TAR Nigeria Focus Sept 18

TOP 200 BANKS EXCLUSIVE RANKING

Faces of Finance Abiola Bawuah, UBA; Admassu Tadesse, TDB; Laurence do Rego, Ecobank; Bolaji Akinboro, Cellulant

N ° 10 3 • S E P T E M B E R 2 018

w w w.t he a f r ic a r ep o r t .c om

THE AFRICA REPORT

EXCLUSIVE INTERVIEW

Christine Lagarde,

Managing Director, International Monetary Fund

The IMF is back MONTHLY • N° 103 • SEPTEMBER 2018

A new role for the fund as spiralling debt triggers alarm

JEUNE AFRIQUE MEDIA GROUP INTERNATIONAL EDITION

Algeria 550 DA • Belgium €5.90 • Canada CA$ 7.95 • DR Congo US$ 9 • Denmark 60 DK • DOM 8 € • Ethiopia 130 Birr • France €5.90 • Germany €5.90 • Ghana GH¢ 12 • Italy €5.90 • Kenya KES 410 • Morocco 40 DH • Netherlands €5.90 • Nigeria 800 NGN • Norway NK 70 • Portugal €5.90 • Rwanda RWF 6,000 • Sierra Leone LE 15,000 • South Africa R40 (tax incl.) • Spain €5.90 • Sweden SEK 70 • Switzerland 9.90 FS Tanzania TZS 10,000 • Tunisia 5.4 DT • Uganda UGX 10,000 • UK £4.50 • United States US$ 6.95 • Zambia 48 ZMW • Zimbabwe US$ 4 • CFA Countries 3,500 F CFA • Euro Zone €5.90

At the crossroads of Africa, Asia and the Arab World

The future is on the move

A diversified economy A regional logistics and transport hub International standard infrastructure and services New tourism opportunities

A home port for investors

Š V. FOURNIER for J.A. - and DR

An environment conducive to innovation

TOP 200 BANKS EXCLUSIVE RANKING

CONTENTS

Faces of Finance Abiola Bawuah, UBA; Admassu Tadesse, TDB; Laurence do Rego, Ecobank; Bolaji Akinboro, Cellulant

N° 10 3 • S E P T E M B E R 2 018

w w w.t he af ricar epor t .com

EXCLUSIVE INTERVIEW

Christine Lagarde,

Managing Director, International Monetary Fund

THE AFRICA REPORT | FINANCE SPECIAL SEPTEMBER 2018 The IMF is back A new role for the fund as spiralling debt triggers alarm

JEUNE AFRIQUE MEDIA GROUP INTERNATIONAL EDITION

Algeria 550 DA • Belgium €5.90 • Canada CA$ 7.95 • DR Congo US$ 9 • Denmark 60 DK • DOM 8 € • Ethiopia 130 Birr • France €5.90 • Germany €5.90 • Ghana GH¢ 12 • Italy €5.90 • Kenya KES 410 • Morocco 40 DH • Netherlands €5.90 • Nigeria 800 NGN • Norway NK 70 • Portugal €5.90 • Rwanda RWF 6,000 • Sierra Leone LE 15,000 • South Africa R40 (tax incl.) • Spain €5.90 • Sweden SEK 70 • Switzerland 9.90 FS Tanzania TZS 10,000 • Tunisia 5.4 DT • Uganda UGX 10,000 • UK £4.50 • United States US$ 6.95 • Zambia 48 ZMW • Zimbabwe US$ 4 • CFA Countries 3,500 F CFA • Euro Zone €5.90

63

NIGERIA: PLAYING MONOPOLY

From younger politicians to entrepreneurs, app developers to activists, disruptors are striving to break the link with Nigeria’s long-entrenched vested interests and cartels. Plus an interview with agriculture minister Audu Ogbeh.

20

THE IMF IS BACK

70

Alarm bells are ringing about rising debt among African countries. Exclusive interview with the IMF’s managing director, Christine Lagarde

FACES OF FINANCE

COVER CREDITS: STEPHEN JAFFE/IMF PHOTO; VINCENT FOURNIER/JA; CELLULANT.COM; ALL RIGHTS RESERVED; UBA

Increased regulation and the march of technology light the way to a better financial sector. From the worlds of fintech, banking, development finance and exchanges, here are the people who put people first.

TOP 200 BANKS

29

6 EDITORIAL Use tech to check TRENDING 8 12 14 17

Trending Dealbook Calendar Opinion A political deal to break Zimbabwe’s cash impasse

Bank profits are growing and new reporting standards are causing big international groups to pull out, leaving space for local talent

33 GHANA’s Abiola Bawuah People power 34 ETHIOPIA’s Admassu Tadesse Blend, build, profit and repeat 36 UGANDA’s Joseph Kitamirike Equities for everybody BANKING

20 Interview: Christine Lagarde, Managing Director, IMF

38 Fintech Debtors, bettors and profits 42 Ghana The strong survive 46 Interview Abubakar Suleiman, CEO, Sterling Bank, Nigeria

PEOPLE

MARKETS & MONEY

30 KENYA/NIGERIA’s Bolaji Akinboro & Ken Njoroge Payment priorities 32 BENIN’s Laurence do Rego Setting a standard

48 54 56 60

FRONTLINE

Private equity The fall of Abraaj Stock exchanges IPO highlights LSE London calling Africa Cryptocurrencies The rise of Nigeria’s digital abokis

COUNTRY FOCUS – NIGERIA 63 Nigeria Playing monopoly 68 Interview Audu Ogbeh, Agriculture Minister, Nigeria TOP 200 BANKS 70 Finance Opportunity knocks again 74 Rankings Our exclusive ranking of Africa’s Top 200 banks 80 Nigeria A fragile recovery 82 Kenya New challenges on the horizon 84 South Africa Start-up shake-up 86 Egypt Resilient and responsive 88 Ethiopia Opening up: How far and how fast?

90 Last Word A woman’s place is in the boardroom

ADVERTISERS’ INDEX REP. OF DJIBOUTI p 2; SANLAM p 4-5; WOLF OIL CORP. p 7; BEIJING REVIEW p 10-11; MASTERCARD p 13; TDB - TRADE AND DEVELOPMENT BANK p 15; JAMG p 16; AfDB p 19; AFRICA CEO FORUM 2019 p 27; TAR SUBSCRIPTION p 28, 79; VECTURIS p 36; FIRST BANK OF NIGERIA p 37; BWT p 45; MO IBRAHIM FOUNDATION p 45; ENI p 51; EDITIONS DU JAGUAR p 53; REP. OF COTE D’IVOIRE p 56-57; CHANNELS TV p 60; ITE AFRICA OIL WEEK p 79; ALLIANCE MEDIA p 91; STANDARD BANK p 92

To order more copies of TAR Finance Special Edition: sales@theafricareport.com THE AFRICA REPORT

•

N ° 10 3

•

S E P T E M B E R 2 018

3

For generations to come Sanlam is a Licensed Financial Services Provider.

KINGJAMES 43129

Isn’t it time we stopped thinking me, me, me and started thinking we, we, we?

In this out-with-the-old, in-with-the-new throw away society we live in, it’s easy to forget about those who will come after us. And who will have to deal with the world we create today. At Sanlam we believe there’s never been a better time to get back to building things that last, especially at a time when the world needs it most. That’s why, for the last 100 years, we’ve been hard at work building financial futures, lasting legacies and a better world for generations to come.

6

THE AFRICA REPORT A Jeune Afrique Media Group publication

NICHOLAS NORBROOK

57‑BIS, RUE D’AUTEUIL – 75016 PARIS – FRANCE TEL: (33) 1 44 30 19 60 – FAX: (33) 1 44 30 19 30 www.theafricareport.com

CH AIR M AN AN D FOU N D E R BÉCHIR BEN YAHMED

Use tech to check

PU BL IS H E R DANIELLE BEN YAHMED publisher@theafricareport.com

A

frica needs cash and quickly: economies are not keep‑ ing up with booming populations, which is a shortcut to instability. The African Development Bank now esti‑ mates that the continent needs more than $100bn a year just to finance and maintain its infrastructure needs.

But, while there are investors from East and West looking for bigger returns abroad due to low interest rates at home, the difficulty of en‑ forcing property rights is holding back serious investment in the continent.

The Federal Palace Hotel, Lagos, is the picture of potential. It has a prime lagoon‑side spot, a casino, a reno‑ vated pool area and plenty of green space in a notoriously asphalted city.

Despite this, the hotel is driving away investors because of poisonous legal battles amongst the owners, the Ibru family, over who owns what.

Drive in any direction out of the gates of the Federal Palace, and it is not long before you will find houses with ‘NOT FOR SALE’ written in red paint. Elsewhere, whole communities have been bulldozed out of water‑ front areas because, despite living in an area for a generation, they cannot produce written land titles.

Certainty is needed when it comes to moveable assets, too. A lack of clarity over beneficial ownership of companies – who really owns it, rather than a shell company regis‑ tered in the Bahamas – means that responsible pension funds from the US and Europe are staying away from investing in Africa.

That has consequences. Africa’s 54 countries received just $43bn in foreign direct investment (FDI) in 2017, a 13% drop from the previous year. The ASEAN grouping of 10 mid‑ dling Asian countries received more than double that amount last year.

E XE CU T IVE PU BL IS H E R JÉRÔME MILLAN

Trust and transparency matter if Africa wants to get serious long‑term investors. Given the looming debt crisis on the continent, often driven by opaque and corrupt government spending, the pessimists may appear to be in the ascendant. But new advances in technology are keeping the flame alive.

The principles behind the crypto‑ currency Bitcoin are distributed ledg‑ ers, where everyone can see who owns what and data is difficult to tamper with. Companies like Land Layby and Bitland are already using that technology for shared land registries in Africa.

It is a way of creating that very transparency that gives comfort to private‑sector lend‑ ers who may well be sitting on huge cush‑ ions of liquidity – see most African banks – but are fearful of lending due to identity opacity.

This is not science fiction.

