Presentation is loading. Please wait.

Presentation is loading. Please wait.

Draft/ Confidential This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by.

Similar presentations


Presentation on theme: "Draft/ Confidential This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by."— Presentation transcript:

1 Draft/ Confidential This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent Nigeria – Governance and Political Risk Outlook Address by Senator Udoma Udo Udoma at the Nigeria Development and Finance Forum (NDFF) 2014 Conference in New York 29th – 30th May 2014 THEME: “Entrenchment of Economic Growth in Nigeria

2 2 Nigeria is the largest economy in Africa GDP rebasing – now 26 th in the world (Top 20 by 2020?) Stable macro-economic outlook Increased economic diversity and visibility on the global economic map New economic and investment opportunities - Top African destination for FDI (UNCTAD, 2013) - Among Goldman Sach’s “Next 11” - Top destination for equity investments in frontier markets (Rencap, 2014) Population - ~168m GDP - $510bn GDP growth rate – 6.4% (IMF, 2013) GDP per capita - $2,600 Inflation rate – 7.8% (Apr, 2014)

3 3 Despite strong outlook, Nigeria still experiences many challenges Lack of adequate infrastructure Income inequality High unemployment Significant levels of poverty and growth disparities among regions Poor power supply Insecurity in the North East Key Challenges Infrastructure – power, transport, housing, ICT Real sector – agriculture, manufacturing, oil and gas, solid minerals Human capital development – education, healthcare, labor and productivity, women and youth development. BUT – Governance challenges in executing the transformation agenda Nigeria’s Priorities as defined in the Transformation Agenda

4 4 What is good governance and why does it matter? Why does it matter? Promotes long term economic growth and development Improves Government efficiency, transparency and accountability Ensures sustainable and transparent framework of rules and institutions for businesses to thrive Promotes political stability Minimizes corruption What is it? “The manner in which authority is exercised in the management of a country’s economic resources for development” – World Bank

5 5 Recent news reflects poorly on governance in Nigeria… Alleged non-remittance of crude oil revenue by NNPC in January Suspension of CBN Governor in February Terrorist activity in the North-East by Boko Haram (nearly 4,000 deaths in 2014 alone) Kidnapping of 276 female students in Chibok, Borno State in April - #BringBackOurGirls trending globally on social media However, - International support from USA, UK, France, China, Canada, Israel, Iran and neighboring countries - May signal a turning point in the fight against Boko Haram

6 6 …however there are many positive developments  Significant progress in building the institutions that will strengthen governance over time; and  Nigeria is making progress on many other fronts

7 7 Nigeria: A thriving democracy with a strong, independent and critical press Democracy is strongly linked to good governance. 27 of the world’s top 30 most prosperous countries are democracies – Legatum Prosperity index™* Since 1999, Nigeria has operated a successful democracy with strong & independent legislature (checking powers of the President) and press (mostly privately owned) - Print: > 30 national and provincial newspapers, >20 general interest magazines and journals, + a variety of local newspapers - Radio and TV: over 20 privately owned stations - Social media: Blogs, Twitter, Facebook Though Nigeria’s three democratic presidents produced by Peoples Democratic Party (PDP) Strong opposition emerging – All Progressives Congress (APC) formed from merger of main opposition parties, controls ~40% of the states and National Assembly 2015 general elections expected to be more competitive at all levels! * Based on variety of factors including wealth, economic growth and quality of life

8 8 Increasing transparency in government operations, with independent and well respected regulatory agencies Freedom of Information Act in 2011 Increasing public disclosure of government activity (e.g. budgeting, revenue accounts) Ministry of Finance announces forensic audit of oil revenue accounts by PWC Public hearings and corruption probes by the National Assembly Independent and well-respected regulatory agencies operating without much political interference - CBN, SEC, AMCON, PENCOM, NDIC, NCC, etc. Macro-economic stability, restored investor confidence, stable and strong banking sector…. foreign investor interest in banks being currently sold e.g. Enterprise Bank. Mini Case Study: CBN - Handling the financial crisis Global financial and economic crisis Nigerian economy and banking system crisis – NSE Collapsed by 70% CBN intervention Injection of N620bn of liquidity Establishment of AMCON Replacement of leadership in 8 banks Today 2012 Successful recapitalization of some banks – Union Bank as an example

9 9 Ongoing privatization and deregulation of the Nigerian economy Fostering growth and development of the economy Reduced reliance on inefficient government parastatals for essential services More level-playing field for businesses Privatization of key sectors/services previously operated solely by the Government - Telecommunications - Broadcasting services - Airlines - Power – “A game changer” Next challenge - Deregulation of downstream petroleum sector and privatization of NNPC – will reduce opportunities for corruption An example: Telecoms Nigeria now largest telecommunications market in Africa, with 9% contribution to GDP in 2013

10 10 Independent judiciary and increasing citizen participation in governance matters Governance is improved when there is a rule of law - Nigeria has a fairly independent judiciary - Many successful court actions against the Government (including successful election petitions) Governance is improved when citizens participate more actively - Several demonstrations to promote improvement in infrastructure and service delivery in Nigeria - #BringBackOurGirls is a great example - Government initiatives aimed at directly reaching end users of services e.g. Ministry of Agriculture

11 11 Nigeria is a proven investment case, not without risks but with strong fundamentals Youthful (~60%) and entrepreneurial population Average GDP growth rate of 7% over last 3 years World Economic Forum (May 7-9) in Abuja - Billions of dollars in investments commitments. Over 1,000 participants Growing middle class (~23% of 168 million population)

12 12 Example: UACN – High Return on Investment (ROI) in just 2 years DateNSE QuotationDividend Paid UAC Market Capitalisation 31 Dec 2011N29.70N1.10N47.5 billion 31 Dec 2012N42.00N1.50N67 billion 31 Dec 2013 N67.00 (post-scrip 1 for 5=N80.44) N1.60N129 billion 21 May 2014 N56.20 (post-scrip N67.44) N1.75N108 billion 171% ROI between Dec and Dec 2013 Price slightly lower now due to profit taking by investors, but still a good return CBN official Naira/Dollar rate remained relatively unchanged since 2011 purchase date

13 “If we are to be present in Africa, we need to be present in Nigeria” Francois Hollande, President of France

14 Draft/ Confidential This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent Thank you!


Download ppt "Draft/ Confidential This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by."

Similar presentations


Ads by Google