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Global Investors Still Interested in Nigeria – Ernst & Young

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Nigerian stock market - Investors King

A Partner and Emerging Markets and Global Deputy Leader, Ernst & Young, Mr. Rohan Malik, has said international investors are interested in investing in Nigeria as the country presents huge opportunities.

According to Punch, Malik identified the financial services sector as one of the five sectors that hold massive opportunities for Nigeria amid the sustained drop in global oil prices.

Other sectors, according to him, are telecommunications, manufacturing, real estate and agriculture.

Malik, who visited Nigeria last week, said, “I think the international community is looking at Nigeria with great expectations from the new regime. When I talked to international investors, they see Nigeria as a beacon of hope because of the vast demographic dividend you have got with the young population. I feel the government should take this opportunity with the low oil price to say, ‘What could this low oil price actually give to us?’”

He said investors would be interested in investing in any part of the world where they can get investment opportunities with the right optimum level of risks and returns.

He said, “Today Nigeria has to compete for investments with the likes of India, China, the Middle East, South America, the so-called higher growth markets.

“The global investors are still looking at deals. I was talking to some of the investors recently and they said, ‘We have got more money than bankable projects today.’ In other words, money is not the problem. So I think Nigeria is to compete in a much harsher climate today with other economies and they are looking at Nigeria vis-a-vis India, China and others.”

He explained, “The sector where I believe there is an advantage which Nigeria has got, but it comes down to how you formalise and shape these, are financial services. Thinking about banking the unbanked, people who don’t have bank accounts today are huge. It is a huge opportunity to get them on.

“Telecommunications. If you look at the opportunities which technology is giving today to governments around the world and for citizens, there is a huge amount of opportunities right now.”

He noted that the biggest area could be agriculture, saying, “If you think about the volume of people in Nigeria who are involved in agriculture – over 50 per cent – how can you ignore the biggest sector of all? And agriculture can lead to things like food processing.

“So financial services, telecommunications, manufacturing, real estate and agriculture will give you great dividends,” Malik said.

He described the decline in oil prices as an opportunity for economies who depend on oil as a major source of revenue to make change happen.

“So, I feel this is a golden opportunity for the government to actually shape policies that will deliver impact to the vast majority of the population in Nigeria.”

The EY partner, who stressed the need for the government to encourage entrepreneurship in the country, said government bureaucracies, regulations and lack of policy implementation were some of the challenges facing entrepreneurs.

He said, “Access to funding remain an issue, not because there is no funding; it is because there are not enough bankable projects. Many entrepreneurs don’t know what it will take to fund a business. They underestimate very often the actual amount of investment required.

“The second one is access to markets. Many entrepreneurs don’t understand how they can access the markets beyond the local context; how they can be national and international. For me, that is a common challenge that I find right now that an entrepreneur or a small business remains local.

“I think this is a huge challenge that government think that their job is done when they produce policies. That is the first step on the journey. How can you go from policy to outcomes is the challenge, and entrepreneurs suffer from that.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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The Fed is Spooking Investors Into Adopting Fundamentals

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The Federal Reserve’s expected move today to raise interest rates is spooking investors into doing what they should be doing already: ensuring their portfolios are properly diversified – and this is a good thing.

This is the assessment from Nigel Green, the chief executive and founder of deVere Group, one of the world’s largest independent financial advisory, asset management and fintech organisations, as markets wait for the U.S. central bank’s announcement on Wednesday at which they could signal the first lift-off in U.S. interest rates since 2018 as they seek to tackle hot-running inflation.

He notes: “Today is the day. Investors around the world have been prepping for the Fed’s big decision since the beginning of the year, which, in turn, has sparked bouts of volatility in global stock markets.

“We saw this turbulence on Monday with one of the most remarkable Wall Street rebounds on record. It was the first time since the fallout of the 2008 financial crisis that the Nasdaq had been down more than 4% on the session and closed up. It was a similar story on the Dow Jones index.”

The deVere CEO explains what’s happening: “While higher interest rates increase borrowing costs for all businesses, they also make firms’ projected profits worth less in investors’ valuation models. This is exacerbated for tech and other growth stocks whose peak earnings are not expected for years to come.

“As such, investors are now more eager to reconsider the value sectors of energy, industrials, materials and financials, and increase their exposure to them.

“Some of the tech and growth stocks’ valuations are simply too high and it doesn’t make sense to be over-exposed.

“However, sensibly, they will not be dumping all growth stocks. They will also be aware that the pandemic has led to the advancement of fundamental trends, such as online shopping, remote working and gaming.”

In short, says Nigel Green, the Fed’s expected move on interest rates is “is spooking investors into doing what they should be doing already: ensuring their portfolios are properly diversified.”

This, he goes on to say, “is a good thing.”