Letshego Microfinance Bank, for example, is rolling out its first loans facilitated by distributed ledgers in October (see page 30). Kenyan telecoms operators, too, are creating virtual financial histories for users of their mobile‑money schemes, which, despite requiring a regulatory fix, could provide the blueprint for far greater lending to the poorer seg‑ ments of society.

If Africa’s governments were able to provide similar levels of transpar‑ ency – as some argue is already start‑ ing to happen in Nigeria, with the Treasury Single Account – then Africa would start to turn heads among the largest global fund managers.

Trust and transparency matter if Africa wants to get serious long‑term investors

THE AFRIC A REPORT

•

N ° 10 3

•

SEPTEMBER 2018

M AR KE T IN G & D E VE LO PM E NT ALISON KINGSLEY‑HALL E D ITO R IN CH IE F PATRICK SMITH M AN AG IN G E D ITO R NICHOLAS NORBROOK editorial@theafricareport.com AS S O CIATE E D ITO R MARSHALL VAN VALEN RE S E ARCH & P RO D U CT IO N OHENEBA AMA NTI OSEI REG IO N AL ED ITO R CRYSTAL ORDERSON (SOUTHERN AFRICA) ART & L I FE E D ITO R BILLIE ADWOA MCTERNAN S U B- E D ITO R ALISON CULLIFORD P RO O F RE AD IN G KATHLEEN GRAY

ART D IRE CTO R MARC TRENSON D E S IG N VALÉRIE OLIVIER (LEAD DESIGNER) SYDONIE GHAYEB CHRISTOPHE CHAUVIN (INFOGRAPHICS) CAMILLE CHAUVIN RES E ARCH SYLVIE FOURNIER P H OTO G R AP H Y CLAIRE VATTEBLED ALICE FOURNIER FRANÇOIS GRIVELET LAURA LAFON XAVIER ROUSSEAU SALE S A JUSTE TITRE Tel: (33) 9 70 75 81 77 contact‑ajt‑sifija@ajustetitres.fr CONTACT FOR SUBSCRIPTION: Webscribe Ltd Unit 4 College Road Business Park College Road North Aston Clinton HP22 5EZ United Kingdom Tel: + 44 (0) 1442 820580 Fax: + 44 (0) 1442 827912 Email: subs@webscribe.co.uk ExpressMag 8275 Avenue Marco Polo Montréal, QC H1E 7K1, Canada T : +1 514 355 3333 1 year subscription (10 issues): All destinations: €39 ‑ $60 ‑ £35 TO ORDER ONLINE: www.theafricareportstore.com ADVERT IS IN G D IF CO M INTERNATIONAL ADVERTISING AND COMMUNICATION AGENCY 57‑BIS, RUE D’AUTEUIL 75016 PARIS ‑ FRANCE Tel: (33) 1 44 30 19‑60 – Fax: (33) 1 44 30 18 34 advertising@theafricareport.com PRINTER: SIEP 77 ‑ FRANCE N° DE COMMISSION PARITAIRE : 0720 I 86885 Dépôt légal à parution / ISSN 1950‑4810 THE AFRICA REPORT is published by GROUPE JEUNE AFRIQUE

PREMIUM QUALITY

LUBRICANTS

Complete range of high quality lubricants, following the latest technolo ogy designed to serve all engines used in extreme conditions. Guaranteeing engiine protection and high performance.

Find out more about the Champion lubricants on www.championlubes.co om

REL E AS E T H E F U L L P OTEN TIA L A B R A N D O F W O L F O I L C O R P O R AT I O N

8

CHINA

MIKE HUTCHINGS/REUTERS

MONEY TALKS

SOUTH AFRICA WILL BE GETTING MORE LOANS FROM THE BRICS BANK

A

s China strengthens its role as one of the contin ent's top financiers, officials from Western countries are launching a war of words. Whilst Paris Club and international financial institution lending combined still outstrips loans from China, China is now the largest single lender to Africa. And the Asian economic powerhouse is not content to act alone. The New Development Bank – which is led by the BRICS

governments of Brazil, Russia, India, China and South Africa – is getting started and said in July that it could fund an additional $600m in projects in South Africa this year.

Donald Trump's government in the US is angry about China's diplomatic and commercial advances, but so far it has done no more than complain about it.

In July, Overseas Private Investment Corporation chief executive Ray

“I have said this

SOURCE: ETHIOPIA GOVERNMENT

Prime Minister Ahmed Abiy’s government estimated in July that it will need to spend $7.5bn in order to complete its current road and dam projects, which are crucial to boost exports and strengthen the landlocked country’s economy.

Progress on the Grand Ethiopian Renaissance Dam took a hit in July

before and I am saying it again, there is no cause for worry ”

n $7.5b when its chief engineer was killed in mysterious circumstances.

Abiy has promised to weaken the state’s control of the economy and strengthen the role of the private sector – a move in the opposite direction of his predecessors – which could attract the attention of more investors.

STEPHEN JAFFE/IMF STAFF PHOTO

ETHIOPIA

Washburne cited Zambia’s new airport in the capital, Lusaka, built

by China’s AVIC International for $370m, as an example of a Chinese project that is too large, too expensive and ultimately creating too much unproductive debt. He warned that such projects created a debt trap: “At some point, someone’s got to pay.

Pay or the Chinese take control.”

Overpricing is a common problem with single-sourced Chinese contracts. But where there is competition, says Ghana’s deputy finance minister, Charles Adu Boahen, Chinese firms actually offer lower prices. “Maybe the quality of their work might not be the same as someone else but you get what you pay for and they come in at a cheaper price and with the financing as well. It’s a hard package to turn down,” Adu Boahen says.

While many African governments would like to see the positive fruits of competition for business in Africa, some see Washburne’s comments as hypocritical. Adu Boahene says double standards are being applied: “There is this concern from the West that the Chinese are being very aggressive, they’re coming in, giving funding – but look at America, their biggest financier is China.

Why can they do it and we can’t?”

Nigeria’s ffinance minister Kemi Ade eosun says that, at 20%, Niigeria’s debt to GDP ratio is one e of the lowest in sub-Sah haran Africa.

THE AFRICA REPORT

•

N ° 10 3

•

S E P T E M B E R 2 018

PICTURE OF THE MONTH Musician-turned-politician Robert Kyagulanyi, alias Bobi Wine, protesting against Uganda’s tax on social-media use on 11 July. Three days later he was involved in a deadly clash with security forces which left him in hospital and fighting a treason charge.

MOBILE MONEY PATCHY RECEPTION

0-19 20-39 40-64 65-89 90-100 No data

0-9 10-19 20-29 30-39 40-100 No data

Mobile money needs regulation to allow it to exist and to grow. It has taken off in places like Kenya and Zimbabwe, but has lagged behind in many big economies where it could benefit large unbanked populations, like Nigeria, Egypt and Ethiopia. In July, Kenya’s Safaricom announced it is in talks with the Ethiopian government to launch its successful mobile-money service, M-Pesa, there as the economy opens up (see page 88).

THE AFRICA REPORT

•

N ° 10 3

•

S E P T E M B E R 2 018

SOURCE: GLOBAL FINDEX DATABASE

Adults with a mobilemoney account (2017, %)

Nearly a quarter of last year's African start-up fundraising went to fintech firms: companies focused on subsectors like microlending and payments.

The $133m raised through 29 deals represents 70% year-on-year growth.

Deals continued to roll in in 2018.

Kenya’s Pezesha, which offers lending with financial education, scored seed funding from Consonance Investment Managers in August. In February, Ecobank predicted that the African fintech sector would grow from a $200m market today to one worth $3bn by 2020.

$560m African start-up funding in 2017 SOURCE: PARTECH VENTURES

Adults with a bank account (2017, %)

FINTECH FUTURE MONEY

$133m Funding for fintech and insurance tech start-ups

9

ISAAC KASAMANI/AFP

TRENDING

Moving in the Same Direction How can the FOCAC drive the AU Agenda 2063?

By Benard Ayieko

T

he African Union (AU), established in 2001 to replace the defunct Organization of African Unity, which was founded in 1963, was formed to hasten the regional integration process in Africa to enable it to play its rightful role in the global economy. The AU has created an effective forum for its member states to adopt coordinated positions on matters of common concern to the continent in international fora and defend the interests of Africa effectively. It is this unity of purpose that gave birth to the celebrated Agenda 2063 - a 50-year continental people-driven plan outlining the “Africa We Want.” Agenda 2063 is a strategic framework for the socioeconomic transformation of Africa.

But what does Agenda 2063 aspire to achieve? Its main objective is to create a prosperous Africa based on inclusive growth and sustainable people-driven development. It also aims to create a continent that is strong, united, resilient and influential - this has opened up Africa to numerous growth opportunities and challenges. World economic powers like China, India, the United States and Japan have upped the ante by hosting African heads of state to various development summits. Japan hosts the Tokyo International Conference on African Development; the United States hosts the U.S.-Africa Business Summit; India hosts the India-Africa Forum; and China hosts the Forum on China–Africa Cooperation (FOCAC). China’s successful cooperation with Africa in economic sphere has brought FOCAC’s role in pushing China-Africa cooperation into sharp focus. Since FOCAC’s inauguration in

2000, the forum has focused on trade, investment and technical cooperation, resulting in multi-sectoral growth of the Sino-African cooperation.

Continental development blueprint

FOCAC has emerged as an engagement channel of interest for most African nations because of its favorable agenda that resonates well with the development needs of the continent. With the established diplomatic relations between China and 53 African countries, cooperation has been furthered through creation of sub-forums within the framework of FOCAC. Besides ministerial conference, FOCAC also holds summit. The Third FOCAC Summit, to be held in Beijing in September this year, offers African countries a great opportunity to strengthen cooperation with China aimed at realizing aspirations of the Agenda 2063 in light of the evolving geopolitical dynamics. The implementation of a continental development blueprint is periodic, with the first phase taking 10 years and a focus on flagship projects that include an integrated high-speed railway network, an African virtual and e-university, African commodity strategy, Continental Free Trade Area, Grand Inga Dam in the Democratic Republic of the Congo, continental financial institutions and a single air transport network. These are areas where the Chinese have valuable lessons and experiences to share with their African counterparts at the FOCAC Beijing Summit. With a combined population of 2.6 billion people and a GDP of $16.282 trillion, China and African

countries have a solid foundation for heightened cooperation. The FOCAC Beijing Summit offers African countries an opportunity to not only broaden the scope and benefits of Agenda 2063, but also propose new measures to deal with issues of industrialization, trade imbalance, employment creation for the youth, food security, energy, security, public health and disease prevention.

