Business
Okpala:Debt utilisation must support actual economic growth
Published
3 years agoon
OKPALA:Debt utilisation must support actual economic growth
Group Managing Director, VFD Group Plc, Nonso Okpala, presides over an expansive financial conglomerate with expertise across many sectors. Okpala, a well-rounded finance and economic expert, in a recent interview speaks on Nigeria’s macroeconomic outlook, financial markets and business development.
What are the key variables that will shape the economic space in the second half, especially the financial markets?
OKPALA:Following the recession witnessed in third quarter 2020, the economy has recorded two consecutive quarters of economic growth, albeit marginal.
Two major factors have heavily influenced the economic conversation in first half 2021 are inflation and exchange rate. These will remain a key factor for the rest of the year. In second half, we expect a likely increase in headline inflation, followed by the growing trend of higher interest rate across most money market instruments, including treasury bills.
In the capital market, we have seen some progress with the implementation of the demutualisation. However, factors such as naira stability, earnings performances of key players and government policy would be crucial for market growth, especially towards attracting and retaining foreign investors.
We’ve seen a continuing decline in foreign portfolio investments. What is responsible for this and how do we make Nigeria the preferred destination among emerging markets?
The decline in foreign investments could be attributed to the condition of Nigeria’s economic and business space, as well as the security challenges, socioeconomic uncertainties associated with the COVID-19 pandemic, negative macroeconomic indices and mismatch in policies that have failed to give direction.
Huge concerns around foreign exchange (forex) liquidity, capital repatriation, rising inflation and the deterioration in the macro-environment have also dampened the appetite of foreign portfolio investors. In addition, the Nigerian Exchange (NGX) and mutual funds both recorded bearish performances with the NGX All Share Index on negative yield between January and June and only 25 out of 118 listed mutual funds posting growth in the first quarter 2021.
A possible increase in foreign inflow will be supported by the combination of significant improvement in operating environment and the capital market, relative stability in the foreign exchange market, improved security conditions and deliberate government policies that impacts ease of doing business.
Are we likely to see a rebound in the equities market in the second half?
The equities market is not reflecting impressive corporate earnings or a continuous uptick in fixed income enough to weigh on the market. However, a decline in inflation and a convergence of forex rates and forex stability in second half will boost investor confidence and improve foreign portfolio investments in the equities sector. Those are a few of the conditions that will indicate whether a recovery will occur for NGX ASI, although some sectors are already seeing positive year-to-date performance. In addition, the SEC is working on various initiatives which we are hopeful would increase local participation in the market.
What sectors do you think investors should look out for?
Across Africa, we have seen accelerated investments in financial technology. This trend would remain the same given the maturity stage we are in and the vast market that remains to be captured.
Real estate is a viable investment sector. A gradual shift into property-tech and rejig of the housing model to increase investment yield and rental yield is required to accelerate growth.
Other sectors to look at include telcos, food and beverages and travels and tourism especially as the world economy comes to a full reopening and travel restrictions are lifted.
Access to finance is still a major issue for individuals and businesses, especially small and medium enterprises (SMEs), how do we improve access to finance? And what is your Group doing about this?
This remains a challenge, especially in developing and underdeveloped countries.
Along the value chain of our businesses, we have different initiatives and products that helps address this. For individuals, this is purely technology-focused. We have built a virtual banking solution that eliminates barriers and reduces the cost and time of accessing financing. In addition, we will continue to use data to understand our customers and provide them with risk-based credit access.
Within the Group’s portfolio companies, we have three entities with differentiated focus on creating access to credit for individuals and businesses, and emphasis on how important this is to us. We give loans to SMEs through our micro-finance bank while structured financing for larger corporates can be accessed from our bridge financing outfits. Hence, there is something for everyone.
Layered on this is our corporate banking portal which will be launched soon. In designing this, a large emphasis was placed on SMEs. Beyond financing, we are committed to providing end-to-end financial services and growth accelerators to business we work with.
