(A part of the FirstBank Group)

1. FBN Capital Limited (A part of the FirstBank Group)

2. Invest in Nigeria: The Way Forward Kayode Akinkugbe CEO, FBN Capital Limited 2nd Nigeria International Investment Forum Lagos, 4th October 2012

3. A leading FDI destination in Africa • Nigeria was the no 3 destination in Africa in 2010 per UN • Figure for Nigeria for 2011 per CBN was US$8.9bn (gross) or US$8.1bn (net) • Levels are modest in context of a market size of close to 170 million • Need to more than double current rate of 2.7% of GDP to soak up unemployment • Some way to go to join the BRICs by this measure Gross FDI 2010 (US$bn)

4. A popular regional comparison Net FDI (US$ bn) • Trend for Nigeria more stable than SA • Nigeria outflows largely in finance sector, which is now curtailed • SA outflows more diverse, including mining, telecoms and retail • Potential of reform agenda and active infrastructure programme in Nigeria to yield substantial increase in FDI

5. Direct vs portfolio flows Capital inflows (gross; US$ m) • Direct second to portfolio investment in Q1 due to offshore entry into FGN debt market • This story likely to have been repeated in subsequent quarters • Both inflows valuable in underpinning current account of BoP and naira exchange rate • More enduring value of direct investment than portfolio flows

6. The many fruits of FDI • A substantial increase in FDI in conjunction with FGN’s infrastructure programme has the potential to push the GDP growth rate from 7% to 10% and beyond. • The example of Brazil shows that agriculture has piggy-backed on the building of roads for the development of natural resources. • FDI can help to soak up unemployment, which was running at 24% nationally and as high as 38% for the 15 to 24 year age group in 2011 according to the NBS. • It opens the door to technology transfer and higher productivity: examples include plantations, mining, hotels, shopping malls and cable tv.

7. Some steps to boost FDI • FDI should never be a substitute for domestic investment. If FDI predominates, there are negative implications for entrepreneurship, employment, wealth creation and even sovereignty. • The policy environment is appropriate yet the annual surveys from the World Bank Group, the World Economic Forum and others all point to remaining challenges on the ground. • The passage of the investor-friendly petroleum industry bill and the review of the Land Use Act of 1978, not to mention further reforms at FGN and state government level, would all enhance the environment. • A deepening of sub-regional integration, based around ECOWAS, along the lines of the East African Cooperation would broaden the market for Nigerian products and attract new investors.

8. The Nigerian banks: a way forward • On the surface the banking industry is in good health: AMCON has cleansed its balance sheets, the valuations of listed banks on the NSE are compelling and the regulatory environment has been tightened since 2009. • Financial inclusion policies targeting the banks e.g. mobile money which is in its infancy – most Nigerians are unbanked and IT offers the potential for efficiency gains. Over time, mobile money extends the taxed economy. • The banks continue to be large holders of FGN debt because of the slower development of the buy side community.

9. The financial sector: A future • Large gaps remain in the pensions business, insurance companies and in the overall savings industry. Filling those gaps on the buy side would transform the low level of financial intermediation. • Pension assets under management have reached N2.75trn but this is just 7% of GDP and covers just five million employees nationally. The public sector is under-represented. • Insurance penetration stands at just 2% of the population. • Promotion of collective investment schemes

10. FBN Capital Limited • 16 Keffi Street • Off Awolowo Road • S.W. Ikoyi • Lagos, Nigeria • Tel: +234-1-2798300, +234-1-2707180-9 • Fax: +234-1-2707192 • info@fbncapital.com • www.fbncapital.com