Adebimpe: AACN Nigerian Investors Conference Will Set Agenda for Incoming Administration

2023 is projected to be another defining year for Nigeria, especially its economic landscape, against the backdrop of the general elections that brings on board a new administration. President, Association of Asset Custodians of Nigeria (AACN), Mr. Abiodun Adebimpe, explained in this interview that the 2023 AACN Nigerian Investors Conference would provide a veritable platform for a comprehensive review of the country’s economy and setting the agenda for the new government. Excerpts!

The stage is set for the 2023 Nigerian Investors Conference on May 17. Let’s start by asking what feedback can you share with us from the 2022 edition of the conference?

The event was a huge success. In arriving at this evaluation, I have considered the major thrust of the annual conference which is to present the Nigerian economy to the world by way of spotlighting its fundamentals and potential. The cardinal objective is to provide critical insights with which investors can make informed decisions, in order for them to invest in the country ultimately. So, to ensure a successful outing, we assembled a team of seasoned economic experts drawn from various sectors of the economy, the intention being to provide all-around insight into the Nigerian economy. Mr. Gbolahan Taiwo, Chief Economist for Africa at JP Morgan who spoke on the topic, “Macroeconomic update – Nigeria,” presented a comprehensive overview of the Nigerian economy in the aftermath of the COVID-19 pandemic. Also, Mr. Bola Onadele, the Managing Director/CEO of FMDQ Holdings Plc, dissected the topic, “How to prepare Nigeria for the derivatives markets. What are the upsides?” On his part, JaloHaruna-Waziri, the CEO of the Central Securities Clearing System Plc spoke on “CSD role in Future Market Development”. There were also presentations by the Securities & Exchange Commission (SEC), the Nigerian Exchange (NGX) and the Central Bank of Nigeria (CBN), all connected to the country’s economic fundamentals. The participation of Mrs. Saratu Umar was like an icing on the cake. More than anything, it represented a major signal in building confidence in the country and economy. As the Executive Secretary and CEO of the Nigerian Investment Promotion Council, her words had the weight of government, which has sole responsibility of shaping and implementing economic direction and policies. She provided firm assurances to everyone keen on participating meaningfully in the economy. She spoke elaborately on steps being taken to sustain the Ease of Doing Business in the country, protection of investments and building a burgeoning capital market. These are signs that investors crave to see, and upon which they reach favorable decisions.

It is remarkable that you have used London as the venue for this conference several times, apparently for some strategic reasons! I guess this is in order to provide a convenient avenue to reach investors from across the world!

Your guess is right to a large extent.  The Nigerian Investors Conference is targeted at the global audience, especially portfolio investors with an appetite for frontier and emerging markets. The overarching objective remains the promotion of Nigeria’s economic potential and opportunities. As you know, London has for several decades been reputed as the globally-acclaimed financial center, alongside New York and Hong Kong, among others. So, it is only natural to hold the event where there is a considerable presence of the targeted audience with ease of accessibility across mainland Europe.

We may consider other venues in the future depending on global dynamics and our core objectives. Do also remember that the last two editions of the conference were held in Nigeria, though they were done virtually due to the devastating pandemic at the time.

This year’s event has the theme, “Nigeria’s Economy: Emerging Opportunities in a New Structure”! Can you help us unlock the rationale behind this theme, especially the part referring to a new structure?

The 2023 general elections in Nigeria are, all things being equal, expected to emplace a new administration at the Federal level as well as many states across the country. It is expected to be sworn into office just two weeks after our conference. The transition comes with new realities. In the economic space, virtually everyone understands the challenges facing the country. These are issues that the new administration must face squarely. For us, we hope to see a more market-friendly government that we expect with inherent opportunities. Secondly, there is a new economic structure now emerging which has been propelled by the pandemic: electronic transactions, digital assets etc. Essentially, the COVID-19 pandemic, which disrupted the global economy left in its wake a new approach to economic and business management. This is often described as the new normal. This simply means the deepening of technological solutions and innovations across the board. Transactions or activities, which hitherto required physical intervention or application, are now done virtually or hybrid of in-person and virtually. Another salient factor that has also engendered a paradigm shift in macroeconomic management is climate change. Emissions, which were initially attributed to the exploration of fossils, have been discovered to occur in several other sectors, including ICT. The effect though is a colossal change in the environment and atmosphere that poses an existential threat to the earth and humanity. This consequently prompted a steady shift to renewable energy and the green economy, with several countries setting targets for the elimination of emissions. We cannot ignore these evolving developments because they also impact our own economy and businesses. Nigeria cannot be left out of the global shift. While the economic base has remained largely the same, its organization has taken on a new foundation that is digitally-driven. Now, virtually every sector of the economy operates on a template that prioritizes innovation, technology and AI. Inevitably, digitalization has become the major catalyst for the continuous change in the way the entire economy works. So, we are saying that Nigeria is now structured in a way that it still offers bountiful opportunities to a typical investor.