What is your assessment of the first half economic performance, with emphasis on the financial markets?
The first half 2021 was a mix of outcomes. The country officially came out of recession in first quarter 2021, while we have seen strong resistance to the pandemic across some sectors with growth in key indicators, particularly in banking and telecoms. However, these gains remain limited tempered by rising inflation, declining foreign reserves and further naira depreciation across official and parallel windows.
In the financial markets, we witnessed rising interest rate for T-bills, bonds and fixed income instruments. The capital market, however, has witnessed a six per cent decline year to date
Micro-lending is a global tool for poverty alleviation and empowerment. What has been your experience?
We have been into micro-lending business since 2009 first with VFD Bridge using our Lagos State lending licence and now joined by our microfinance bank. From then till date, we have deepened our reach of clientele who can access micro-credit significantly. Particularly between 2019 and today, where we have grown from 3,000 customers to about 300,000, who can potentially access micro-credit on request. We have been able to provide credit to individuals and small businesses who, otherwise would not have had access to credit from mainstream financial institutions. This, in return, enables these businesses grow, while also creating more jobs for thousands of others.
That said, this is only one of the several means of poverty alleviation and the government needs to create more social programmes and an economic environment that ensures gains are sustained.
Nigeria’s national economic development programme revolves around diversification and job creation, what are your suggestions?
In addition to diversification of government revenue and job creation, bridging the infrastructure gap is also a front burner subject towards achieving our development goals. While the government continues to make progress in this regard, the pace of infrastructure needs to be sped up to achieve our goal.
Also, we have seen gradual decline in oil contribution to gross domestic product (GDP), with growth, especially in the agricultural sector. However, the future is technology. Even in our agricultural sector, growth accelerator from this sector would need investment in tools to increase mechanised farming and general produce efficiency. Still on technology, we saw the emergence of India in the 90s to 2000s as a major exporter of tech-based solutions, services and personnel. In today’s increasingly global village, we continue to see the ascendance of Nigerians in the tech and software development phase. Government policies need to fully support this budding area of expertise for job creation and economic value realisation.
What’s your view on Nigeria’s debts?
Our debt profile is on the rise, and this is well documented. The bigger challenge is our ability to generate revenue. In 2020, about 97 per cent of government revenue was used to service existing debt stock. Hence the focus in the future should be on how to enhance our revenue, and how future debt utilisation must support actual economic growth.
How much of a risk does the foreign exchange constitute to the markets and economy?
Considering the importance of foreign inflows to our financial markets, foreign exchange stability and availability is an important indicator for the market and our economy.
Investors need assurances that there will not be capital or interest gain erosion at repatriation point or worse case, scarcity of forex as we saw in 2016 when companies could not repatriate funds to home country.
This stability also has the potential to affect the prices of goods and services, especially for products in the manufacturing value chain that relies on imported raw materials. This, alongside the increasing cost of outrightly imported items, can lead to inflation, a scenario we also saw between 2016-2017, when “imported inflation” accounted for the upward trend in headline inflation.
Related
Bank
ZENITH BANK REWARDS HACKATHON WINNERS WITH N77.5M CASH PRIZE AT ZENITH TECH FAIR 4.0
Published
9 hours agoon
November 22, 2024ZENITH BANK REWARDS HACKATHON WINNERS WITH N77.5M CASH PRIZE AT ZENITH TECH FAIR 4.0
A total sum of N77.5 million in prize money was won at the end of a keenly contested hackathon session at the Fourth Edition of the Zenith Tech Fair, themed “Future Forward 4.0: Embedded Finance, Cybersecurity & Growth Imperatives – The Impact of AI “, which held on Thursday, November 21, 2024, at the Eko Convention Centre, Eko Hotels & Suites, Victoria Island, Lagos.
