By Eric King-
The Lord Mayor of the City of London. Alderman Charles Bowman has extended a hand of business relations to Nigeria during a visit to Africa’s most populous nation. In a key speech in Abuja, he said his principal role was to act as an ambassador and a key spokesperson for the UK’s financial and professional services sector, which has had historic links to Nigeria.
The financial sector employs two point three million people nationwide and accounts for some twelve per cent of the Uk’s national GDP. He hailed the sector as the world’s leading exporter of financial services with the largest insurance sector in Europe. It also hosts more than 250 foreign banks – more than any other international financial centre.
Hailing the Uk’s financial sector as a national, European and international jewel, the RT Lord Honourable Mayor of London said he will spend some 110 days during my year in office travelling to 30 countries to promote the UK financial and professional services sector.
”It is no coincidence that I have chosen Nigeria – an important bilateral partner with whom the UK already enjoys a special bond as evidenced by the important contribution the 200,000-strong Nigerian diaspora make to the UK. We have a rich history of collaboration and a joint desire to deepen this further.
Highlighting his goals whilst in Nigeria, he pointed to five key objectives. First, to provide assurance that the City of London will remain the pre-eminent global financial centre well into the future. Second, to advance the strong ties that exist between the UK and Nigeria. Third, to harness this relationship to improve bilateral trade, investment and business-to-business opportunities.Fourth, to promote innovation in financial services. Fifth, to engage, discuss and promote my Mayoral programme – The Business of Trust – which aims to create a lasting legacy of better business, trusted by society.
BILATERAL TRADE
Alderman Bowman spoke of a strong bilateral trade relationship with Nigeria which he estimated as standing at around £3.4 billion pounds per annum. And it is set to become even stronger – forecast to reach £7 billion by 2030. This is a great foundation on which to build future success, but in my view, we can do much more.
Making reference to a declining GDP per capita by the IMF for the foreseeable future, he said the rising population and current economic situation called for a radical change. In order to convert the democratic reality from challenge to opportunity, the country needs to sustain some 3-4 million jobs each year he said. Economic growth will need to rise from the current 2 per cent to at least 6-7 per cent, he stated. The Rt Alderman Charles Bowman emphasised the urgency for economic growth, as he stressed the imperative prerequisites that can produce the desired outcome. He listed the need to create investable infrastructure assets; improving access to capital; the Promotion of financial inclusion; and developing an enabling and compliance-based business environment.
”I’m pleased to announce today that the City is well positioned to be Nigeria’s partner of choice in all four areas. Let me take each of these in turn:
First, Nigeria needs to finance and create the modern infrastructure that every successful economy needs, specifically in the areas of power, gas distribution, transport, IT and broadband. Whilst not forgetting the softer areas of health and education.
London hosts the largest cluster of professional and financial services required for largescale infrastructure projects. We can finance projects, advise on their legal and regulatory framework, deliver the projects through our civil engineering and project management experts, and insure the final product. In short, the City is a full-service centre for infrastructure. And more details on all these strengths can be found in this booklet published on the City of London’s website.
”Here are just some of the projects we are working on, he said.
On my own doorstep in London: the Crossrail project, the largest construction project in Europe – to open this December -, will provide a modern and efficient rail link crossing London from East to West.
And, internationally we are busy the world over. For example, becoming key partners with China in its ‘One Belt, One Road’ programme providing the Chinese with both the hard and soft skills necessary to deliver this extraordinary vision. Nigeria’s second priority should be improving access to capital – moving away from an over reliance on the banks and unlocking dead capital – be it in pensions or real estate, finding innovative solutions and unleashing the capital market. And Nigeria is and can further benefit from access to London’s capital markets.
The City of London has always been at the forefront of financing the African growth story, ever since 1938 when the first African company listed in London.
Eighty years later there are now 116 African companies listed in London with a combined market capitalisation just under £200 billion – the largest concentration of African listed companies outside of Africa. But the City of London will not rest on this privileged history. We are here to work in partnership and collaboration to innovate on financing solutions underlined by the strong partnership with the London and Nigerian Stock Exchanges.”
