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Nigeria’s infrastructural deficit: A clarion call for private sector investment

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By Manny Ita

Nigeria’s infrastructure deficit has been one of the biggest factors holding back its growth and development. The value of Nigeria’s total infrastructure stock represents only 35% of GDP, significantly below that of emerging economy average of 70%, according to the country’s Debt Management Office, with the World Economic Forum’s 2019 Global Competitiveness Index having ranked Nigeria 116 out of 141 countries, largely due to the poor state of .its infrastructure

The sector has been bedeviled with a myriad of challenges ranging from the lack of adequate fiscal revenue, weak institutions, lack of accountability and limited policy consistency across different administrations to poor regulatory framework, compounded by graft and the limited maintenance of existing infrastructure and exacerbated by a rapidly growing population, all of which add strain on the already inadequate infrastructure stock. Instability in the political landscape and increased vulnerability of the nation to social violence and terrorism has also served to deter investors, factors which have left the country’s economy grossly in deficit in infrastructure, with a financing shortfall for infrastructure estimated at a staggering $3 trillion over the next 30 years.

However, the problems go beyond funding, given that billions of dollars have been sunken into infrastructure projects that have failed to see the light of day or have been abandoned after construction, with 11,866 projects identified and recorded by the Federal Government established a Projects Assessment Committee in 2011to have been abandoned for a myriad of reasons, leaving the country’s geographic terrain littered with abandoned infrastructure projects.

With an infrastructure deficit estimated at $100 billion annually, projected at $34.51bn.2,3 annually, and the country’s currently strained public finances, private participation is indispensable to adequately finance infrastructure projects.

More than ever, the future of Nigeria depends on its ability to build and modernize its infrastructure, particularly in mainstream sectors, which form the foundation for socio-economic development: creating employment, reducing poverty, increasing disposable income, improving the environment and enhancing standards of living.

The overwhelming necessity therefore to prioritise basic physical infrastructure cannot be over-flogged in catalysing progress across multiple systems towards massive economic growth. This calls for an urgent need to leverage the private sector capital in a variety of ways such as creating special purpose vehicles for financing creations and drive, while developing public-private partnerships, and investment.

Fortunately, there remains vast potential for large infrastructure projects within the country. Government must build a track record of public-private partnership (PPP) performance to attract large sums of long-term funding from pensions funds and insurance.

PPP will enhance a better allocation of risks between public and private sectors and facilitate efficiency in the provision and management of these projects which will impact positively on the country’s economic growth trajectory and support job creation and the industrialization of the Nigerian economy

It is no gainsaying the fact that apart from her natural endowments, Nigeria is blessed with a deluge of human resources; vibrant men and women whose investments continue to impact global finance, technology, medical, oil, legal and indeed the whole shebang of the global economy; investors such as businessman and founder of Zenon Petroleum, Femi Otedola whose investments span finance, trading cutting through insurance, shipping and real estate.

Another is economist, entrepreneur, investor and chairman of Heirs Holdings and United Bank for Africa Tony Elumelu who with TEF is championing entrepreneurship in Africa. He is fostering entrepreneurial development across Africa, providing the much-needed funds, training and mentorship of commercial enterprises that promote social and economic change, while supporting growing African businesses through dynamic programmes that provide capital and human resources to budding entrepreneurs. TEF has been providing scale sustainability for great investment ideas to take flight, with the objective of ensuring job creation and catalysing economic growth.

There’s also astute lawyer and investment banker Adebayo Ogunlesi to mention but a few, who bought the London Gatwick airport and reversed its fortunes, unceasingly making remarkable impacts in the global investment circle; men in different spheres of expertise who have served to instil a sense of economic empowerment for the long term, knowing that the private sector must create both social and economic wealth in ensuring economic development.

The clarion call is now for more investors of this ilk to revamp Nigeria’s infrastructure sector; trained trusted, experienced and passionate professionals who can change the country’s infrastructure investment climate for the better, promoting sustainable socio-economic development through the provision of apt and adequate infrastructure.

This crop of investors is not in short supply and at this critical period when the country direly needs investment in infrastructure to drive economic growth, provide jobs, and deliver vital services to the country and the majority of its citizens, there couldn’t be a better time to respond to that call.

A technocrat and investor who fits the mould of Ogunlesi, reputable lawyer, chartered accountant, PPP & infrastructure finance adviser and seasoned investor, George Nwangwu readily comes to mind. An expert in corporate, project and development finance, whose experience in the oil and gas, power and telecommunications sectors, mergers and acquisition terrains as well as years of experience as a lawyer and academician in Nigeria and the UK are as extraordinary as they are inspiring.