The prize money was shared among ten finalists who emerged from the over 1,700 contestants that took part in the hackathon, with JumpnPass, a self-checkout technology solution reshaping the retail landscape in Africa emerging as the overall winner and taking home the grand prize of N25 million. This is in addition to a six-week mentorship and incubation program designed to help them grow and scale effectively, which will run from December 2024 to February 2025.
The first runner-up, CreditChek, a credit and verification service provider which leverages AI and open banking to streamline income and credit history verification for financial institutions, won N20 million and a mentorship programme, while the second runner-up, Salad Africa, a start-up which offers seamless integration of credit products for digital platforms and software companies won N15 million as well as a mentorship programme. Other finalists who took home N2.5million each include Regxta, CashAfrica, Middleman, Messenger, Pocketfood, Famasi Africa, Kitovu.
Earlier during the programme, the Group Managing Director/CEO of Zenith Bank Plc, Dame (Dr.) Adaora Umeoji, OON, in her welcome address expressed her appreciation to the Founder & Chairman, Dr Jim Ovia, CFR, for birthing the idea that led to the establishment of the Tech Fair initiative 5 years ago, she thanked him for his vision and foresight in utilizing technology to revolutionize the world of business and banking.
Commenting on the Hackathon, she said, “This prestigious annual event was created to empower and nurture young fertile minds. We hope to produce the likes of Bill Gates, Mark Zuckerberg, Steve Jobs and Elon Musk from the Zenith Bank Hackathons in the nearest future. According to the Nigerian Bureau of Statistics, 70% of Nigeria’s population are youths which is an economic asset when properly harnessed. This is part of the reason why Zenith Bank is hosting this event to support the development of technology startups. Their success not only fosters innovation and growth in Nigeria, but it also plays a vital role in creating employment opportunities for our youth.” She also stressed on the importance of innovation and embedded finance in ensuring strong and enduring institutions. According to her, “it is paramount that we adapt and adopt technology to stay ahead of the curve. We have seen various cases of companies that failed because of their lack of innovation. It is quite obvious that when companies fail to innovate; they can easily be displaced, so this is not the time to be orthodox, innovation should be a top priority for us.”
In his goodwill message, The Governor of Lagos State, His Excellency, Mr. Babajide Sanwo-Olu called for a global approach to doing business in the country. According to him, “What we need to do is to be able to enhance our product and services in order to compete in the world. We can’t continue to act local, we need to think global. Anything that we’re doing now, we need to be able to know that we are not just serving a local market, we actually want to serve the global market, and that’s why I’m glad that consistently, for the past four years, I have kept up with the Zenith Tech Fair. I am sure 5.0 should be bigger and better than what we have today, but for us as a government, what we need to do is to continue to use platforms like this to reassure you of our readiness to provide an enabling environment for your ideas and innovative solutions.”
Described as a huge success by participants, the Fair featured the launch of the bank’s digital wallet, EazyByZenith, which will help to support the bank’s retail and financial inclusion strategy. The fair also included presentations on the leading technological innovations that cut across different aspects of life, such as Artificial Intelligence, Cybersecurity, Risk Management, Compliance, Financial Intelligence, Cloud Computing and Communication Technologies, with the keynote address, “Banking Transformation in a Digital World”, delivered by Robin Speculand, a renowned Strategy & Digital Implementation Specialist.
The event also featured goodwill messages by Jim Ovia, CFR, Founder and Chairman of Zenith Bank; His Excellency, Hon. Kashim Shettima, GCON, Vice President of the Federal Republic of Nigeria (represented by Dr. Tope Fasua, Special Adviser to the Presidency on Economic Matters). Other eminent IT practitioners from top global brands who also made presentations include; Robin Speculand, renowned Strategy & Digital Implementation Specialist; Danilo McGarry, Global Expert on Digital Transformation and AI; Jania Okwechime, Partner, Africa, AI & Data Leader, Deloitte; Rupert Nicolay, Director, Microsoft Worldwide Financial Services.