The benefits of the FOCAC Beijing Summit to Africa cannot be opposed and it will remain pivotal in catapulting Africa to meaningful partnerships to grow their exports not only to China, but also to the other parts of the world.

This can be done through tapping the Chinese experience and practices on trade competitiveness. African countries depend heavily on primary products for exports and foreign earnings which have minimal value additions. It’s imperative for Africa to learn from the Chinese on the need to process primary products so that they can gain competitiveness in the international markets and earn them higher margins. This will expand international markets for African exports that will help reduce trade deficits, and increase balance of payments and foreign exchange earnings.

African countries participating in the FOCAC Beijing Summit have an opportunity to discuss with China on how to adopt appropriate modern and affordable Chinese technology that will promote efficiency in the production of goods and services for both domestic and international use. Information and communications technology is an enabler of growth and development and will be instrumental in creating jobs for the youth.

Variety of cooperative projects

Most of China’s infrastructure projects in Africa are located in urban areas and so the FOCAC Beijing Summit will be a good forum to engage China on more infrastructure projects targeting rural areas to reduce rural-urban migration, alleviate poverty and spur rural development.

The FOCAC Beijing Summit will also be useful in engaging China on the need to have more Chinese visit Africa as tourists. www.chinafrica.cn

WANG TENG

The photo taken in June 10 shows a bridge built by China Road and Bridge Corp. in Brazzaville, capital of the Republic of the Congo

Despite the growing Sino-African relations, there is disquiet on the current number of visitor arrivals from China. In fact, the share of tourists from China to Africa is a paltry 1.5 percent of the total outbound Chinese tourists, with only Kenya, South Africa, Mauritius, Morocco, Egypt, Namibia, Cape Verde, Botswana, Tunisia and Tanzania emerging as the most competitive tourist destinations for the Chinese.

For the continent to be stronger as a trading bloc, it’s important to adopt competitive global currencies away from the traditional reverence of the U.S. dollar, British pound and the euro. There is need for the FOCAC Beijing Summit to discuss not just the possibility but also the pros and cons of adopting the renminbi as a reserve currency. This www.chinafrica.cn

will safeguard Africa’s currencies from unprecedented local currency volatilities, thus leading to economic stability.

Some have termed the increased Chinese infrastructure loans as a new face of neocolonialism, but Professor Ching Kwan Lee of the University of California argues that China-Africa cooperation has helped Africa stand on its own, rather than making her dependent on China. Lee adds that more than 10,000 Chinese enterprises operating in Africa have promoted Africa’s independence and autonomy rather than the usual dependence commonly associated with colonialism. It’s a two-way relationship with mutual benefits. For Africa to move toward a peaceful, prosperous and integrated continent based on inclusive growth and sustainable

development, in line with the Agenda 2063 mission statement, collaboration with China must be given unconditional room to grow beyond expectation. CA The writer is an economist, consultant and a regional commentator on trade and investment @BenShawAyieko

Scan QR code to visit ChinAfrica’s website * Comments to niyanshuo@chinafrica.cn

12 TRENDING

TOP AFRICAN SOVEREIGN BONDS JANUARY–AUGUST 2018

2016

369

deals

MONTH PRICED

EGYPT

February

4,000 1,250 1,250 1,500

5.58% 6.59% 7.90%

2023 2028 2048

ANGOLA

May

3,000 1,750 1,250

8.25% 9.38%

2028 2048

B-

NIGERIA

February

2,500 1,250 1,250

7.14% 7.70%

2030 2038

B

SENEGAL

March

2,200 1,200 1,000

4.75% 6.75%

2027 2047

B+

CÔTE D’IVOIRE

March

€1,700 (2,100) 1,050 1,050

5.25% 6.63%

2030 2048

KENYA

February

2,000 1,000 1,000

7.25% 8.25%

2028 2048

B+

SOUTH AFRICA

May

2,000 1,400 600

5.88% 6.30%

2030 2048

BB

GHANA

May

2,000 1,000 1,000

7.63% 8.63%

2029 2049

B-

2017

The total value of deals completed in 2017 in the sub-region was $22.6bn, up from the $19.6bn in 2016. Five of the top 10 deals that year, including Glencore in South Africa and Vodacom in Kenya, were inked in the first quarter alone. Overall, the energy sector had the highest value in transactions, with a total of 59 deals.

AMOUNT (US$m)

YIELD/ COUPON

MATURITY

S&P RATING

B

B+ (Fitch)

FUNDRAISING LOANS AND LISTINGS FOR EXPANSION South African consumer food maker Libstar Holdings raised the targeted R1.5bn ($119m) in an IPO in May, one of the biggest JSE listings so far this year. The share sale valued the company at R8.5bn.

The money will mainly be used for debt payment and expansion projects.

The European Bank for Reconstruction and Development will loan Morocco’s SDX Energy up to $10m to finance the expansion of upstream gas production and related gas-transport infrastructure, facilitating the transition from fuel oil to clean energy.

In April, Kenya-focused fintech company Tala raised KSh6.5bn ($65m) in series C funding, bringing the company’s total fundraising to more than KSh10bn. The investment will be used to develop the consumer lending app, which has more than a million customers in Kenya, its largest market outside the US.

SOURCE: THE AFRICA REPORT RESEARCH

343 deals

$22.6 bn SOURCE: REUTERS

$19.6bn

ISSUER

TOP AFRICAN LOANS JANUARY-AUGUST 2018 BORROWER

MONTH SIGNED

AMOUNT (US$m)

SECTOR

ISSUER

China Development Bank

ESKOM

July

2,300

Electricity

EGYPT

June

2,000

Governance

EGYPTIAN ELECTRICITY HOLDING Co.

June

900

Electricity

BANK OF INDUSTRY, NIGERIA

June

750

Industry

DANGOTE INDUSTRIES NIGERIA

July

650

Oil refinery

MTN NIGERIA

August

553

Telecoms

12 Nigerian banks

EGYPT

January

500

Governance

African Development Bank

NIGERIA

February

486

Electricity

World Bank/IDA

TANZANIA

June

455

Electricity

World Bank/IDA

ETHIOPIA

March

375

Electricity

World Bank

DEVELOPMENT BANK OF SOUTHERN AFRICA

July

300

Electricity

New Development Bank

TRANSNET, SOUTH AFRICA

July

300

Logistics

THE AFRICA REPORT

•

IMF Syndicated loan coordinated by Credit Suisse and HSBC Syndicated loan arranged

by Afreximbank Afreximbank

Industrial and Commercial Bank of China N ° 10 3

•

S E P T E M B E R 2 018

SOURCE: THE AFRICA REPORT RESEARCH

Completed M&A deals in sub-Saharan Africa

14

NOC ASSEMBLY 24-25 September

MANDELA’S MEMORY INSPIRES A SPECIAL PEACE SUMMIT AT THE UN GENERAL ASSEMBLY

RICK BAJORNAS/UN PHOTO

AMSTERDAM | NETHERLANDS How will national oil companies (NOCs) survive in a post-peak-demand world? oilandgascouncil.com

73RD SESSION OF THE UN GENERAL ASSEMBLY 18 September – 5 October NEW YORK, US To mark the centenary of the birth of South African leader Nelson Mandela, this year’s assembly will host the Nelson Mandela Peace Summit on 24 September. This high-level plenary meeting will adopt a political declaration negotiated by member states. The nineday General Assembly meeting begins the following day. Other meetings taking place parallel to the event are the Global Goals Week 2018, aimed at driving progress towards the Sustainable Development Goals, and Climate Week NYC 2018. un.org/en/ga

SEPTEMBER

CIBEX EAST AFRICA 3-5 September NAIROBI | KENYA International trade fair for construction, infrastructure, building and energy. cibexeastafrica.com

SEAMLESS EAST AFRICA 3-5 September NAIROBI | KENYA Essential gathering for banking, payments and fintech professionals wanting to stay ahead in the digital race. 3 September is Financial Inclusion Summit day. terrapinn.com/exhibition/ seamless-east-africa/

AFRICA OIL & POWER 5-7 September CAPE TOWN | SOUTH AFRICA Major continental conference for the sector. africaoilandpower.com

AFRICAN GREEN REVOLUTION FORUM 5-8 September KIGALI | RWANDA Turning smallholders into sustainable agribusinesses. agrf.org

SOUTH AFRICAN BOOK FAIR 7-9 September JOHANNESBURG | SOUTH AFRICA On the programme, Elinor Sisulu, Gen. Bantu Holomisa and The Africa Report contributor Lidudumalingani. southafricanbookfair.co.za

FIBRE TO HOME CONFERENCE 10-12 September DURBAN | SOUTH AFRICA ftthcouncilafrica-conference.com

NIGERIA COM 19-20 September LAGOS | NIGERIA tmt.knect365.com/nigeria-com

LES RENCONTRES AFRICA 24-25 September PARIS | FRANCE High-level meeting for French and African company executives, organised around four key sectors. rencontresafrica.org

eLEARNING AFRICA 26-28 September KIGALI | RWANDA Latest innovations and strategies for expanding access to education. elearning-africa.com

NAIROBI INTERNATIONAL BOOK FAIR 26-30 September NAIROBI | KENYA kenyapublishers.org/buildyour-dreams-in-3d

LAKE OF STARS FESTIVAL 28-30 September SALIMA | MALAWI An idyllic new location for this beloved music festival. lakeofstars.org OCTOBER

AFRICA HOTEL INVESTMENT FORUM 2-4 October NAIROBI | KENYA The business and networking forum also includes a debate on the role of tourism in conservation. africa-conference.com

IMF & WORLD BANK ANNUAL MEETINGS 8-14 October BALI NUSA DUA | INDONESIA am2018bali.go.id

THE AFRICA REPORT

•

N ° 10 3

•

S E P T E M B E R 2 018

1,1

3,9

MILLION

BILLION

JOB CREATED IN 2017

INVESTED IN TRADE AND PROJECTS FINANCE IN 2017

TRANSFORMING AND INTEGRATING THE REGION’S ECONOMIES By providing different types of financing,TDB fosters trade, sustainable development and economic integration, prioritizing projects with cross-border impact that support community mobilization.