A diversified portfolio is a collection of different investments that combine to reduce an investor’s overall risk profile. Diversification includes owning stocks from several different industries, regions, and risk profiles, as well as other investments such as bonds, commodities, currencies and real estate.

“As ever, the best way to mitigate risk and position yourself for opportunities is to be diversified.”

He concludes: “The Fed is delivering a high-pitched wake-up call to investors around the world about financial history: review your portfolio regularly, remain diversified and don’t try and ‘time the market’.”

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United Kingdom Signals West African Expansion at Africa Investment Conference

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Investment - Investors King

UK exporters gain foothold in West African region, which accounts for over one-quarter of Africa’s GDP; Demand for UK products and services expands in West Africa, with deals to build hospitals, roads and bridges; UK government export finance support at its highest in decades in the region, including a record deal worth more than £200 million in Cote D’ Ivoire.

UK Export Finance has released new data today showing it provided over £500 million worth of support for projects in West Africa throughout 2021, the most in over two decades.

At last week’s Africa Investment Conference (20 January), the Prime Minister said the UK is already one of Africa’s biggest commercial partners but we are “determined to do much more – our shared task must be to ensure that Africa prospers from the green industrial revolution.”

The Conference is an annual showcase event, designed to partner investment projects in Africa with British investors. Over 3000 delegates took part this year, boosting trade and investment ties between the UK and the continent.

The government is also mobilising support from its export credit agency, UKEF, to boost exports to Africa – it provided support worth £2.3 billion in the past year, more than trebling the amount provided in 2018-19.

In West Africa this has been deployed to a range of vital infrastructure projects, helping to build major roads and bridges as well as providing medical and IT equipment, design services and environmental and social work.

The region provides a unique opportunity for UK exporters as West Africa has experienced a surge in economic growth since the early 1990s. Research shows that since 2000 its collective GDP has risen from $105 billion to more than $659 billion in 2020.

UKEF has capacity to provide further support for UK trade in West Africa, with up to £3 billion available in Senegal, £2 billion in Cote D’Ivoire, and up to £2 billion in Nigeria.

Minister for Investment, Gerry Grimstone, said: “We want more British firms to sell to the world, taking advantage of new opportunities that present themselves in growing markets like this. The potential is huge. This government has the finance available to back British firms going global in West Africa, supporting growth and development in the region and helping communities and local economies to thrive.”

Examples of successful investments include an over £40 million UKEF guarantee for Gloucestershire firm Mabey Bridge to build 87 emergency bridges used to strengthen flood defences in Ghana, supporting countries suffering from the effects of climate change.

In 2021, UKEF also signed its largest-ever deal in the region worth over £200 million to support the construction of six hospitals, with support from UK suppliers, creating jobs in the UK and improving health outcomes in the Côte d’Ivoire.

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Debt Management Office Releases Q1, 2022 Calendar

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Director General DMO - Investors King

The Debt Management Office (DMO) will, on January 16, 2022 issue N70 billion to N80 billion, four years and 20 years Federal Government of Nigeria (FGN) bond, with an interest rate of 12.50 percent.

In its recently released calendar for the issuance of bonds for the first quarter of 2022 (Q1-2022), the DMO noted that this bond has an original tenor of 10 years and 20 years and will re-open in January 2026 and January 2042.

The DMO also revealed that it will issue three years, 11 months and 19 years, 11 months FGN bond of N70 billion to N80 billion on 16th of February.

This bond, according to the DMO, will carry an interest rate of 12.50 percent, to be re-opened in January 2026 and January 2042, and with original tenor of 10 years and 20 years.

Also on March 23, the DMO will issue three years, 10 months, and 19 years, 10 months, 70 billion to N80 billion FGN bond which would last for a period of 10 years and 2 years.

The bond has an interest rate of 12.50 percent, and will be re-opened in January 2026 and January 2042.

FGN Bonds are debt securities (liabilities) of the Federal Government of Nigeria (FGN) issued by the Debt Management Office (DMO) for and on behalf of the Federal Government.

The FGN has an obligation to pay the bondholder the principal and agreed interest as and when due. When you buy FGN Bonds, you are lending to the FGN for a specified period of time.

The FGN Bonds are considered as the safest of all investments in domestic debt market because it is backed by the ‘full faith and credit’ of the Federal Government, and as such it is classified as a risk free debt instrument.

Prior to the establishment of the Debt Management Office (DMO) in 2000, Nigeria’s public debt was managed by a myriad of Government Agencies in an uncoordinated manner.

This diffusion created systemic and structural problems that brought about serious strain on the country’s debt portfolio and economic growth.

Hence, the establishment of the DMO marked the beginning of the institutionalization and professionalization of public debt management in Nigeria.

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