The two stock exchanges have created an innovative platform for dual listing of equity and bonds which has already proved successful, as the heavily oversubscribed Eurobond and Diaspora bond showed last year. Nigerian sovereign bonds have raised £6.5 billion in total so far”.
The massive demand is a strong statement of international investor interest in building exposure to Nigeria’s economy. It demonstrates the City’s ability to provide a deep additional channel of finance for the development of Nigerian infrastructure and the growth of its economy. The City of London also recognises the need to finance Nigeria’s infrastructure using Naira-denominated financial instruments. Engagement has begun with the City of London and key Nigerian institutions to develop the concept of a Jollof Bond. Similar instruments have already been used successfully in India and China. And will eliminate foreign exchange risk for Nigerian issuers – from the government down to SMEs and provide even greater access to capital for this key sector.
The opportunities for London to facilitate the finance of Nigeria’s growing infrastructure, includes green infrastructure as Nigeria moves towards a low carbon economy, he said. London has raised £20 billion via green bonds and another £9 billion via the 13 green equity funds that are listed on the LSE. ”Nigeria is developing its status in this field and was a pioneer as one of the first governments in the world to issue a sovereign green bond. To advance Nigeria’s ambitions, the LSE will be initiating an international green advisory board spearheaded by the finance and environment ministries to further develop Nigeria’s green finance aspirations”, he said.
Accompanied by business delegate member, Ibukun Adebayo , Head of Emerging Market Strategies at the London Stock Exchange, Bowman spoke optimistically and encouragingly about the prospects of collaborative trade with Nigeria on ever expanding levels. He did not touch on the crippling corruption that compromises the benefits of the oil rich nation and leaves several millions in dire need and shameful poverty. Perhaps he was not to know, or Bowman wanted to keep his speech on positive notes and avoid the smear that comes with corruption. However, with corruption so endemic in Nigeria, given the mass mismanagement of the country’s resources over decades, dealing with corruption will always be a daunting challenge for any prosperous plan or investment there.
FINANCIAL INCLUSION
Bowman spoke about financial inclusion, a topic which also lies at the heart of corruption. Nigerians excluded from the financial pot of the country will all point to corruption as one of their main obstacles. Its effect are so bad that even many of those who complain of corruption rely on this evil force for their very survival. The current president, Mohammadu Buhari has battled corruption for most of his administration, but has failed to rid the country of this selfish and wicked trait. Bawman wants Nigeria’s third priority should be to promote financial inclusion so that more of the population can access and benefit from the financial sector.
”I understand that only 40 per cent of adults are currently banked and some 42 per cent of the population are financially excluded. And thus stifling the development of SMEs – the lifeblood of any successful economy. Promoting financial inclusion requires innovation, something the City has always had at its heart. Perhaps the most exciting innovation in finance today is fin tech, which is changing the way we all access financial services. As Bill Gates put it, “banking is needed, but banks are not,” he said.
London has become a world leader in fin tech, through, strong government tone from the top, a supportive regulatory environment and healthy private investment. We are home to about 1,600 fin tech firms helped by the fact that the Square Mile and the Tech City are only 500 meters apart compared with 5,000 kilometres for their equivalents in the United States.
This proximity has been a key driver for increasing technological innovation in the City. Access to expertise, the huge potential for commercial partnerships and an explosion in demand for digital products within finance are all major pull-factors.
A very exciting development in fin tech as far as Nigeria is concerned is the Open Banking Initiative which was launched in the UK and has since gone global. Open Banking combines security, innovation and accessibility, underpinned by a strong regulatory framework. If given the right regulatory support, Open Banking in Nigeria has the potential to provide a pathway so that millions more can access basic financial services, empowering them to lead more prosperous lives. Indeed, Nigeria could become the leading country in Africa for Open Banking”.