MAURITIUS PRINCIPAL OFFICE TDB Ebene, Blue Tower, 2nd Floor, Rue de L’Institut, P.O Box 43, Re duit, Ebene, Mauritius Tel: +230 4676016/4676021 Fax: +230 4675971

BUJUMBURA PRINCIPAL OFFICE TDB Bujumbura, Chaussée Prince Louis, Rwagasore, P. O. Box 1750, Bujumbura, Burundi Tel: +257 22 224966 / 22497 5 Fax: +257 22 22 4983

BUJUMBURA PRINCIPAL OFFICE TDB Bujumbura, Chaussée Prince Louis, Rwagasore, P. O. Box 1750, Bujumbura, Burundi Tel: +257 22 224966 / 22497 5 Fax: +257 22 22 4983

HARARE REGIONAL OFFICE TDB Harare, 70 Old Enterprise Road New lands, Harare, Zimbabwe Tel: +263 4 788330-3/ 788336-9/ 7881 7 Fax: +254 20 2711510 FCT Line (Mobile): +263 782 784 95 5

Invitation for Applications

Ibrahim Leadership Fellowships Programme Identifying and supporting African leaders of the future

The Ibrahim Leadership Fellowships offer the opportunity to work in the executive offices of either the African Development Bank (Abidjan), the UN Economic Commission for Africa (Addis Ababa) or the International Trade Centre (Geneva) with an annual stipend of $100,000.

The Executive Management office of each organisation will host an Ibrahim Leadership Fellow for a 12-month period. The Fellowships are open to young professionals, mid-career and new executives up to the age of 40 or 45 for women with children.

The Fellows will be nationals of an African country with 7-10 years of relevant work experience and a Master’s Degree.

The application process opens on 13 August 2018 and closes on 15 October 2018.

For more information about the Fellowship programme, eligibility and application process please visit: mo.ibrahim.foundation/fellowships

WATER FOR YOUR HOME

WATER FOR YOUR PROCESS

BWT (Best Water Technology) designs and provides water treatment equipment from standard to customized solutions in all areas such as : private users, commercial market (buildings, hospitals, hotels…) and industry (pharmaceutical, food & beverage…).

BWT specialists’ will offer you complete solutions, in order to improve energy performance in your different projects from drinking water to climatic systems, or industrial processes.

Contact us at : bwtexport@bwt.fr

WATER FOR YOUR BUILDINGS

bwt.fr

TRENDING 17

Patrick Smith Editor-in-chief, The Africa Report

A POLITICAL DEAL TO BREAK ZIMBABWE’S CASH IMPASSE

O

ver morning coffee, Zimbabwean academics and international observers were arguing how the latest political explosion had torpedoed the government’s plans to win legitimacy, just three days after the 30 July elections. From the lobby at the Meikles Hotel in central Harare, one of them beckoned: “Welcome to the war zone!” The greeting was only half-humorous.

The previous day, we journalists had been covering a demonstration by some 3,000 opposition activists, protesting at delays in the release of results for the presidential elections.

It had started well enough. On some streets, police and demonstrators were shaking hands. Minutes later, everything changed. A small contingent had peeled away from the main cohort of protesters and ran towards the headquarters of the ruling Zimbabwe African National Union-Patriotic Front, a hundred metres from the electoral commission.

THE VOTE

Some started hurling rocks at this symbol of the ruling party’s dominance. As guards started firing over the wall, another group broke into the car park to smash up party vehicles, setting one ablaze.

Then more gunfire. This time from men in military fatigues, some with balaclavas and bandanas like militia fighters, shooting with high-velocity weapons into the crowds. Down the street, more soldiers descended from an army lorry, ran along the pavements wielding rhino whips and started laying

THE CAMPAIGN THE AFRICA REPORT

•

N ° 10 3

•

S E P T E M B E R 2 018

into passers-by. Three hours later, six Zimbabweans lay dead and 19 more had been rushed to hospital.

That deadly afternoon shattered the prospects that the election, whose fairness was already under heavy criticism, would usher in a promised land of loans, investment and the country’s triumphant re-entry into the international system. The government’s response – blaming protesters for the violence and rounding up oppositionists – hardened sentiment. Although observers from the African Union and China gave the elections a comfortable pass mark, arbiters from the European Union and the United States demurred.

Washington then announced fresh sanctions.

TheresultsgivingPresidentEmmersonMnangagwa 50.8% of the vote did nothing to change those positions. The sight of police breaking up an opposition press conference and then being condemned by Mnangagwa for doing so raised doubts over the government’s coherence – and the role of the military.

The chances of a new economic order after the elections were sprinting, rather than slipping, away.

IMF managing director Christine Lagarde tells The Africa Report that the system had been on standby to work with Zimbabwe: “The support of large numbers of institutions is conditioned on free and fair elections […] if that was confirmed, then we would stand ready to engage as soon as possible.”

The technical aspects would not be too difficult, she adds: “They paid off their arrears with us at the

18 TRENDING

IMF […]. My team tells me they still have reasonably solid institutions. They have had lots of trade missions in the last few months to figure out what kind of investments would be available in mining and farming and so on.”

As Lagarde points out, Zimbabwe has its international cheerleaders. Just after the elections, Hafez Ghanem, the World Bank’s vice-president for Africa, said Zimbabwe could become an uppermiddle-income economy within a decade, boosted by its millions of well-educated people and rich mineral resources.

For now, that possibility is on hold. Without a political consensus on the election, the government will struggle to relaunch the economy. That means paying off arrears of $1.7bn to the World Bank and African Development Bank, and restructuring debts of more than $14bn.

It also needs an infusion of cash, around $2bn, to shore up the monetary system. After adopting the US dollar and abandoning the Zimbabwe dollar a decade ago, the Reserve Bank put its own twist on dollarisation. As the economy’s exports and investments were not generating enough US dollars, the Reserve Bank started issuing bond notes for internal trading, a surrogate currency known as Zollars.

This has created at least three new currency systems, each with its own exchange rate. No one believes the government’s insistence that a Zollar is worth the same as a US dollar, and the arbitrage between the two is growing sharply, according to a senior banker in Harare. Money supply increased by 43% in 2017, while the economy grew just 3.7%.

THE PRIZE

THE DISPUTE Without better management and more hard currency, this creation of money will lead to a monetary meltdown, the banker predicts.

“Right now, it is in no one’s interest to state the obvious,” he adds. “That is, that the Reserve Bank can’t cover its liabilities.” Credits from outfits like Afreximbank in Cairo have helped shore up the currency this year. Others are reluctant to jump in without an IMF backstop.

Of the three mooted options – stick with the status quo and hope for new capital inflows, announce a massive Zollar devaluation or join South Africa’s rand zone – the government looks stuck on the first.

Many have been advising it that the political risks of a devaluation or joining the rand zone are simply too high. But others are calling on Mnangagwa to take another sort of risk and set up a power-sharing government with an agreed agenda to reform the public service and a minimum programme for economic and social recovery.

Within days of being declared winner, Mnangagwa said he saw no reason to form a coalition, given his party’s resounding victory. Similarly, Nelson Chamisa, the presidential candidate for the Movement for Democratic Change, rules out any form of power-sharing, given his insistence that the election was stolen. The consensus between the two main protagonists is that there is no consensus.

In the end, economic forces may suggest otherwise. If questions about its legitimacy stop the government from bringing in the capital to break the debt and monetary impasse, a power-sharing government could change the dynamics. It would be unpopular with activists on both sides, but it could help trigger a more positive international financial response. Without that, the immediate prospects are of a slow-motion economic crash as the political fight rages on, which will hurt most of all the millions of Zimbabweans who have waited so long for change.

N ° 10 3

•

S E P T E M B E R 2 018

As your partner of ďŹ rst choice we promise to always deliver gold standard of value and excellence.

46

BANKING

F

Abubakar Suleiman

or Abubakar Suleiman, chief executive officer of Sterling Bank, and his counterparts in Nigeria’s Chief executive officer, Sterling Bank, Nigeria banking industry, the aftermath of the abrupt fall in the global oil price in late 2014 provided an important lesson. The price slide laid bare the gaps in their assessment of the risks involved in financing players in the country’s energy sector, which, like the global industry, is susceptible to both random and cyclical price shocks. Led by Suleiman, Sterling Suleiman talks to The Africa Report about the lessons learned after Bank, a mid-tier Nigerian lender, getting burned by investing in the oil and power sectors, and is now betting on a strategy that prioritises underserved sectors of how the bank plans to study five key sectors to avoid that mistake Nigeria’s economy such as health and transportation.

