Temasek comes to Nigeria with Seven Energy Deal

Bloomberg reports that Singapore’s state-owned investment company, Temasek Holdings Pte, plans to buy a stake in Seven Energy International Ltd. for $150 million.

This follows an announcement in November of a $1.3 billion investment in three gas blocks offshore Tanzania by Temasek’s liquefied natural gas unit Pavilion Energy Pte.

Song Seng Wun, a Singapore-based economist at CIMB Group Holdings Bhd. (CIMB) said “It(the deal) ticks all the right Temasek boxes as it is an investment in a fast-growing emerging economy and it is an investment in resources.”

Temasek joins other investors including Carlyle Group LP and Robert Diamond’s Atlas Mara Co-Nvest Ltd. (ATMA) that are seeking to profit from Africa’s development.
“We are interested in investment opportunities in Africa where they fit our investment themes; in particular, around the transformation of economies and the demand for consumption by growing populations,” Temasek spokesman Stephen Forshaw said.

Ahead of the most recent investments in Africa, Temasek’s assets in the continent, central Asia and the Middle East accounted for just 2% of its total holdings as of March 31, 2013, according to its latest annual report published in July. That’s on a par with investments in Latin America and compares to 13% in Australia and New Zealand, and 12% in North America and Europe.

Investing as little as $150 million in a Seven Energy makes sense as Nigeria is still politically unstable, Song said.

“One has to have a very high-risk appetite to invest in a failed state like Nigeria,” Friedrich Wu, an adjunct associate professor at Nanyang Technological University in Singapore said in an e-mail. “After the BRIC economies, investors are chasing the next frontier markets to pour their money in. Africa has been talked up by various analysts and the media, but it could turn out to be a nightmare or quagmire.”

Founded in 2004, Seven Energy focuses on the emerging Nigerian domestic gas market.

Apart from Temasek, International Finance Corp., a unit of the World Bank will invest $75 million and the IFC African, Latin American and Caribbean Fund $30 million.


FG to float Fannie Mae-Style Mortgage Company

The Federal Government intends to develop the Nigeria Mortgage Refinance Company along the lines of the United State’s Fannie Mae that will help broaden access to home loans in Nigeria.

The company will sell bonds in the capital markets and provide long-term financing to lenders that will help them extend more home loans, according to Mercury, a PR company acting for the FG. The Mortgage Company will also have an oversight function to standardise mortgage lending practices in Nigeria.

The company will extend maturities to Nigerian home-buyers for as much as 20 years, encouraging the building of 75,000 new homes a year and creating at least 300,000 jobs.

Nigeria has been seeking to expand financing to help address a housing deficit in the country.

The Federal Mortgage Bank of Nigeria said last month that it is in talks with two Chinese lenders for credit of as much as $6 billion. In November, the FG accepted a $300 million loan from the World Bank’s housing unit.

The Tribune-FG to float Fannie Mae-Style Mortgage Company












CBN to subject banks to security certification audit

Headquarters of the Central Bank of Nigeria in...

Headquarters of the Central Bank of Nigeria in Abuja, Nigeria (Photo credit: Wikipedia)

The Central Bank of Nigeria has announced plans to subject all Deposit Money Banks in Nigeria to a security certification audit.

The exercise, according to the CBN, will help ensure greater information security awareness in the financial sector, thus assisting in the protection of clients’ assets.

The Director, Information Technology Department, CBN, Mr. John Ayoh, confirmed this in a chat with journalists on the presentation of the ISO 27001 – 2005 certificate for information security to the bank.

Ayoh said, “Our certification will go through a six-month review internally; but as I said, by the end of 2015, the commercial banks are required to have also acquired the certification.

“We are going to set up a review committee within the Bankers’ Committee and the consultants that will go around the banks and check for compliance with that standard on a periodic basis.”

With the ISO certification, the CBN has joined the league of international financial institutions such as the World Bank and the International Monetary Fund, which have gone through the certification audit conducted by the British Standards Institute.

Shedding more light on the development, the Deputy Governor, Economic Policy, CBN, Mrs. Sarah Alade, said the CBN, with the Bankers’ Committee, was committed to the implementation of the selected standards as an integral part of the financial services industry’s infrastructure transformation programme.

The aim of the programme, according to her, is to significantly enhance the operational efficiency and cost effectiveness of Nigerian banks through shared services.

Alade said a part of the overall goal was industry compliance with an acclaimed standard of managing critical information.

This, she said, would help engender the confidence of stakeholders in the country’s financial services industry.

This, she explained, led to the selection of the highest standard for information security management, the ISO 27001 – 2005, for information security framework as part of the IITC.


FG Commits N70.2 billion Eurobond to Gas Infrastructure

Logo of the African Development Bank (AfDB), p...

Logo of the African Development Bank (AfDB), part of the African Development Bank Group (Photo credit: Wikipedia)

The Federal Government announced the allocation of N70.2 billion ($450 million) for the improvement of the gas infrastructure across the country.

This is aimed at addressing the gas supply problems in the country.

The Minister of Power, Prof. Chinedu Nebo, who disclosed this, also stated that the FG had sourced for additional $1.47 billion from the World Bank; African Development Bank; French Development Bank and the Chinese Exim Bank for the improvement of the electricity transmission infrastructure.

The FG had last Tuesday, said the proceeds from the sale of the 10 Independent Power Project Plants (IPPP), amounting to $1.6 billion, would be used to finance the Transmission Company of Nigeria (TCN).