Nwangwu’s professional trail leaves a colourful string of achievements. As managing partner of Ratio Consulting Limited, Nwangwu has worked in a lead consulting capacity on several projects across Africa. With wide experience in company law and practice, project finance, infrastructure regulation/finance and public-private partnerships, Nwangwu as an international consultant to multilateral institutions, has been involved with framework issues in the field of infrastructure/utilities regulation and finance, Energy Law, Project management, environmental law, Public-Private Partnerships (PPPs), providing full support to government agencies and mineral exploration and production companies. In this role, he has been responsible for the development of a number of legal and policy instruments around private finance for infrastructure across a number of African countries including Nigeria.

As head, Strategy and Multilateral Relations Unit of the Bureau of Public Enterprises (BPE), Nwangwu managed the outcomes of transactions relating to the IDA Privatization Support Project (PSP). He coordinated the execution of transactions within the different departments and transaction managers in the Bureau, ensuring compliance with World Bank processes, and that the Bureau met the stipulated Project outcomes and key performance indicators (KPI’s) as agreed between the FGN and the World Bank.

He helped in the formulating, executing and monitoring of the Bureau’s strategy and liaising, ensuring effective and efficient reporting to the World Bank on the execution of privatization transactions and the reform program, under which role he superintended the consummation of transactions in the Power sector, transport sector (including railways, roads, National Inland Waterways) Oil and Gas (NGC and PPMC), Telecommunication (NITEL) and other major industries, participating in the conclusion of over 100 transactions.

Nwangwu provided general and sector-specific legal and regulatory advice on sectors and sub-sectors slated for privatization or commercialization, such as the Power, transport & aviation, Mining, oil & gas and manufacturing sectors to ensure the promotion of infrastructure and utility efficiency, satisfying demand, thereby protecting consumers and users against dominant operators while protecting investors against government action.

George Nwangwu was also PPP Coordinator at Federal Ministry of Finance and Special Adviser to Dr. Okonjo Iweala, as Coordinating Minister of the Economy and Hon. Minister of Finance, on infrastructure Finance and PPPs. In this role, George Nwangwu was responsible for initiating the construction of the Second Niger Bridge, the rehabilitation of the Lagos- Ibadan Expressway and the development of the coastal railway project to mention a few of the transactions.

As an entrepreneur, George Nwangwu has been responsible for delivering some of the most important infrastructure projects in Nigeria over the last decade. For example, he is co-founder of North South Power Company Limited, concessionaires of the Shiroro and Gurara hydroelectric dams. He is also the founder of Universal Elysium which has some of the largest concessions in the agriculture and port sectors in Nigeria in its portfolio. His other investment vehicle, Pan African Global Infrastructure Company Limited is the concessionaire to Bakalori dam, zobe and Jibya dams.

A lecturer with vast experience within and outside Nigeria and prolific writer, Dr. Nwangwu is a research fellow at the Department of Mercantile Law, Stellenbosch University and also Honorary Senior Research Associate in the Bartlett School of Construction and Project Management, University College London. He is an alumnus of the University of Lagos Nigeria, University College London, University of Hull and the University of Oxford.

Nwangwu’s antecedents in the public and private sectors of the Nigerian economy, effectively participating in the consummation of over a hundred privatization/ PPP transactions worth over $20 billion either on the side of the public sector or private sector in Nigeria, naturally place him on high premium as a prospective investor in the infrastructure sector, and others like him willing to carry out shrewd investments in the infrastructure space and further contribute to the growth of the private sector as well as the general economy.

The global fiscal space is constrained, and with government borrowing rising, Nigeria looks clearly a promising destination, with regard to infrastructure investment, standing at the acme of countries with the best return on investment; and for a market with a very high youth population, projecting very active demand power, the country’s infrastructure sector is certainly a market for any smart investor.

 

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FIRSTBANK LAUNCHES LIT APP, A REVOLUTIONARY MOBILE BANKING APPLICATION, REINFORCES ITS COMMITMENT TO PUT CUSTOMERS FIRST

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In furtherance of its commitment to spearhead value-driven mobile and digital banking in Nigeria, First Bank of Nigeria Limited has announced the launch of the LIT Application, created to revolutionise the culture and experience of mobile banking in Nigeria.

The state-of-the-art banking app is the first of its kind in the industry, exposing customers to a wealth of opportunities to promote their safety, convenience whilst ensuring they are at an edge in today’s digital banking world. It is a mobile banking app developed and owned by the Bank and configured with a wide range of exciting features to meet the needs of its dynamic customers.