The lessons of the oil rout are key to Sterling’s new strategy. models had worst-case scenarios Suleimansaysherecognisesthat The difficulties took place in the A STERLING taking time to study the sectors of $75 or even $60 per barrel. This period from 2011 to 2014, when a REPUTATION flurry of economic reform activity before making any significant oversight contributed significantly 1995 loans means that Sterling will not created opportunities in Nigeria’s to the non-performing loan (NPL) Graduated oil and gas and power sectors for be able to generate high levels of ratio for the industry rising to more with a than 15% at the middle of the last local business players. Both efforts returns in those sectors in the short bachelor's in required a significant injection of term. He argues that focusing on financial year. This is three times business from the regulatory threshold. long-term value is in the bank’s capital, so local businesses turned the University to the banks to obtain funding for best interests. He explains: “The of Abuja their acquisition and expansion STUDY PERIOD five sectors we have chosen are plans. Sterling Bank, like most Sterling Bank saw its NPL ratio sectors where there is a massive January 2000 Hired other banks in the country, issued jump sharply initially, peaking at demand-supply gap. It means that as a trader if you do the right thing with the loans on the basis of the prevailing 12% in early 2017. It gradually deat Citibank oil price and Nigeria’s economic right partners you will create the clined after the bank restructured Nigeria fundamentals, which were undermost of the problematic loans. Its supply that is required at a lower pinnedbytheoil.Sowhentheprice NPL ratio is now 6% and has been costtotheconsumer,andtherefore 2003 of oil fell from record highs of more declining each quarter. Suleiman the sector would actually expand.”

Appointed is confident that Sterling will get than $100 per barrel to around $30, treasurer the portion of its troubled loans PROVEN STRATEGY bankswereleftscramblingasloans of one of started to go bad.

Suleiman cites two examples of Sterling Bank’s predecessor Suleiman, who how the bank made similar bets “The five sectors we have banks was chief finance on projects that are paying off. chosen are sectors where there officer at the time, First was its foray into Islamic is a massive demand-supply gap” September says: “I must conor non-interest banking, which 2012 Named fess that we didn’t Sterling got involved in several Sterling's have enough time in oil and gas to well below the threshold by the years ago after the central bank chief financial and power because there was a end of the financial year. established guidelines for banks. officer Sterling spent more than three Sterling has since devised a new national need to finance those April 2018 strategytobeprofitablesustainably years piloting the activity without assets and we hadn’t had time to Promoted while also contributing to the deprofiting from it. But since then, specialise.” He points out a key to chief velopment of Nigeria’s economy. the bank has been able to sharperror: underestimating how low executive en its sword and its non-interest the price of oil could fall. The stress The strategy is known as HEART banking business has turned tests that Sterling and its counterand involves the bank developing parts carried out prior to financing specialistknowledgeofkeysectors. profitable. It contributed 5.5% The sectors it has identified are projects failed to take the historical of profit before tax, or N470m health, education, agriculture, trend of oil prices over a longer pe($1.5m), in 2017. Sterling is now riod into account. Their financial renewable energy and transport. planning to scale up its activity.

WE DIDN’T HAVE ENOUGH TIME IN OIL

THE AFRICA REPORT

•

N ° 10 3

•

S E P T E M B E R 2 018

BANKING

ALL RIGHTS RESERVED

central bank estimated in June that more than 40 million people are still excluded from accessing financial services despite authorities’ efforts to drive up inclusion.

As the 2018 financial year plays out, Suleiman says he is confident that Sterling Bank will achieve its guidance numbers and consolidate on the progress it has been making over the past 18 months.

For 2017, Sterling reported 65% year-on-year growth in its net profit, N8.5bn, in 2017. Its Tier 1 capital increased to N80.7bn in the first quarter of 2018, further shoring up the bank’s capital base.

Sterling is also in the process of securing an injection of Tier 2 capital to balance its capital structure.

The other example was the bank’s financing of the bus rapid transit scheme in Lagos State.

Sterling Bank lent $50m to the state government in 2015 for new vehicles and rolled out a new contactless payment system for the buses late last year.

Retail banking is another of Sterling’s growth targets. In the car park across the street from Sterling Bank’s 23-storey head THE AFRICA REPORT

•

N ° 10 3

•

office on Lagos’ Marina Street, a prototype, solar-powered kiosk is stationed on a lawn. From his office in the building, Suleiman points it out as he speaks of his plans to expand the bank’s agent network. Sterling plans to distribute 10,000 of these kiosks to agents across the country after a pilot run. The kiosks will enable agents to carry out basic banking and airtime-vending services. The

S E P T E M B E R 2 018

FRIEND OF FINTECH Suleiman says that Sterling Bank is sparing no effort in the “race to digitisation”, where it is competing with its banking peers and financial technology (fintech) start-ups.

Sterling launched a digital loan product called Specta in April.

The bank claims it can assess loan applications and disburse approved loans within five minutes, leveraging data from both internal and shared industry data­ bases to determine if a customer is creditworthy.

Suleiman says he is unruffled by the threat posed by fintech. He argues that banks are actually the biggest fintech firms, but they are highly regulated because of their principal function of collecting deposits from consumers. Suleiman saysratherthanviewingeachother as competition banks and fintech firms should seek opportunities to work together: “There has to be a space where fintechs can operate but they must be prepared to collaborate with banks because there arethingsthattheycannotdowithout falling under regulation. And the most critical one is that they cannot become a deposit money bank. If you become a deposit money bank then you have to be prepared for regulation.”

Interview by Charles Idem in Lagos

47

63

Nigeria FRENCH PRESIDENT EMMANUEL MACRON HITS THE STAGE WITH TONY ELUMELU AFTER VISITING FELA KUTI’S SHRINE

SUNDAY ALAMBA/AP/SIPA

PLAYING MONOPOLY Vested interests and cartels are major stumbling blocks for Nigeria's development. New faces, ranging from younger politicians to app developers and agriculturalists are striving to disrupt Nigeria's elites and buck the system

By Nicholas Norbrook in Lagos

THE AFRICA REPORT

•

N ° 10 3

•

S E P T E M B E R 2 018

E

mmanuel Macron and Tony Elumelu stand side-by-side on a raised platform. In almost identical suits, the Nigerian banker sports a flamboyant red tie while the French president has chosen sober black. Elumelu’s foundation sponsors young entrepreneurs and several thousand of these acolytes gathered to listen in Lagos in early July.

“Innovation is just about disrupting the insider,” says Macron, “and becoming part of the game”.

Nigeria knows a thing or two about monopolies and oligarchs

COUNTRY FOCUS

NIGERIA

JA

CQ

UES

W I T T / S I PA

OUT WITH THE OLD, IN WITH THE NEW

Muhammadu Buhari

LR IGHT

S RESER

VE

D

President Buhari, 75, is set to be the last of a generation of senior military leaders who have governed Nigeria for the past few decades.

Upon the vist of France's President Macron in July, one Lagosian quipped to The Africa Report: “An old man is president of our country of young people and young Macron is running an ageing France. Can we switch?”

Buhari came into power in 2015 promising to fight corruption and vested interests, but does not have any big victories to take to the campaign trail in 2019. Buhari could face former vice-president Atiku Abubakar in the presidential race, but Atiku's companies have benefited from a number of sweetheart deals, leading his critics to doubt he would do much to take on oligarchs.

AL

64

Shola Akinlade New technologies hold promise for innovation, but they are not changing Nigeria overnight. Nigeria is behind its East African peers in terms of mobile-money usage, for example, because of its regulatory frameworks. However, fintech firms like Shola Akinlade’s Paystack, agriculture-focused Farmcrowdy and good-governance NGO BudgIT are helping regular folks to play a bigger role in the economy and political sphere. Solar power offers consumers the chance to fast-forward development as the government muddles through improving the national grid, but will require the right mix of marketing and finance.

cornering the market. The British colonialists – like Lord Lugard, who welded the country together – got the ball rolling with the Royal Niger Company at the end of the 19th century. They set the stage for exploitative trading, a habit yet to be flushed out of the system. And, barely five years after independence, the 1966 coup set the groundwork for a series of politico-military elites who dominated the country: Yakubu Gowon, Olusegun Obasanjo,MuhammaduBuhari,Ibrahim Babangida, Sani Abacha.

HOW DO YOU BREAK A MONOPOLY? Behind these concentrations of power is oil. The Nigerian economy buckles under the gravitational pull of crude.

As the decades after independence progressed, factories fell silent and thriving farms were reclaimed by the bush. Rather than targeting the real economy, entrepreneurial eyes turn instead to Abuja, source of oil money. A slew of companies linked to politicians emerged, alongside state-owned enterprises captured by businessmen. The competitive struggle in business was about access to power, not providing cheaper products. A once-proud civil service was hollowed out by corruption, and the political and business elites focused on accessing loot.

And though much has changed since Fela sang, “If gun steal eighty thousand naira / Pen go steal two billion naira,” these trends are still in evidence today.

While petty bandits roam, the major theft happens at the tip of a biro wielded by a politician or civil servant.

Nigeria’s weak institutions mean that the state cedes control of the economy to vested interests and it struggles to maintain security. One area where a monopoly would be welcome is in violence. The government should be the only armed force in the country. Today, Nigeria has a thriving market in conflict.

In the north, a deadly protracted Islamist militancy in the form of Boko Haram has been worsened by Al-Qaeda in the Islamic Maghreb and other regional Islamist groups. In the south, militants in the Niger Delta continue a low-grade insurgency, blending political grievances with criminal activity. In the Middle Belt and beyond, Nigeria’s most deadly conflict in the last 12 months pits farmers against herders whose cattle flee drought and spark conflict. Some 1,800 people have died in the clashes

TECHNOLOGY, AND INITIATIVES LIKE FARMCROWDY, ARE HELPING SMALL FARMERS GET MORE PRODUCTIVE

since January, says the International Crisis Group think tank.

But Nigeria also has a history of disrupting its monopolies. Technology and youth are again challenging the status quo. In finance, agriculture, politics and in the streets, a new generation of Nigerians is turning up the pressure on entrenched elites and vested interests.

So how do you break a monopoly? It can be from above with the great fist of the regulator, or from below.

Hunched around a couple of tables looking out over the Lagos suburb of Yaba from the sixth floor, a small team is hatching a plan. It is an animation project: a young girl wakes up, gets dressed.

You slowly understand that – far from an innocent T-shirt – she is pulling on a vest laced with explosives. The film then quickly spools back to show what has led her to planning mass murder.

