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Nigeria Is Africa's Foreign Investment Destination – Soludo By Okenwa R. Nwosu, M.D.
Dr. Charles C. Soludo, Nigeria's Central Bank Governor, was the keynote speaker at the inaugural gala of the Achia Investment Group in Greenbelt, Maryland, last night. The affair, which was slated to commence at 7:00 pm took off more than two hours later at the popular Martin's Crosswinds with capacity audience and distinguished guest list that included the Nigerian Ambassador to the US, Dr. Obiozor, the Deputy Governor of Central Bank of Nigeria, Mr. Ernest Ebi and a representative of the Prince Georges County Executive, Jack Johnson. The President of Achia Investment Group, Dr. George Ego-Osuala, opened the occasion with a brief introduction of the entity that he leads. Achia, which translates as let's laugh, was started by a group of Nigerian baby-boomers in Washington, DC metropolitan area as a club for pooling funds for mutual support of its members on rotational basis. The group has since refocused its goal to diversified long-term investment which can better prepare their members' financial portfolios to support their needs during retirement. The gala event, according to the group's leader, is a community service designed to highlight investment opportunities in Nigeria and the key players who have contributed in promoting wealth creation and preservation for its citizens in remarkable ways. The well organized event featured a three-course dinner and generous entertainment that more than satisfied the gastronomical needs of all present.
The Central Bank Governor's background in the academia was clearly evident throughout his very informative presentation. Before his appointment as the Central Bank Governor, Dr. Soludo had a stint in the World Bank after he left the prestigious Swarthmore College, near Philadelphia, where he taught for years. Rather than read through the text of a written speech, the keynote speaker adopted a lecture format which was based on a well outlined PowerPoint presentation. The thrust of his speech was to clearly illustrate why Nigeria is an investment haven despite the many difficulties that still plague the country and its citizens. He was emphatic that deliberate policies of the Obasanjo administration, which include sanitization of the banking system, judicious management of foreign debt portfolio, accelerated privatization and development of non-oil sector, are key drivers which have markedly enhanced investment climate throughout the national economy. Foreign direct investment, which used to concentrate in the oil sector before 1999, has now been extended to other parts of the economy. The annual Gross Domestic Product (GDP) growth rate, which used to be less than 2.5% in 1999, has more than doubled and faster increases are in the forecast. Similarly, the country's foreign reserve, which used to be about $3 billion (US) in 1999, is now estimated at $35 billion (US). With this rate of growth, the Central Bank boss predicated that Nigeria is on course to overtake South Africa as the continent's largest economy within 10 years.
The young unassuming Central Bank Governor's enduring legacy shall be the decisive role he has played in sanitizing the banking industry in the country. The 1980s and 90s witnessed a proliferation of banks which ended up diluting the stature of Nigerian banking industry on the international market. Before his entry at the helm, not a single bank in the country was listed in the world's top 1000 despite the fact that two had made top 500 list decades earlier. He promised that, in the near future, more than a handful of Nigerian banks shall make it to the world's top 500 and even the top 100 list. The bitter medicine, which the country's top banker prescribed to encourage consolidation in the industry, is now being hailed by many as a "revolution" that is destined to procure Nigerian banks a place of pride and respect in the global financial market. Major banks in industrialized economies of North America, Europe and Asia are now beginning to actively seek operational relationship with their Nigerian counterparts that have successfully scaled through the consolidation process mandated by Soludo's Central Bank. With this new disposition, the banks can now afford to finance large projects on long-term basis instead of the former habit of preferring to engage in short-term loans based on cash collected mostly from their clients' savings deposits.
Perhaps, what got everyone's special attention most was the fact that Nigeria has one of the highest rate of return on investment in the entire world. While the stabilized industrial economies of the West offer rate of returns of 5% or less annually, investors in Nigeria get return rates of 35% or more. Foreign direct investors are now flocking to Nigeria to take advantage of this high rate of returns. The resultant infusion of large amounts of foreign exchange through direct investment has caused a steady strengthening of the naira whose exchange rate has been steadily appreciating. The quantity of foreign exchange invested through the country's private sector has grown so much that the Central Bank is no longer a key player in the sale of hard currency in the country. In 1999, the Central Bank provided more than 90% of all foreign exchange sold in Nigeria but today, it provides only 20% or less while the bulk of hard currency sold originates from private sources. Dr. Soludo predicts an even lesser role, in coming years, for the apex bank in foreign exchange sales. Areas that shall continue to yield impressive returns to investors include Internet and Computer Technology, Telecommunications, Real Estate and Hospitality Industry, amongst others. He noted that as much as 65% of Nigeria's arable land is presently uncultivated. Growth in cassava export, which has now risen to 2 million tons annually, shall become a major foreign exchange earner as more land is devoted to its cultivation. Dr. Soludo portrays Nigeria as a richly endowed virgin forest that is beckoning to be exploited.