Talking about the COVID-19 that ravaged the global economy from which it is yet to recover fully, what new fundamentals about the Nigerian economy will you be marketing against the fallout of the aforesaid pandemic?

Looks like you are recycling the above question in other words. Let me put it this way. At the height of the COVID-19 pandemic, we lived in a VUCA environment – volatile, uncertain, complex and ambiguous environment.  Things have clearly not remained the same though the Nigerian environment has stabilized to a considerable extent. A new normal has emerged and the world has moved on. Nonetheless, we need to be mindful of developments elsewhere as part of a global environment.

The world has embraced a new normal based on adaptations from the COVID-19 experience. In our own case, it was on account of the epidemic that we deferred the annual investor’s conference in 2020, but in 2021 and 2022 we responded by organizing it virtually and both turned out very successfully with almost all the benefits of physical events. Participation was high and the sessions were very robust and insightful. Addressing your question directly, I will say that with our very young demography, pandemic or no pandemic, climate change or not, Nigeria remains the toast of discerning investors. Imagine a country of over 200 million people with a median age of 18.1 years! What fundamentals could be more compelling? No doubt that we have our issues. Nonetheless, I strongly believe that our wide infrastructural gaps across various sectors also present opportunities. Healthcare, education, entertainment media and technology, and agriculture are actually some of the gainers. Endless economic opportunities exist in Nigeria, especially in those sectors that service the youth directly. We just need to fix some of our issues, which are well-known, to unlock these opportunities. In a nutshell, while we acknowledge that the Nigerian economy is not completely insulated from macroeconomic shocks such as the one triggered by the COVID-19 pandemic or climate change, we, however, emphasize that it has adapted to evolving changes in the macroeconomic space, with its fundamentals remaining very strong. The vital anchors of socio-economic development are abundant in the country. Ranging from natural resources to human capacity, the country is blessed. When you juxtapose such essentials as arable land, petroleum, sunlight, energetic young people, population size, and solid minerals, among others, you will realize that Nigeria is an investor’s haven. The country’s status as Africa’s biggest economy is not a matter of political sloganeering, it’s a reality backed by factual indicators. For instance, the size of our capital market is roughly 15% of the GDP while in South Africa, the capital market is about 300% of the size of the GDP. That’s a huge growth potential.

Can you give us a heads-up about prominent personalities being expected at the event?

Like in previous editions, we expect to have a large contingent of participants drawn from across the globe and from various sectors of the economy. We expect senior representations from the CBN, the SEC, the FMDQ, the DMO, PAPPS, NGX, and CSCS, among others.

At the moment, we are working on obtaining final confirmations from our distinguished speakers and attendees. We are happy to share this with you once they become available. In any case, the event will feature keynote speeches and panel discussions by highly experienced subject matter experts and thought leaders in relevant industries and would be an opportunity for investors and other stakeholders to engage and share experiences for mutual benefit. In 12 years of existence, our association has contributed in no small measure towards the growth and development of the Nigerian financial markets, primarily using the instrumentality of thought leadership and market advocacy through engagements with the Central Bank of Nigeria (CBN) and the Financial Market Dealers Association to facilitate a more efficient and investor-friendly electronic Certificate of Capital Importation (CCI) processes; collaboration with the Securities & Exchange Commission (SEC) to initiate the appointment of Custodians to safeguard investor interests such as in registered Collective  Investment Schemes etc. and joint development of operational guidelines and other prerequisites for Securities Lending in the Nigerian Capital Market with the then Nigerian Stock Exchange now NGX, and the Central Securities Clearing System, among others. We are determined to maintain the reputation of the event as a veritable platform to for promoting Nigeria as a top investment destination in Africa by presenting a compelling case for the benefits of free market economics and developing strategies and insights that can be used as building blocks for the robust economic development of the country.

Can you paint a picture of the current trajectory of the bank custody industry in Nigeria?