Hand slaps ring out, eyes brim with intensity. The team members

THE AFRICA REPORT

•

N ° 10 3

•

S E P T E M B E R 2 018

NIGERIA

COUNTRY FOCUS

the letter he had written to the agency contracted to do the work “asking the agency to account for the funds because BudgIT is on his case,” says Longe, “which is not typical in this part of the world.”

ThetechhubofYabahasbeenhometo much more than just BudgIT, including companies that increase economic competition rather than political pressure.

Paystack, a payment platform, moved out of Yaba to Ikeja a few years ago, into Silicon Valley-style offices, complete with a bathtub full of many-coloured soft balls. Whether you jump in a Taxify cab, order a Domino’s pizza or, shortly, pay your toll on the Lekki expressway, that payment is handled by Paystack, which now handles about 15% of online payments in Nigeria.

bat ideas around as they discuss how to get the rest of the population better attuned to the desperate situations many face in the north-east. Walls sport sheets of paper on which are scrawled ‘Indifference’, ‘Poverty as driver’, ‘Religion’. “I have spent time in the north, in Kano,” says Olaide Olawuwo, an engineer. “The children are so hungry they watch you eat and carry off your plate if you are too slow.”

POKING THE SLUSH FUNDS Femi Longe, the organiser of this hack­ athon at the Co-Creation Hub, punctures the euphoria with some penetrating questions that quickly reduce the team to incoherence. “It’s about getting them to focus on the execution and not just the idea,” says Longe. “Better to do this now before they get in front of the judging panel tomorrow and are asked, ‘Which of you can actually animate?’ and they have no reply.”

Longe recalls a similar hackathon that launched the non-governmental organisation BudgIT in 2011. For Oluseun Onigbinde, the founder of THE AFRICA REPORT

•

N ° 10 3

•

S E P T E M B E R 2 018

SOURCE: PARTECH, TECHPOINT

GEORGE OSODI/PANOS-REA

DEMOCRATISATION OF LUCK Paystack is playing an unseen role in Nigeria’s economic life: conferring credibility. “We find that our customers look to Paystack as almost a seal of verification, knowing how thoroughly we take the process,” says Emmanuel Quartey, Paystack’s head of growth.

And with its relentless focus on helping businesses – through an Amazon-style approach to customer service – Paystack has made itself ‘sticky’: attractive to Nigerian companies used to dealing with Nigerian banks, who BudgIT, shining a light on exactly how traditionally only devote time and care the government spends its money and to their blue-chip clients. explaining this in plain language to ordinary voters was the way to harness This idea of helping revitalise an democratic pressure and form a historic ecosystem starved of opportunities by counterweight to political monopolies. big business is what Tony Elumelu is referring to when he says that supporting Since 2014, BudgIT has been tracking start-ups is about the “democratisation the implementation of every item in the national budget. Parliamentarians get of luck”. Where business barons across ‘funds for constituency’, every sector take chunks but most of the money out of consumers with is used as a slush fund. cartel-style pricing, these BudgIT checks whether new fintech upstarts can Amount of venture schools or roads are built provide services such as capital raised by payments and small loans as promised and chall­ Nigerian tech start-ups at a more competitive rate. enges lawmakers publicly. in 2017. The country Labs & Ware founder Recentexamplesinclude now boasts 55 a N41m ($110,000) youth Ayooluwa Odutayo is a tech hubs, up from centre designed to emTony Elumelu Foundation 23 recorded in 2016. grantee. He received some power young people that business training and $5,000, which MuhammadUmarJega,alawmakerfrom he used to buy a laptop and hire an Kebbi State, did not deliver. BudgIT also reported that children were sitting under engineer. “I’m a self-taught coder,” a tree rather than in the N12m classsays Odutayo. “Now I have rented my rooms that Senator Sani Mohammed own office space, and I’m training up had promised for Niger State. three interns.”

One senator was so agitated about One critique of start-up optimism – aside from the fact that Silicon Valley is BudgIT’s questioning that he published

$115m

65

COUNTRY FOCUS

NIGERIA

hoovering up Nigerian tech reports that the average companies and that funding global margin for cement is concentrated into a very companies is around small number of firms – is 17%. Dangote Cement Price of a 50kg bag of that a majority of start-ups clears 42%. Financial cement in Africa, while are simply squabbling over expert Feyi Fawehinmi global prices average explains that while it may the discretionary spending $3.25. Nigerian of a small minority. sound nice to compare billionaire Aliko But some start-ups are Asian-style industrial Dangote is one of the support and what Nigeria shifting paradigms and biggest cement barons. has done, that misses an could help restructure the essential point: “In Nigeria, the same economy away from its oil dependency. government that protects businesses Farmcrowdy, launched in 2015, created a crowdfunding platform to finance from outsiders protects them from legions of small farmers. It splits the insiders as well. But in China, though profits with the investors and the farmcement companies were protected from ers. Instead of handing the farmer the the outside, internally there were about money, Farmcrowdy buys seeds and 2,000 companies, and there was brutal competition.” fertiliser in bulk, also providing soil The Nigerian government is yet to testing and advice.

And word has got out among the have the tough conversations about farming community: “We worked with this. For his part, agriculture minister about 2,000 farmers last year,”, says Audu Ogbeh agrees that ‘sunset’ clauses Onyeka Akumah, Farmcrowdy’s chief should exist on the import substitution policies that are currently pumping up executive. “This year, in six months rice production. “You can’t keep doing we’ve already touched 7,000.”

Though it is popular to deride Nigeria’s governments, successive WITH BUHARI ABSENT, TENSIONS WERE administrations have been taking agHIGH IN PARLIAMENT IN AUGUST AS riculture more seriously. The country MPS WERE PREVENTED FROM ENTERING is now producing nearly 6m tonnes of milled rice, just 1m tonnes short of its national consumption, having nearly doubled production in a few years.

This matters because it gets to the heart of a nationwide problem: traders make the lion’s share of profits. For decades, acquiring the licence to import a commodity was a licence to print money.

As a result, Nigerians pay much more for basic goods and services – much as Mexicans have paid handsomely to turn telecoms monopolist Carlos Slim into one of the world’s richest men.

$9.57

SOURCE: WORLD BANK

66

protectionism forever because then you create other challenges,” he says.

There are examples of muscular, topdown monopoly-busting in other parts of the economy. Obasanjo opened up the government-run communications monopoly to competition by licensing new mobile-phone operators in 2001.

In 2009, then central bank governor Lamido Sanusi ended the impunity in the banking sector, where cartel-style misbehaviour caused a rapid build-up of toxic assets. “It was a crazy period,” recalls Ikechukwu Umeh, who was a stockbroker back in 2008 and lost his job due to the crisis. “Bank CEOs were buying up shares using their own money to pump the stock price,” he explains.

LOCAL CONTENT WINNERS Just as the era of monopoly-busting US president Theodore Roosevelt in the early 1900s saw a flowering of capital, Nigeria’s banking sector is now more resilient and productive. The banks are financing the real economy – witness the recent announcement by Fidelity Bank on arranging $120m in financing for Temile & Sons Development Company, a shipping firm.

PROTECTION GOOD AND BAD In South Korea in the 1960s, General Park Chung-hee faced the same problem.

He started by throwing the heads of big conglomerates into jail, then incentived others to compete, offering protection and subsidies. In Nigeria, however, in the early 2000s, protectionism had less lofty goals. Faced with raising money for political campaigns, general-cum-president Obasanjo granted business baron Aliko Dangote government support – such as exclusive import licences – in exchange for setting up cement production in the country.

Whether this has helped Nigeria save money is debatable: Bloomberg THE AFRICA REPORT

•

N ° 10 3

•

S E P T E M B E R 2 018

Control of the telephone sector

Market share by operator (GSM)

(1999)

(March 2017)

24.56 % 39.73 % 100 %

12.91 % 22.80 %

Airtel

Nitel

Globacom

AFOLABI SOTUNDE/REUTERS

THE AFRICA REPORT

•

N ° 10 3

•

MTN

COUNTRY FOCUS

the way, adding massively to the cost of goods and services.

President Buhari arrived in office in 2015 with anti-corruption promises. “I will try to ensure that there is responsible and accountable governance at all levels of government in the country,” he said during his inauguration. And there has been some progress in tackling pervasive government corruption. The Treasury Single Account, proposed by Goodluck Jonathan, was fully implemented by Buhari. It puts all government revenue in a single account at the central bank, helping to identify those who fail to remit their revenue. Gone are the days when every ministry and department has its own opaque bank account.

But Buhari, 75, has missed many opportunities – and not just in failing to fight the concentrations of power that lead to abuse. Nigeria has 10 million children out of school, ‘leading’ the world, followed by Pakistan at five million. Nigeria also has more people living in extreme poverty than India, according to a report by US think tank the Brookings Institution.

330 metres, it is one of the biggest vessels in the world and will shortly be pulled out to the deep seas to add an additional 10% to Nigeria’s current oil production.

“LADOL provides a 50% cost saving because we have this fully integrated model, where we as a Nigerian company are carrying out services that previously you would have had to fly in people from abroad to achieve,” says Amy Jadesimi, LADOL’s managing director.

“That’s where I think LADOL has been NEW FACES IN POLITICS particularly disruptive.”

Meanwhile, younger leaders are keen to disrupt Buhari, the last of his cohort Others boosted by the drive for more Nigerian ownership in the energy secin the ageing politico-military elite. tor were indigenous oil producers like Senate president Bukola Saraki, 55, is Seplat. It is supplying gas to the Azura emblematic of the next generation of power plant, one of the few bright spots politicians who feel it is their turn to in Nigeria’s dysfunctional power sector. lead. Buhari’s team knows that Saraki is a threat, and have spent The so-called ‘diesel cartel’ is working hard to keep the last year trying to pin Nigeria dependent on a corruption charge on him, which eventually was small generators.