The panel session had Wole Odeyele, Client Technology Lead for Microsoft Inc. as its host, and featured six discussants including Ada Jabaru, Founder & Director, Nistad Limited; Funke Opeke, Founder & Chief Executive Officer, MainOne; Guy Futi, Chief Executive Officer, Orda; Dr Auwal Adam Sa’ad, Founder, ZamzamPay; Kashifu Inuwa Abdullahi, Director General, National Information Technology Development Agency (NITDA), and Engr. Bisoye Coker-Odusote, Director General/Chief Executive Officer, National Identity Management Commission (NIMC).
The Zenith Bank startup pitch competition and incubation program seeks to identify and fast-track the growth of high-potential Nigerian startups innovating in key sectors, including Embedded Finance, Cybersecurity, Fintech, HealthTech, Agritech, E-commerce, and more. The program provides an ideal platform for startups to showcase their groundbreaking ideas and gain access to invaluable resources to scale their businesses.
Related
Business
NEW BPP DG COMMITS TO EFFICIENCY AND STAFF WELFARE FOR IMPACTFUL SERVICE DELIVERY
Published
19 hours agoon
November 21, 2024NEW BPP DG COMMITS TO EFFICIENCY AND STAFF WELFARE FOR IMPACTFUL SERVICE DELIVERY*
*_…begins review of bureau processes to enhance government procurement systems_*
The Director General of the Bureau of Public Procurement (BPP), Dr Adebowale Adedokun, has outlined his vision to drive efficiency, enhance staff welfare, and reinforce the Bureau’s regulatory mandate in alignment with President Bola Ahmed Tinubu’s renewed hope mandate and his commitment to improving Nigeria’s economy. This was made known during an interactive session with staff of the Bureau at the State House Banquet Hall on November 20, 2024. Dr Adedokun emphasised the urgency of delivering results as well as improving trust in the government procurement system to support President Bola Tinubu’s Renewed Hope Agenda, declaring, “Let us work together to get value for money for Nigeria’s developmental processes and achieve President Tinubu’s mandate of making Nigeria’s economy better.”
Furthermore, in a bid to strengthen operational efficiency, the DG also announced key reforms, including introducing Service Level Agreements for the bureau’s processes ensuring that letters are treated within 3 (three) days, and ensuring reports are completed within 14 (fourteen) days. He also highlighted plans to secure a sustainable budget that would improve the working environment and provide better welfare for staff.
Dr Adedokun firmly stated the Bureau’s resolve to uphold its regulatory integrity under his watch. He warned that officers are prohibited from visiting Ministries, Departments, and Agencies (MDAs) unless on official assignments stressing the need for officers of the Bureau to stay above board. He further declared that contractors are no longer allowed within the Bureau’s premises to ensure that officers can perform their duties without undue interference and influence.
Calling for a collaborative approach, the DG urged staff to embody the Bureau’s regulatory values by adhering to procurement guidelines, avoiding delays, and striving for excellence. “As a regulator, you must be seen to be guided by the procurement process,” he stated. He assured the team of an open-door policy, encouraging innovative ideas that could propel the Bureau to greater heights.
The session also featured a visit from former DG, Engr. Emeka Ezeh, OFR, FNSE, who led the Bureau from 2009 to 2016. Engr. Ezeh commended President Tinubu for appointing Dr Adedokun and urged staff to provide their full support to the new leadership. He encouraged staff to focus on leaving a legacy of excellence, saying, “Work in a way that you will be celebrated wherever you go in life.”
Senior Directors, including Engr. Nasir Bello and Engr. Isaiah Yesufu reiterated the importance of supporting the DG’s vision while emphasizing adherence to the Bureau’s operational guidelines. Staff also welcomed the session, sharing their perspectives on improving the Bureau’s operations and pledging their support for the new leadership.
In a related development, Dr Adedokun sought collaboration with the Presidential Office of Digital Engagement and Strategy (PODES) led by its Head, Mr O’tega Ogra, who is also the Senior Special Assistant to the President on Digital/New Media, during a courtesy visit to his office on November 21, 2024. The DG emphasized the need to enhance the Bureau’s public engagement and visibility in line with the all-of-government communications approach being espoused by the PODES.