The Central Bank boss exuded much pride about the naira. He remarked that the former widespread practice of massive conversion of the naira into more stable foreign currency, like the US dollar, is no longer in vogue because of the steady appreciation of the naira in foreign exchange market. He announced an imminent plan to issue new naira notes later this year and cautioned those hoarding the current issues to redeem them soon before they cease to be legal tender in Nigeria. Arrangements are now in place to mint all future Nigerian currencies in the country thereby terminating the practice of printing them overseas at costs that exceed $100 million (US) annually. Dr. Soludo did not only come across as an economic guru who is at ease with the theme of his speech but also he was a very persuasive salesman for the many virtues of Nigeria's resurgent economy. He enjoined the audience, which had a preponderance of expatriate Nigerians, to follow the lead of the European, Indian and Chinese Diaspora populations who have historically played leading roles in energizing the investment booms in the United States, India and China respectively. Investment in Nigeria's economic growth by its own indigenes living in the Diaspora, said Dr. Soludo, shall greatly encourage other non-Nigerians to follow suit in even larger numbers.
In the brief questions-and-answers session which followed the keynote address, the Central Bank Governor was confronted with the perennial problems of poor socioeconomic infrastructure, economic hardship amongst the masses and need for continuity for most of the good programs that are being initiated by this administration. He expressed great confidence in ongoing efforts to improve electric energy generation and distribution by participation of the private sector. Rivers state, for example, shall soon have a generating capacity that far exceeds local demand. He sees changes already made in the banking sector and other aspects of the economy as far-reaching and very difficult to reverse, even after a new administration comes into power in Nigeria. He remarked that proposed amendment of the constitution is designed, amongst other things, to make the position of governorship of the Central Bank independent of the presidency. The number of poor Nigerians, who used to be as much as 70% of the population in 1999, shall continue to decline as the many good policies of this administration begin to yield expected dividends. He predicted that earnings from export of liquefied natural gas shall soon catch up and may exceed those from crude oil sales in the near future. As one would expect, Nigeria's top banker is bullish on the national economy and confident that current trends offer great hope for reversing most socioeconomic problems of the country in the shortest possible time.
In his own remarks, the jocular and effervescent Ambassador Obiozor commended the expertise and professionalism of the Central Bank Governor and his Deputy who have affirmed his conviction that Nigeria can reach its full potential sooner if merit and equity are the guiding principles in choosing public servants for key positions. He lauded the many accomplishments of the Obasanjo administration, especially the very cordial relationship that he has developed with the United States since he came into power. He revealed that the United States has recently classified Nigeria as a strategic partner which is strongly indicative of a new perception in both countries' desire to collaborate more closely on many fronts. He is of the view that economic opportunities abound in Nigeria and urged the audience to take advantage of all available channels to seek one's economic redemption. Sound economic policies, in the Ambassador's reckoning, take precedence over emotional considerations. He chided unfounded insinuations which suggest that any particular group of citizens are loved or hated more than the rest by those at the helm of affairs at Abuja. He concluded by commending organizers of the event for their initiative which, by his own estimation, shall surely result in great success for the group, in particular and the entire Nigerian Diaspora community, in general.
Both the Central Bank Governor, Dr. Charles Soludo and the Deputy Central Bank Governor, Mr. Ernest Ebi, received awards from the Achia Investment Group for their stellar performances in service of their fatherland. An award by the Prince Georges County of Maryland was presented to Dr. Soludo in acknowledgement of his unique accomplishments in reshaping Nigeria's banking industry. A dance session by all present brought the fulfilling occasion to a pleasurable end.
OKENWA R. NWOSU, M.D. Upper Marlboro, Maryland. U.S.A.
April 2, 2006
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