Nigeria’s operational shot down by the courts in It is a classic example electricity production early July. of how Nigeria’s elite has in 2015 from installed A wave of defections hit created a market, cornered capacity of 12,522MW it and relentlessly gouged Buhari’s All Progressives was only 3,879MW due citizens. The process startCongress in July and to problems including ed with the weakening August. New faces, less tarlack of maintenance. of the refineries under nished by scandal, such as former House of Representatives speaker Babangida and Abacha. Successive Aminu Tambuwal, are touted as future administrations have privatised and leaders. Both Tambuwal and Saraki invested, without tackling the heart of the problem: fuel and power shortages have rejoined the opposition People’s benefit those in power.

Democratic Party.

These various cartels remain a millA more vibrant private sector, with new dynamics in tech and agriculture, stone round Nigeria’s neck. Take the are providing hope. Encouraged, civil port at Apapa for instance. A forbidding column of heavy trucks and tankers society is trying new tricks to amplify snake out of the port and far along the accountability. In this sense, the elections in February 2019 are an imporOshodi-Apapa Expressway. The slow tant flag post in a broader evolution. speed at which containers get processed at the ports is testament to the rent Things won’t change overnight, but extracted at every painstaking step of change they must.

SOURCE: NIGERIA POWER BASELINE REPORT

Finally, some monopolies have been tackled top-down with industrial policy.

With the passing of the Local Content Act in 2010, Nigeria weakened the foreign dominance of the oil sector. One clear winner of this has been LADOL, the logistics hub company that won a tender from France’s Total to do the final engineering work on the deepwater Egina platform.

SittingoppositetheApapadocks,Egina looms like a skyscraper lain on its side. At

EMTS

SOURCE: NIGERIAN COMMUNICATIONS COMMISSION

NIGERIA

S E P T E M B E R 2 018

31%

67

68

COUNTRY FOCUS

NIGERIA

Audu Ogbeh Agriculture minister, Nigeria

THE CHANGE MUST BE CULTURAL Nigeria's agriculture minister, himself the son of a farmer, talks to The Africa Report about the future for small-scale producers and how to solve the root causes of herder/farmer clashes

S

o m e t h i n g re f re s h ing happened when Ni g e r i a’s m i n i s t e r of agriculture, Audu Ogbeh, arrived ‘on seat’ in November 2015. He maintained and deepened the programmes of his predecessors rather than replacing them.

This included, for example, the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending, launched by Akinwumi Adesina – now president of the African Development Bank.

“We did not throw it overboard,” says Ogbeh. “It is helping the big-scale operators to be able to access credit with the commercial banks, given their allergy to lending to agriculture.”

But if Ogbeh has a passion, it is for the smallholder. “By far, the majority of farmers in Africa today own no more than a football-field worth of land. And there are so many that managing their demands and production is beyond the capacity of any single office.”

Reaching them demands an army of extension workers – so called for their ability to extend advice and improve access to inputs like seeds and fertiliser to farmers in the field.

Ethiopia claims to have several hundred thousand extension workers. In contrast, “We have a very poor ratio of farmer to extension worker,” admits Ogbeh. “[Extension programmes] existed in the past under a World Bank scheme, but they withdrew and the system died. But we are reviving them.” Ogbeh says he wants to have four or five extension workers for each of Nigeria’s 774 local government areas.

THE LEGACY OF COUPS Extension workers are particularly useful in educating farmers about practices that have been proven to increase productivity elsewhere. Ogbeh offers an example: “In Minnesota, at a corn farm, the planting distance of maize on the ridge is six inches apart. In Nigeria, they are one metre apart. In between, the weeds take over. So they have to weed the farm twice, lose all their money and the yield of the farm is so low – two tonnes per hectare, compared to the farmer out in Europe or the US who has 15, 20, 25 tonnes per hectare.”

Ogbeh argues that Nigeria’s periods of military rule were particularly devastating to farming knowledge. “India never had a

PLANTING PROMISE 28 July 1947 Born in Otukpo, Benue State 1982 Named communications minister 2001 Became national chairman of the People's Democratic Party 2015 Appointed as President Buhari's agriculture minister

coup! So they could work through serious problems of poverty, but not us,” he explains. For example, before independence there were clear grazing areas for cattle herders in the north covering 5m hectares. These lands were then encroached on by a growing population and seized by generals.

This plays into the current deadly conflict pitting pastoralists, who are suffering from environmental degradation, against settled farmers, whose crops are trampled and eaten by hungry cows. “We are inviting people to go into farming, and then their farms get destroyed,” says Ogbeh.

“We are also interested in the wellbeing of the cattle because we need the beef and milk.” He adds that on their forced marches to find sources of water and food, cows abort if they become

THE AFRICA REPORT

•

N ° 10 3

•

S E P T E M B E R 2 018

NIGERIA

COUNTRY FOCUS

LEMMY VEDUTTI PHOTOGRAPHY

like tractors and rice mills; and a deal with Morocco’s OCP to supply phosphates.

It is not just smallholders who are doing big things. Minister Ogbeh singles out rice producer Coscharis Group for praise at the other end of the scale. “[They are] about to become one of the largest rice producers of the country. [They have] an 8,000ha rice farm, with some of the most sophisticated combine harvesters I have ever seen,” says Ogbeh. The ministry has given Coscharis free access to a government silo and is importing an additional 10 rice mills, each able to process 30,000 tonnes a year, adding to Nigeria’s existing 27 mills. “The first set of big rice mills were bought by the federal government and sold to millers at a whopping discount, with interest rates of 4% down from 25%,” says Ogbeh.

pregnant and produce little milk.

“And the beef getting to Lagos is as good as plastic.”

The government is seeking to create a system of ranches.

That will require finance to create dairy processing plants and feed mills for cattle. It would include reviving grazing areas – “or what is left of them. There were 415 of them before, some gazetted, some not,” Ogbeh says.

Then, the idea is to start building mini-dams to provide the water cattle need. That is to be done in conjunction between the state and federal government.

But the real change will have to be a cultural one, argues Ogbeh.

“We are saying to them, stay in one spot. Things do change. We [Nigerians] used to kill twins because they were seen as horrors – that has changed.”

THE AFRICA REPORT

•

N ° 10 3

•

Whether or not he is able to convince herders to change, one thing that is starting to shift is perceptions around the amount of money in farming.

Central bank governor Godwin Emefiele claimed last year there were 88,000 newly minted naira millionaires from the rice revolution that has swept Kebbi State.

“We are saying to them [pastoralists], stay in one spot.

Things do change” This, claims Ogbeh, is thanks to government efforts: the Anchor Borrowers’ Programme, which has provided more than 70,000 farmers with enough inputs to grow a hectare of rice in Kebbi State; the lowering of import duties on agricultural equipment

S E P T E M B E R 2 018

REVERSING MIGRATION At a smaller scale, Ogbeh says that farming has the opportunity to provide employment for young people. The Livelihood Improvement Family Enterprises scheme is commissioning a slew of projects, including small rice mills and palm-oil mills, as well as aggregating farmers into cooperative arrangements where they can pool their purchasing power for inputs. “It’s a strategy for reversing migration both from the village to the city and from the city to Europe,” says Ogbeh. “We will set these things up in village communities where so many young graduates from schools, polytechnics and universities return back to their villages with nothing to do.”

It is quite an agenda. But Ogbeh says the traditional roadblock to reform – a sclerotic administration – is tempered when he reminds colleagues about the crisis to come. “I say to them: ‘When the crisis of population comes, I won’t be here. You will,” the 70-year-old minister says. “How are you going to feed [Nigeria’s] 415 million people by 2050?”

Interview by Nicholas Norbrook in Lagos

69

TOP 200 BANKS

NIGERIA A FRAGILE RECOVERY Many of Nigeria’s banks recorded healthy profits as the economy turned a corner. Non-performing loans remain a problem, but oil prices are on the rise and lending to government remains a mainstay

S

ince Nigeria’s economy rebounded from a year-long recession in the second quarter of 2017, the outlook for the country’s banks has become brighter. However, concerns remain that the fragile recovery, which is down to the resurgence of oil prices, could be upended by a price slide.

Many banks showed some resilience, growing profits throughout the recession, and they are expected to keep up the trend in 2018, albeit at a lower rate of growth relative to the previous year.

This is mainly due to the decline in yields on government securities, which have

BANK NAME

PROFITS ($m)

TOTAL ASSETS ($bn)

Top Nigerian Banks RANK IN TOP 200

80

21 Zenith Bank

15.4

489.3

23 First Bank of Nigeria

14.4

131.4

24 Zenith Bank Nigeria

13.3

432.1

29 Access Bank Group

11.3

170.5

30 United Bank for Africa Group

11.2

216.1

34 Access Bank Nigeria

9.6

146.4

37 Guaranty Trust Bank

9.2

468.8

41 United Bank for Africa Nigeria

8.1

116.7

60 Ecobank Nigeria

5.0

55.6

63 Diamond Bank Nigeria

4.7

-24.7

2017 RESULTS FROM TOP 200 BANKS RANKING

been a major source of interest income for the banks over the past two years.

The Central Bank of Nigeria (CBN) has recently cut back on issuing securities after embarking on an aggressive programme aimed at funding the national budget deficit in the past couple of years.

This has precipitated a decline in yields.

Top banks such as Zenith Bank (#21) and Guaranty Trust Bank (#37) recor­ ded a 37% and 29% increase in profit after tax in 2017, respectively. Meanwhile, mid-tier banks Stanbic IBTC (#74)and SterlingBank(#93)sawincreases of 70% and65%,respectively,inthesameperiod.

Analysts do not expect such growth rates in 2018. Robert Omotunde, head of investment research at Lagos-based Afrinvest Securities, says new avenues for income have to be explored. “The banks will just have to be ingenious because the free lunch of high yield is no longer the case,” says Omotunde. He suggests that a viableapproachtolong-termprofitability, which some banks are already exploring, is to find niche sectors of the economy to lend to. However, yields on government securities may yet remain attractive as the central bank seeks to prevent capital flight ahead of national elections in 2019.