According to Nebo, “Government is also trying to address gas infrastructure challenges. The first segment is the East-west axis. Government is putting in billions of Naira to address that. The next is the South-North, South-South and North axis. So there is a gas master plan and soon, the issue of gas will be settled”.

On transmission, he said once the FG effectively puts the Funds allocated for the TCN to use, the country would be able to transmit 10,000 megawatts of electricity.

Nebo said, “We might come up with 10,000 megawatts and might be able to transmit all. That is why a huge sum of what is being realized as proceeds of the sale of the NIPP Plants, about $1.6 billion, have been set aside to finance transmission”.

The Minister said the President, Goodluck Jonathan, had approved the inauguration of the Geometric Power Plant in Aba, Abia State.

He added that the FG was working to make sure that the Nigerian Bulk Electricity Trader was fully capitalized to ensure partial risk guarantees for the IPPs.

IFC to Raise $1 billion local Currency Bond from Capital Market

Securities and Exchange Commission (Nigeria)

Securities and Exchange Commission (Nigeria) (Photo credit: Wikipedia)

The International Finance Corporation, the private sector arm of the World Bank has reiterated its readiness to deepen the Nigeria capital market and support private sector development in the country by raising $ 1 billion local currency bond.

The Vice President and Treasurer of the IFC, Mr Jingdong Hua stated this during Nigeria’s Debt Capital Market conference hosted by the Securities and Exchange Commission and the IFC in Lagos. Hua said the IFC’s decision is to look at how to develop Nigeria’s capital market.

According to him, a vibrant local currency capital market is essential for any country to achieve its full economic potential and a cornerstone of the IFC’s strategy to help countries achieve sustainable growth.

“Our desire to put in place a programme for regular Naira denominated issuances reflects the IFC’s commitment to the domestic capital market in Nigeria, and our growing investment to support private sector Development in the country”.

He affirmed that the IFC during its last financial year ended June, 2013 invested $1.5 billion in Nigeria which is 30% of the entire money invested in sub-Sahara Africa.

“IFC’s committed portfolio in Nigeria stands at $1.5 billion, the largest country portfolio in Africa and the 8th largest, globally”, he said.

He added that IFC’s strategy in Nigeria is to prioritise infrastructure, especially power, which was identified as the key constraint to private sector Development; agribusiness, the largest single contributor to gross domestic product(GDP) and the largest employer, especially within the rural poor, the development of small and medium enterprises, the country’s largest formal and informal employer, including for youth and housing.

“These strategic areas are also in line with the Government of Nigeria’s key priorities”, he stated.

Speaking at the programme, the Director-General of the Securities and Exchange Commission, Mrs Arunma Oteh, said that the capital market has been part of the development being witnessed in Nigeria as 18 States issued $3.5 billion bond”.

Oteh highlighting some of the key achievements and challenges within the last few years stated that the conference will provide the Nigerian market with a unique opportunity to leverage the IFC’s wealth of experience in both developed and developing markets to boost capacity.  

IFC to increase Investment in Nigeria

English: The International Finance Corporation...

English: The International Finance Corporation headquarters, designed by architect Michael Graves, located at 2121 Pennsylvania Avenue, NW in the Foggy Bottom neighborhood of Washington, D.C. (Photo credit: Wikipedia)

The International Finance Corporation, the World Bank’s private-lending arm, plans to increase its investment in Nigeria to $2 billion in 2014, according to the Country Manager Mr Solomon Adegbie-Quaynor. This represents a 25% increase.

According to a Bloomberg report, funds to be raised directly by the IFC or mobilised from other sources will be targeted at industries that offer competitive advantage to the West African nation, Solomon Adegbie-Quaynor said in an interview from Lagos.

“We are partnering with the Nigerian Sovereign Investment Authority and also looking at institutions to work with for activities in banks, power, gas, transport and agriculture@, he said.

“Power will be an important industry for IFC investment ‘as it is identified as largest constraint to private-sector growth’ in Nigeria”, he added.

You would recall that Nigeria is selling the majority stakes in its power plants to private investors.

Okonjo-Iweala: Expect Cheaper Mortgages in 2014

Nigerians should expect cheaper mortgages that would assist them to own houses from early next year, Dr. Ngozi Okonjo-Iweala, the Minister of Finance and Coordinating Minister of the Economy revealed.

The lack of access to Mortgage loans due to high charges and inadequate liquidity among the primary mortgage institutions (PMIs) has compounded the housing problems in Nigeria.

However, Okonjo-Iweala said that housing problems would reduce from next year because cheaper mortgages would be available from the Mortgage Refinancing Company to be launched in September.

The World Bank is helping the Federal Government to set up the company with a financial support of $ 300 million. The minister said the new institution would enable the PMIs have access to more liquidity and create more mortgages for Nigerians to own their houses at cheaper rates.

According to her, the company, which would be a private sector driver and majority private sector owned, would provide enough financing in the economy for mortgages. The institution will buy mortgages from the PMIs thereby providing money for the PMIs to give more mortgages.

She explained that the World Bank is supporting the company with $ 300 million soft credit which has zero interest rate, 10 years of grace and 40 years repayment period, stressing that with this financial support, they would be able to drive down interest rates at affordable levels.

She revealed that the project which the Ministry has been working on for two years will be launched by the President within the next two months.

The Mortgage Refinance Company will be floated between August and September but the liquidity will not be available until January, 2014.