Capital Flows to Africa“Accessing the African Capital Markets” Presented by Dr. Ndi Okereke Onyiuke OON Chairman of the African Stock Exchanges Association / Director General of the Nigerian Stock Exchange
The African Capital Markets • 16 member strong African Stock Exchanges Association dealing in a broad range of securities, and includes strong and fast growing markets of South Africa, Ghana and Nigeria • An equities market representing a host of the Continent’s strongest and most reputable Companies • The fast growing private equity and Venture Capital markets dealing mostly in small and medium scale companies • A growing Derivative and innovative structured products market • A very fast growing Bond and debt securities market
African Capital Markets is Open for Business • The African Capital markets are being rated as having the highest returns in the World in dollar terms. Ghana recorded 144% for 2003 while Nigeria recorded 98% for the same period under review. • Most of the ASEA member countries have totally deregulated their foreign exchange controls providing free and unfettered access for investors around the World • In Nigeria, the Nigerian Stock Exchange working closely with the Central Bank of Nigeria has developed a pain free system for Foreign investors to access our markets and repatriate their returns without hassle.
THE FIVE STEP PROCESS FOR ACCESSING THE NIGERIAN STOCK MARKET • Identify your Investment Adviser or Stock Broker and open an account • Identify the securities you wish to invest in • Wire the funds to the Investment Adviser’s Bank operating in our settlement system (Settlement Bank operating in the Central Securities Clearing System “cscs”) • Receive a Certificate of Capital Importation from Bank • Start Investing • Your dividends and including principal and capital appreciation can be repatriated at any time on presentation of your certificate of Capital Importation.
Opportunities available on the African Capital Markets/ the Nigerian Stock Market as a model • Power • liberalized sector policy and enactment of new legislation is growing the opportunities for Companies operating in this sector • The National Electric Power Authority (NEPA) is scheduled to be privatized • Unbundling of monopolies into New Business Units (e.g. Generation, Transmission and Distribution Assets in power, refineries in oil and gas) • Independent power Plants becoming more common and are looking at getting listed on the Nigerian Stock Exchange • Telecommunications • Formulation of liberalized sector policy and enactment of new legislation • Strengthening of existing Nigerian Communications Commission • Licensing of GSM and Fixed Wireless Access Operators • Privatization of Nitel expected through an IPO on the NSE • The New GSM operators have achieved unprecedented success recording over 2.8 million subscribers in under three years
Opportunities in African Markets Countd. • Seaports • Nigerian ports are recorded as being the busiest in Sub-Saharan Africa • The BPE plans to convert Nigerian Ports Authority to an independent Ports Regulatory Commission • Private participation in operations of all ports activities Expected in 2004 • New Port firms that win concessions expected to list on the NSE • Railways • Formulation of liberalized sector policy and enactment of new legislation • Establishment of new Railways Regulatory Commission • Airports • BPE plans to Convert Federal Airports Authority of Nigeria to an independent Airports Regulatory Commission • Privatization of viable New Business Units via long term concessioning • Investors expected to take over such business units as luggage handling, security, shopping complexes etc.
Opportunities in African Markets countd. • Oil and Gas • Present reserves at 32.5 billion in 2002 • Present Production Capacity 2.8 million barrels a day • Restive Youths are being contained • Nigerian Stock Exchange is set to unfold an oil and gas investment initiative which will allow Oil and Gas Companies securitize their assets and raise capital internationally • Local content policy recently announced by Nigerian National Petroleum Corporation sets aside 25% of all Contract Values for local Oil and Gas servicing Companies. Local content bill presently being debated at the National Assembly.
Opportunities Countd. • Gas in Nigeria • Present reserves stand at 169 trillion cubic feet (TCF) • Capacity to produce 2 billion cubic feet per day • Presently over 50% is flared • Increased Tension in Middle East is causing oil majors to look elsewhere for future oil supplies. • The Gulf of Guinea is projected to hold some of the world’s largest undiscovered reserves of oil. • Gulf of Guinea is the West African Coastline (Equatorial Guinea, Nigeria, Gabon, Santome, Ghana) • Major consumer nations are re-evaluating their Energy Strategy in the long term
Opportunities Countd. • Gas is becoming a major fuel for Industries and large projects • Nigeria LNG has invested over $5 billion in establishing a world class LNG plant on Bonny Island. $500 million has been invested in building a world class LNG fleet which has established NLNG as having the World’s best record on delivery. • Chevron is presently leading another consortium which is expected to invest an additional $6 billion to build Nigeria’s second LNG PLANT \ • The West African Gas pipe line project is expected to supply the entire west Africa with the gas it needs once the project comes on line • Presently Power plants are all designed to use Gas feeds • Gas burns cleaner than diesel or PMS • Major Industries, Power, Steel, Heavy Industry, Cement, Petrochemical, Fertilizers etc use Gas
Opportunities Countd. • Banking and Finance; the fastest growing industry on the Stock Market today with strong management skills these firms have continued to grow share holder value • Manufacturing; Foods and Beverages have demonstrated a strong ability to provide superior returns. Especially in growing populations like ours. The Breweries have shown great strength in recent times expanding into new markets in a population that is considered happiest in the World. • Pharmaceuticals and Agricultural manufacturing firms are still considered growth companies in Africa, the demands for their products will continue to grow as the population becomes more and more demanding • Petroleum Marketing firms that deal only in the down stream sector of the oil and gas industry are presently enjoying increasing investor confidence due to the Federal Government’s decision to deregulate the supply of petroleum products. If deregulation of the industry is sustained then these firms stand to increase their earnings considerably in the years ahead
The Future of African Capital Markets • Introduction of innovative structured investment products such as asset backed securities; mortgages, Oil and Gas etc. • Creation of Exchange Traded Funds to provide exposure to foreign Investors of the entire market • American and Global Depository Receipts for qualifying companies in Africa giving them greater access to Fund managers in the international community • Providing greater access to special investment groups such as Traders, Professionals etc. In Nigeria less than 3% of the entire population are invested in the Stock Market as compared with 76% in the United States. This means that the opportunity for growth in our markets is monumental
Strategic Business Partnerships available for International Fund Managers and Investment Banks • Market Data • Market Reports/Statistics • Research Repots on Securities and Companies • Training • Financial Advise/Financial Engineering, Modeling • Consulting, Product Structuring etc
More Areas for Strategic Business Partnerships • Development of Market segments not fully represented on our market include: • Insurance companies • Traders (Rich Importers and Exporters) • Nigerian Professionals and Professional Associations • Nigerians in Diaspora (United States, Europe and Asia) • International Emerging Market Funds.
The Way forward for ASEA • Create Global Partnerships for large Global Investment Banks and local Brokerage firms • Create Mentorship programs for local firms to assist build capacity by sending staff for study programs in the mature markets. • Expand the opportunities of African Listed companies by broadening their market access and increasing their sources of finance. • We are interested in working with any International Investment Bank, Global Custodian, Rating Agency or any other firm with expertise in the Capital Markets that can help us build capacity • Interested Firms may contact me directly or my Technical Assistant for more information. • email@example.com • firstname.lastname@example.org
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