Mr Ogra congratulated Dr Adedokun on his appointment and highlighted the key role BPP plays in advancing Nigeria’s development agenda. O’tega further expressed his commitment to collaborating with the Bureau in amplifying its communication efforts and ensuring Nigerians understand and appreciate its critical role in national governance.
Dr Adedokun’s leadership marks a new chapter for the Bureau of Public Procurement, focused on accountability, efficiency, and impactful service delivery. His vision aligns seamlessly with the Federal Government’s goals of economic transformation and sustainable development as well as President Bola Tinubu’s renewed hope agenda.
Janet McDickson
Director, Information & Public Relations/Head, Media-BPP
Related
Business
Abducted Rivers bizman rescued, suspected robber arrested
Published
2 days agoon
November 21, 2024Abducted Rivers bizman rescued, suspected robber arrested
The Rivers State Police Command said its men rescued a businessman identified as Julius Madabuchi, who was kidnapped by a four-man gang at a filling station in the Oyigbo Local Government Area of the state.
The police said the man was abducted when the miscreants who were driving in a Black Toyota car stormed the area and started shooting discriminately before executing their plan.
The rescue of the man, the police said, followed a distress call sent to the command control room about the activities of the hoodlums on November 17 and immediately mobilised operatives to the scene, saying the abductors engaged the police in a shootout.
The spokesperson for the state police command, Grace Iringe-Koko, disclosed this in a statement issued in Port Harcourt, Rivers State capital, on Wednesday.
The statement reads, “On the 17th of November, 2014, at about 2023hrs, operatives of the command received a distress call from the Room indicating that a gang of armed men numbering about four operating in a Black colour Toyota Corolla car shot sporadically and kidnapped one Madabuchi Julius at Sabbath Filling Station, Oyigbo.
“Operatives were swiftly mobilised to the scene and the hoodlums on sighting the police operatives drove off, but they were given a hot chase by the operatives and subsequently intercepted along Egbu Street, Oyigbo and a gun duel ensued between the operatives and the hoodlums.
“The hoodlums could not withstand the police’s superior firepower and eventually abandoned the victim and their operational vehicle with registration number RIVERS PHC 938 AH and escaped. The victim was rescued unhurt and the vehicle recovered. He has since reunited with his family.”
The state police image maker however said an investigation is ongoing while concerted efforts are being intensified to apprehend other fleeing members of the gang and recover their operational weapons.
In a related development, Iringe-Koko said the following day, precisely on Monday, operatives of the command acted on credible information, coordinated a covert operation at the St Lorinta Street, Oyigbo and arrested one Gabriel Morris, aged 25, at Mercy Ground in Kom-Kom, Oyigbo LGA of the State.
The state police spokesperson stated, “During interrogation, the suspect confessed to being a member of a syndicate that had been terrorising Oyigbo and its environs in recent times.
Iringe-Koko, a Superintendent of Police, listed items recovered from the suspect including one locally made pistol and a quantity of weeds suspected to be Indian hemp.
She added, “Investigation is ongoing, while concerted efforts are intensified to apprehend other fleeing members of the syndicate.
“This successful operation further demonstrates the effectiveness of the Rivers State Police Command in combating kidnapping and all other forms of crime in the state.”
Related
Trending
-
Business7 months ago
Maxwell Opara Goofed Says AAS Investors As They Stand By Jesam Michael, Demand For Justice
-
society6 months ago
Exposing The Many Lies Of Wanted Cyber Bully, Dorcas Adeyinka + Her Failed Attempt To Blackmail The Odegbamis
-
society7 months ago
Alleged Assault In Court: Setting The Record Straight, Jesam Michael is The Victim, Not Maxwell Opara
-
Politics6 months ago
Niger’s Journey of Redemption Under Governor Bago* By Paul Dickson