaction to the MTN listing is a clear example of this assertion. The success of these IPOs could potentially lead to a rebound in the capital market in the near term. Another potential rebound factor is that the market has already experienced substantial depletion, and valuations are quite strong. This presents opportunities for discerning investors to position themselves for the upturn and reap the potentially significant returns on their investments.
Where do you see opportunities in the Nigerian economy? Are there particular sectors you target?
Nigeria is still a developing nation and any sector that contributes to infrastructural development should be of interest to economy watchers. Housing, roads, rails and allied infrastructure businesses are good potentials for growth. Agriculture, which contributes close to 30percent of Nigeria’s GDP is still largely subsistence-based and there are a vast number of opportunities been harnessed in the Agriculture value chain. Apart from these traditional sectors, Disruptive technology and Fintech are compelling growth areas that Nigeria must pay attention to. These areas drive financial inclusion and as such, they are receiving unprecedented global support and funding which will further enhance the country’s productivity and contribute immensely to our global visibility.
How would you rate the investment banking business in Nigeria?
The investment banking business is still a burgeoning business area characterised by a few active players who essentially dominate the sector. Private Equity has also provided critical opportunities for the growth of investment banking in Nigeria and the ongoing need for capital raising by corporates and government has also supported the nascent growth of the industry.
What is your forecast for the year ahead?
Nigeria has been for too long all about potential, At EFG Hermes, we are optimistic that the next 10 years will be about delivery. Nigeria should turn the corner and provide ample opportunities for growth across multiple sectors. With a newly elected and respected Economic Advisory Council, a respected Special Adviser on Economics at the federal level among others, Nigeria should begin to see fiscal policies that will align with monetary policies, and renewed focus on growth sectors from next year and onwards. It is important to highlight that EFG Hermes is looking to expand its business and enhance its offerings to local investors as well as introduce new products which it believes will play a significant part in stimulating the capital markets.
Talking about gender inclusion, what is the most significant barrier in achieving more equality between women and men in business and leadership? What solution would you proffer especially in Nigeria?
I think that long-held cultural nuances coupled with the realities of skewed domestic exigencies and expectations propagated the gap between men and women in relation to business and leadership. In the financial services space, one of the unique challenges is that the business functions that most women choose to specialise in, in some cases, do not position them for ultimate leadership from a succession planning standpoint. As such, women must be deliberate about their career choices if they are aiming for the overall leadership positions in certain sectors and not settle for ‘easier’ roles which may stagnate their leadership goals.
That said; there is an ongoing paradigm shift where women are consistently breaking boundaries, becoming leading voices for change and proving that gender or cultural constructs should not be a barrier to excellence. My take has always been to focus on the positives and see how those positives can be sustained. I am also a firm believer in meritocracy and excellence must become a habit for those seeking to rise to the highest levels of leadership. Furthermore, women who have achieved great heights in their fields should be willing to provide mentorship to younger women. The young ones are the successors to whatever legacy we leave behind and they must be adequately prepared to take on the responsibility for changing the narrative for women at work. We all, male and female have unique attributes and dispositions that we bring to the table and these expressions must be fully reflective in organisations on all levels. As such, my advice is to be deliberate about career choices, make excellence a habit, mentor the young ones and actively be a part of creating a new ideal for women in business and leadership.