I can confidently tell you that the custody industry is firmly on the path of full recovery from the COVID-19 inflicted disruption and other shocks. As I said before, lessons learned from the pandemic have necessitated the development and application of new templates for business survival and growth. Our business thrives on the basis of the confidence that investors have in the safety of their assets. In an inclement economic environment, there is usually capital flight and disinvestment, which naturally affects the custody industry. But we are seeing a steady upswing in confidence levels arising from stability in the operating environment and a high level of faith in the incoming government. We remain hopeful that the industry will ultimately and recover to the pre-pandemic levels to continue its important role. We must also take into account new developments in the industry in general. With the steady evolution of such innovations as blockchain, DLs, AIs, virtual currencies, fin-techs and so on, I see an industry that will be completely different from what we have now. It’s evolving. It’s mind-blowing! I personally think that what has happened to the media space may happen to the banking industry as well. I see a democratized industry where banking services are being offered by non-traditional banking entities as it’s already happening in other parts of the world. There’s no way Nigeria won’t play catch up. The CBN has released the guideline for open banking and payment service banks (PSB’s) and fin-techs are becoming major players in the industry. Most securities transactions are now done electronically. Therefore, custodians leverage best-in-class technological platforms to provide efficient services to our clients. Long gone are the days when things were run off spreadsheets. We use core platforms that can be integrated through API’s and/or SFTP’s with other market and client platforms. Aside from SWIFT which is a member-owned cooperative that provides safe and secure financial transactions for its members, custodians now integrate with key market infrastructures like CSDs through APIs. Just to mention a few.

Back to an issue you mentioned earlier on, Nigeria is currently going through a transition that will hopefully usher in a new government in May. Your event precedes the inauguration of a new president by two weeks.  With the capital market in mind, what sort of agenda would you set for the new administration?

A lot of the nation’s challenges are obvious to everyone. My view is that the government should undertake a holistic review of the economy and associated sectors and subsequently come up with purposeful reforms and policies that will put the country on a stronger economic footing. We as capital market professionals will be pleased to partner with the new government in this regard. During the electioneering campaigns, the president-elect, like other candidates crafted and issued an economic blueprint to guide their actions in government. Now is the time to refine such frameworks in order to develop targeted templates to address each sector. This is the time to have a crack economic team made up of seasoned experts who would devise dispassionate solutions to our micro and macroeconomic challenges. Several issues have been on the front burner for quite a while. Now is the time to find solutions to them. These include FX scarcity, petrol scarcity and subsidy, dysfunctional refineries, multiple taxation, soaring inflation and food prices, decaying infrastructure, rising debt, poverty and unemployment, among others. The incoming government clearly has their work cut out for them. Perhaps, the most threatening issue currently is insecurity in the country. It requires focused attention to deal with.  The capital market is not isolated from the general economy; it’s part of the ecosystem. Whatever impacts the economy positively will also reflect on the capital market and vice versa. The key ingredients for the growth and development of a capital market are stability and economic policies. This is an industry that requires investor confidence to thrive. Whenever there is uncertainty around these factors, investment flight results and the building blocks of capital creation are lost.

The government has frequently promoted the Ease of Doing Business in Nigeria. This goal can be further broadened by generally eliminating factors that encumber investment, whether by foreign or local investors. In this case, the role of proactive regulation and supervision is imperative. Incentives and other forms of motivation are essential to attract listings into the secondary market. The challenge of multiple exchange rates should also be dealt with. This factor is instrumental in attracting foreign investors.

You are now in the third year of your tenure as AACN President. How would you describe the journey so far?

The journey has not been easy, I must admit. This is essentially due to factors beyond our control. But this is not surprising since we exist in an ever-changing world.  You will recall that our team came on board in the middle of the COVID-19 pandemic. So, a major task was to keep safe and carry all members along. At the industry level, we all faced the same challenges, leading to declines in the volume of activities. But curiously it also became a unifying factor for everyone. Thankfully, that is behind us now. Like the famous saying that a tree does not make a forest, I and the current team that constitute the Executive Committee have been pooling together in pursuit of the noble goals of our association. Teamwork has been a major mantra of our stewardship. Of course, we do have some very clear advocacy issues – current and new ones, to pursue in line with AACN’s broad objectives as stated in our constitution. The fact that we were able to hold the annual conference in the last two years, despite several daunting challenges, is a clear indicator of our commitment to the goals of the association, as well as our dedication to supporting Nigeria’s developmental aspirations. We remain firmly committed to our pledge to promote portfolio investments in Nigeria, especially at this difficult time when the country is recovering from the devastating global disruption inflicted by the COVID-19 pandemic and other economic challenges. We would continue to explore ways of supporting the growth and development of the Nigerian financial market by collaborating with relevant stakeholders as well as the Federal Government. Yes, the pursuit of our organizational goals remains a sacrosanct.