Diamond Bank DIAMOND IN THE ROUGH WHEN GLOBAL OIL PRICES COLLAPSED in 2014, sending Nigeria’s economy into a tailspin, mid-tier Diamond Bank was hard hit. It recorded a drop in profits of approximately 80% in 2015. Prior to this, the bank had bullishly pursued a retail strategy that saw it ramp up lending to consumers in the middle class and small companies. And, like most other banks, it was active in lending to corporates across key sectors of the economy such as power and oil and gas. Ratings agency Moody's reports that 52% of Diamond Bank's loan

book was in oil and gas as of December 2017. As the recession set in, Diamond Bank's non-performing loans (NPLs) rose. As of 2017, its NPL ratio has doubled from 7.2% in 2015 to 14.7%, almost three times the regulatory threshold.

With industry-wide NPLs forecast to increase in 2018, it remains to be seen if the bank has reached the peak of its loan troubles. Moody's said in June that it expects Diamond to turn its performance around: ‘Diamond's positive outlook reflects our expectation that

elevated asset risks will decline this year on account of the resolution of some of its past due loans that have not been impaired,’ the ratings agency stated.

Despite these challenges, Diamond Bank has refreshed its strategy and continues to pursue a digitally led, retail banking strategy. In late 2017, Diamond Bank walked back its international campaign. It sold its Benin, Cote d’Ivoire, Senegal and Togo subsidiaries to Côte d'Ivoire's NSIA insurance company. Then, in April 2018 it sold off its Britain-based

operations to focus entirely on the Nigerian market.

Diamond Bank has increased its investments in technology, and financial inclusion is a key focus. It has partnered with the likes of the Gates Foundation, MTN and the International Finance Corporation to continue its push to bring more people into the formal financial system and channel more loans to small enterprises.

Diamond Bank's management team, led by chief executive Uzoma Dozie, is optimistic that Diamond is making the right bet for the future.

C.I.

THE AFRICA REPORT

•

N ° 10 3

•

S E P T E M B E R 2 018

TOP 200 BANKS

MICHAEL KAMBER/THE NEW YORK TIMES/REA

Having cut back on lending during the recession, banks marginally increased the quantum of loans issued to the private sector in 2017 by 3.5%, from N61trn ($170bn) to N63trn according to data from the National Bureau of Statistics.

But in its annual outlook for the sector, ratings agency Moody’s says the real value of the loans declined by 15.4% in 2017 as a result of the devaluation of the currency. The agency forecasts an aggregate increase in lending of up to 10% in 2018.

INCREASED PROVISIONING Non-performing loans (NPLs) remain a concern. The industry NPL ratio is forecast to rise beyond the 15% of total industry loans that the central bank reported earlier this year. Moody’s estimates a rise to around 18% at year end.

Consequently, banks have to cover for the increase in troubled loans. Aside from this, new international financial NIGERIA’S ECONOMY IS STILL HIGHLY reporting standards that came into DEPENDENT ON OIL PRICES, LENDING force in January require the banks to RISK TO BANKS’ LOANS TO THE SECTOR increase provisioning. IFRS 9, as the standard is known, is expected to result in a downward adjustment in the value that banks with relatively high NPL ratios of shareholder capital. will reinvest most of their profits. With Rahul Shah, head of financial equity the release of the full-year results for 2017 and publication of the NPL numbers research at Exotix Capital, explains that the underlying idea behind the standard beginning in April, most of the top banks, is to help improve credit risk manageexcept First Bank of Nigeria (#23), faced no restrictions on dividend payments. ment: “A number of banks may need to set aside substantially higher volumes Others such as Ecobank Nigeria (#60), Diamond Bank (#63, see profile) and of provisions [as a result of IFRS 9], but First City Monument Bank (#85) were we have seen central banks elsewhere either precluded from paying dividends allow for a transition period to ease the or allowed to pay with restrictions, due financial burden and to prevent negative to their NPL and capital unintendedconsequences, such as a sharp reduction adequacy ratios (CAR) not in lending appetite at meeting the criteria.

Individually, the counthe banks. The CBN may Stanbic IBTC’s increase choose to adopt a similar try’s banks hold sufficient in profit after tax capital in excess of the capiapproach,” says Shah. As in 2017. Mid-tier banks tal requirements. Although such, experts generally recorded the highest hold the view that the comthe central bank estimated percentage growth that the average baseline bined effect of the uptick in in profit as Nigeria CAR for the industry was NPLs and the introduction came out of recession. of the new standard will 11.5% in February, most lead to a moderate reduction in capital banks in their full-year results reported a CAR above 15%, which is the threshold held by the banks, but not to an extent set for systemically important banks. that will give any cause for concern.

In a pre-emptive move to further strengthen banks’ capital buffers, the CYBER SECURITY TAX central bank issued updated guidelines Improving income from fees on transacon dividend payments in January, ahead tions and commissions, and particularly those from the use of digital channels, of the release of full-year results for 2017. remains a key focus for the banks as Itprescribednewcriteriawhichthebanks must meet before they would be allowed they seek to recover their investments to pay out returns. This aims to ensure in information technology. The 2017 data SOURCE: TOP 200 BANKS

70%

THE AFRICA REPORT

•

N ° 10 3

•

S E P T E M B E R 2 018

for 13 banks listed on the stock exchange showed that they increased receipts from fees and commissions by 11%, from N592bntoN656bn.But,asthebanksseek to grow income from digital channels, they will need to contend with a new levy of 0.005% on electronic transactions for the government’s national cyber security fund, which the central bank introduced in July. It is expected that the banks will pass on the cost to customers.

Digital transformation remains a key priority for the banks as they seek to capitalise on the promise of efficiency that technology offers. United Bank for Africa(#30)andDiamondBankunveiled artificial intelligence assistants earlier in the year to help customers to carry out online transactions, while Sterling Bank launched a loan service called Specta, which it claims assesses loan applications and disburses approved loans within five minutes (see page 44).

As the gap between the six largest banks and the rest of the pack widens, it remains to be seen if there will be any form of merger and acquisition activity.

Two banks – Unity Bank (#147) and Skye Bank – have been in some distress and in need of capital injections. The former has been involved in discussions with investors to secure capital, but nothing has materialised yet. The latter, which fell off our rankings this year, has received a new two-year mandate for the replacement board of directors appointed by the regulator in 2016.

Charles Idem in Lagos

81

90

FUNMI ADEBAYO

A woman's place is in the boardroom

B

eing a Britgerian, as I like to call myself, I have noticed something quite peculiar. In London, one of the most important financial centres in the world, there is a stark lack of senior female presence, not to mention black female presence!

But I’ve found in Lagos that the story couldn’t be any more different. When I have arranged meetings in Nigeria – whether it be with banks, asset managers or insurance companies – I have been struck by how many women I’ve come across. These women aren’t silently taking notes in the corner or waiting for their male colleagues to take charge of the conversation. They are powerful women in positions of authority who speak confidently about their subject matters and are respected by the people in the room, regardless of gender.

Across the financial services industry in Nigeria, women are represented on both the board and at management levels. You’d be hard pressed to find a Nigerian bank that doesn’t have a woman as a key decision-maker. Each of the top five Nigerian banks has female representation, both on the board and in management. Moreover, First Bank of Nigeria and Guaranty Trust Bank have female chairs, Ibukun Awosika and Osaretin Demuren, respectively. The same can’t be said for Britain, which does not have a female chair or CEO for any of the top five banks, in spite of initiatives such as the Women in Finance Charter.

Even when you look at finance roles in government, it’s astonishing to compare the two countries. Nigeria has had two female finance ministers in succession, one of whom was Ngozi Okonjo-Iweala, seen as one of the most powerful African women in the world. The current minister, Kemi Adeosun, started her career in the City of London, but I can safely say could never have achieved equivalent seniority in Britain.

Britain has had absolutely no women occupy the role of chancellor of the exchequer and few in the cabinet, while in Nigeria women have long enjoyed roles in a litany of ministerial offices. Nigeria has also had a female acting central bank governor, Sarah Alade, in addition to regular representation of women on the central bank board.

The realisation of all of this has been both exciting and paradoxical. I’d have expected that Britain would be much further ahead in female

representation than Nigeria. Questions such as 'Is feminism African?' still circulate in the Nigerian media, not to mention the criticism Chimamanda Ngozi Adichie received for her essay ‘We should all be feminists'. Nigeria is also still battling with deeply entrenched gender-based issues such as female genital mutilation and the fact that marital rape is still legal. That being said, when I look at Britain's suffragette movement, which was largely fought on the right to work as men do, women never had to fight for this in Nigeria. The fight has been more about the societal role of women in the home.

The inclusion of women in the workplace and in senior roles has been empirically found to achieve better corporate performance. A report by the Credit Suisse Research Institute in 2016 found that companies with at least one woman board director produced a better return on investment than those with all-male boards. I wonder if the presence of women in such senior roles in finance and the sector's relative success in manoeuvring through the 2008 economic crisis could be seen as proof that women should be given their dues for their influence in such roles?

Norwegian researchers Øyvind L. Martinsen and Lars Glasø found that ‘women are better suited for leadership than their male colleagues when it comes to clarity, innovation, support and targeted meticulousness’. That could be a factor in why the Nigerian banking system has more successfully dealt with crisis upon crisis than those of Britain or the western hemisphere in general. One example of this is that Kemi Adeosun was the first finance minister to address the removal of ghost workers from the federal payroll, demonstrating a transparency that we haven’t seen from her predecessors.

It’s time Nigerians take stock of the empowering role of women in one of their key industries and unleash the power of women for society at large.

Maybe tackling corruption and bringing forth economic progress could do with a female touch.

Women’s leadership could be a factor in why the Nigerian banking system has more successfully dealt with crisis upon crisis than that of Britain

Funmi Adebayo is a financial analyst. She is a finance professional based in the City who frequently travels to Nigeria.

THE AFRICA REPORT

•

N ° 10 3

•

S E P T E M B E R 2 018

Shaping the future of Africa

Save the date 7th edition

KIGALI

25 & 26 March 2019

www.theafricaceoforum.com ORGANIZERS