The LIT application is not just about bills payment, funds transfer or airtime recharge, but also the app is equipped with several other exciting features that reiterate the Bank’s resolve to continually expand its digital architecture to modernise its interaction with customers, irrespective of where they may be across the world.  These functions of the LIT app include: multiple transfers which allow customers to select several beneficiaries at once for a single transfer; account opening opportunities for non-customers as well as account management, enabling customers to identify their relationship managers for immediate assistance, should the need arise.

In addition, customers can generate bank statements with options to download as pdf or send an email whilst having receipts generated as far back as one wants. With the LIT app, customers are also able to log and manage their complaint(s) without having to visit the branch. The LIT app is not all about usage but rewards as users (customers) are rewarded for using the application.

Expressing his excitement, Dr. Adesola Adeduntan, CEO, First Bank of Nigeria Limited said “the LIT App is designed to strengthen our commitment to our customers, ensuring the continued safety of their funds and providing them with access to renewed transformative and adaptable solutions especially in today’s digital world. Developing the application is essential to make certain that our customers have more ways to seamlessly interact with us. The LIT App is the latest addition to the Bank’s robust electronic banking family, with others being the multiple global award-winning FirstMobile, *894# USSD Banking, FirstOnline internet banking, WhatsApp chat banking, amongst many others.”

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Heritage Bank, others bankroll SCOA handover of trucks, equipment to Julius Berger worth N15.5bn

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Heritage Bank Plc, Nigeria’s Most Innovative Banking Service provider and seven other banks have provided a total of N15.5billion to assist SCOA Nigeria Plc for the importation and supply of MAN Platform Trucks and equipment to Julius Berger Nigeria for construction of 380km Abuja-Kaduna-Kano roads and many others across the country. 

Specifically, Heritage Bank availed SCOA Motors an Advance Payment Guarantee (APG) N4.64 billion for the project.

Whilst, other banks – Zenith, Wema, UBA, Union, Unity, Coronation and Providus Banks complemented the global total sum.

The sum total covers for 33 trucks and technological equipment. For the first phase during the ceremony, 16 of the trucks were handed over to Julius Berger and the second phase of delivering will be executed next month.

Commenting on the Official Handover Ceremony of State-of-the-Art Man Trucks and Wirtgen Equipment to Julius Berger Nigeria Plc, the MD/CEO of Heritage Bank Plc, Ifie Sekibo stated that the support efforts through project financing in the various sectors of the economy is one of the platforms that underscores our resolve and readiness to make a mark in the financial sector as a major pivot of socio-economic transformation of the country.

The Regional Head, Lagos Mainland Zone of Heritage Bank, Mother Dan-Egwu, who represented Sekibo, said the bank partnered to support SCOA Nigeria Plc for its long and outstanding presence in the automobile market, by retaining the cutting edge in their line of business.

Dan-Egwu disclosed that the Heritage Bank’s philosophy is to support businesses to grow in their discharge of duties; she was quoted as saying, “For us at Heritage Bank, our core business philosophy as a timeless wealth partner to our customers is captured in our mission to create, transfer and preserve wealth.”

According to her, the bank’s field of engagement of support has so far been diversified, covering economic sectors such as Micro, Small and Medium Enterprises, agriculture, entertainment and arts, education, oil and gas, aviation and haulage as well as the public sector.

Earlier in his address, the GMD/CEO of SCOA, Dr. Massad Boulos commended Heritage Bank and the other banks’ roles, as the transactions were made possible through their solid partnership.

“I will also thank Heritage bank, their Directors, MD; Unity Bank and other senior bankers official & the entire team of banks, they’ve worked closely together with us on this project, same with Providus Bank, they all have worked together tirelessly for the success of this project,” he said.

According to him, this partnership is like no other considering the parties involved especially SCOA Motors and Julius Berger in the official hand over of state of the art modern trucks for use on the road constructions’ equipment for the execution of the biggest and the most significant project in Nigeria; the Abuja/Kaduna/Kano express way.

SCOA Motors Plc has been operating in the Nigeria Market since 1922. The company has over the years expanded from Automobiles to other lucrative ventures such as importation and assembling of Vehicles and Generating plants, Agriculture /Food processing.

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UBA’s Half-year Profit Grows By 33% to N76.2 Billion

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Africa’s leading financial institution, the United Bank for Africa (UBA) Plc has announced its audited half year financial results for the half year ended June 30, 2021, showing impressive growth across all major income lines and performance indicators.

The pan African financial institution delivered a 33.4 per cent appreciation in its profit before tax which rose to N76.2 billion as at June 2021, up from the N57.1 billion recorded in the same period of 2020. This translated to an annualised Return on Average Equity (RoAE) of 17.5 per cent as against 14.4 per cent a year earlier. This feat was recorded despite the challenging business and economic environment that emerged from the slow pace of activities following the global lockdown occasioned by the Covid-19 pandemic.

The results submitted to the Nigerian Exchange Limited, showed that the group’s profit after tax stood at N60.6 billion, representing a significant rise by 36.3 per cent, compared with the N44.4 billion recorded in the half year of 2020.

Similarly, gross earnings grew to N316 billion, which was a five per cent increase, from the N300.6 billion recorded as at June 2020.
According to the results, at June 30, 2021, the group’s total assets crossed the N8 trillion mark as it increased to N8.3 trillion, up from N7.7 trillion at the end of the 2020 financial year. Its customer deposit also crossed the N6 trillion mark, growing by 7.4 per cent to N6.1 trillion in the period under review, compared with N5.7 trillion as at December 2020.
Furthermore, the group’s Shareholders’ Funds remained robust at N752.5 billion, up from N724.1 billion in December 2020, reflecting its strong capacity for internal capital generation.

In line with the bank’s culture of paying both interim and final cash dividend, the Board of Directors of UBA declared an interim dividend of 20 kobo per share for every ordinary share of 50 kobo each, held by its shareholders.
Commenting on the results, UBA’s Group Managing Director/Chief Executive Officer, Mr. Kennedy Uzoka, expressed delight over the bank’s performance in the first half of the year.

He added: “This has been a strong first half for us, as global economic recovery exceeded expectations, creating a positive rub-off on consumer and corporate confidence, savings and investment activities.
“We saw this positively impact our business, as we continued to leverage our key strategic levers – People, Process and Technology, and our Customer first philosophy, to revolutionise customer experience at UBA.”

He added that the bank’s investment in the Rest of Africa (excluding Nigeria) continues to yield good results for the group.
Uzoka added: “The benefits of pan-African business diversification accruing to the Group is once again evident, with gross earnings and interest income growth of 5.1 per cent and 8.3 per cent respectively, despite the low yield environment in our largest market, Nigeria.
“We are making remarkable progress on our strategy that is progressively positioning UBA as the bank of choice on the continent, driven by our emphasis on tech-led innovation and best customer experience.”

Continuing, the GMD pointed out that the bank recognises the far-reaching effects of the pandemic on businesses globally, and remains focused on its promise to always provide our customers with the best banking experiences possible.

“Our first half 2021 (H1 2021) performance reflects our progressive efforts in building on the strong momentum that we started the year with. As a purpose-driven organisation, we remain resolute in our drive for sustained growth in customer acquisition, transaction volumes and balance sheet, as we consolidate our ‘Africa’s Global Bank’ market position in the years ahead, uplifting livelihoods across the continent,” Uzoka explained.
UBA’s Group Chief Financial Officer (GCFO), Ugo Nwaghodoh, on his part, noted that the bank’s goal was to achieve marked improvement in earnings quality whilst maintaining positive operating leverage as well as top-notch asset quality.

“The Group recorded RoAE of 17.5 per cent (from 15.1% in 2020H1) and a Net-Interest-Margin of 5.8 per cent (from 5.4% in H12020) as we played the volatile yield environment diligently for best return on our interest earning assets.

“Capital position remained strong, with a capital adequacy and liquidity ratios of 23.9 per cent (22.4% in 2020H1) and 58.3 per cent (58.2% in 2020H1) respectively. This is robust enough to support our growth ambitions,” he said.
The GCFO pointed out that even while the operating environment remains largely uncertain and volatile, despite marked improvement from Covid-19 induced macroeconomic stress, UBA will continue to build resilience through its geographically diversified business model to support headline earnings growth for the Group.

“We remain committed to our 18 per cent and 15 per cent respective RoAE and deposit growth guidance for FY 2021, as we continue to invest in growth opportunities across our geographies of operation, whilst managing capital and balance sheet prudently,” Nwaghodoh stated.
UBA offers banking services to more than twenty five million customers, across over 1,000 business offices and customer touch points, in 20 African countries.
With presence in the United States of America, the United Kingdom and France, UBA is connecting people and businesses across Africa through retail; commercial and corporate banking; innovative cross-border payments and remittances; trade finance and ancillary banking services.

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