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Project Finance, Nigeria's '007' Executive Order, and the Creation of a New Tradable Instrument

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Image Courtesy: Resource Planning Group Georgia Resolving the infrastructure deficit in Nigeria has been a major point of discuss over the last decade with several roundtables, conferences, and stakeholder meetings brainstorming viable and sustainable financing options for bridging the infrastructure gap. In 2018, the African Development Bank had estimated that a whopping $3Trillion would be required to fund the infrastructure deficit in Nigeria over the next 26 years. Financing infrastructure development projects in Nigeria has, in the past and till date, largely been through debt. However, with a rising debt profile of $73.21Billion as at September 2018, and the call by international stakeholders for the country to focus more on domestic loans, the Nigerian government appears to have devised an innovative way of funding a class of infrastructure projects – Roads. The ‘007’ Order On January 25, 2019, the Nigerian President signed Executive Order 007, an or
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Bridge Banks and Shareholders of Failed Banks – Victims or Culprits?

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Image sourced from the Nigerian Voice On Friday, the 21 st of September, 2018, the Central Bank of Nigeria (CBN) revoked the banking licence of Nigeria’s Skye Bank and together with the Nigerian Deposit Insurance Corporation (NDIC), announced the establishment of a bridge bank to assume the assets and liabilities of Skye Bank. Bridge banks are set up to take over the operations of a failed bank pending the consequent sale to a new investor. The primary objective of this is the management and avoidance of systemic risk. Bridge banks are typically established for a restricted period of not more than three years, with a general average of two years. The establishment of a bridge bank does not necessarily translate to an automatic business rescue; failure to find an investor within the relevant time-frame will result in a liquidation of the operations of the bank. The September 2018 action by Nigeria’s central bank is not the first in the history of the country. In Augu
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Are Ratings overrated?

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image credit: HEC Paris (www.hec.edu)  Globally, bond ratings have been known to drive liquidity while helping investors take an informed investment decision. These credit ratings have played a significant role in the decision making process of purchasers of debt securities while also playing a role in the development of markets. The International Organisation of Securities Commissions’ (IOSCO) report on Corporate Bond Markets in Emerging Markets identifies Government policy and the existence of international credit rating services as underpinning factors in the general development of bond markets in EMEs, particularly following bank-based crises. [1] In spite of the unanimous verdict on the role played by credit rating agencies (CRA) in the 2007 financial crisis, a role which many attribute to the conflict of interests by CRAs arising from playing a dual role of advisory and rating, as well as a lack of competition, the opinion of CRAs regarding the ability of an issuer
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Dear Nigerians, Please let your agitations be properly guided!

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“Nigeria has taken too long to get to this point and any further delay will be detrimental to the economy, healthy living of Nigerians, the economy and the total environment. We urge the president to do the needful and immediately assent to this draft law.” - The Centre for Social Change and Citizenship Education Image Sourced from Premium Times I stumbled on a media report titled “ Group urges Buhari to sign Federal Competition and Consumer Protection Bill .” The Group is of the opinion that when the Bill is signed into law, it “would boost human rights, and the anti- corruption fight of the Federal Government, as well as help the economy” comments are reserved on the first two points. Upon conclusion of the harmonization of the different versions of the Competition Bill by the Nigerian Parliament, a copy of the Bill was forwarded to the President for assent in December 2017. The Group wants President Buhari to assent to the Bill without further delay, but would as
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Sukuk? Hold that thought!

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Image sourced from the Daily Trust Press Report of June 13, 2017 I once heard the managing director of a Nigeria investment bank postulate a “perception deception” theory as the culprit and the major inhibiting factor to the successful development of vibrant non-interest capital market in Nigeria. This theory essentially suggests that a lack of understanding of the principles which underlie these capital market products is responsible for the erroneous perception by the lay man, that such non-interest financial instruments as Sukuk are geared at portraying the nation as an Islamic state. Maybe/Maybe not; Nigeria is well on its way to issuing its maiden sovereign Sukuk, and No this does not make the country an Islamic State.  Sukuk is popularly known as an Islamic or Sharia compliant instrument and may be either asset-based or an asset-backed financing instrument.  How is this different from the conventional bonds, you might ask. Sukuk issuances are typically governed
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Towards a competition Regime in Nigeria; Are we there yet?

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Is this is it? Should we get our hopes up? Nigerians seem to have lost count of the ‘almost there’ feeling that comes with every competition bill that appears to make significant progress at the National Assembly only to get dropped along the way. A search through the archives of the Nigerian parliament will reveal several abandoned bills on the subject among which are the Restrictive Trade Practices, Monopolies and Price Control Bill, the Nigerian Trade and Competition Commission Bill, and the Nigerian Antitrust (Enforcement and Miscellaneous provisions) Bill. According to a briefing paper on the UK Competition Regime, “ competition is the lifeblood of a vibrant economy and fundamental to growth” . What then is it that keeps frustrating the efforts at a substantive competition regime in Nigeria? The current bill before the 8th National Assembly seems promising, considering that it does not recommend the establishment of an entirely new agency, which has been one of the maj
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Katlego Bagwasi-Kidisil

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  Of everything I thought the ILFA cohorts of 2015 would share, sad news was definitely not on that list. I imagined getting calls of Timbo becoming President of Sierra Leone, of Yomi becoming a Professor at Law and Senator in Nigeria. I fantasized about vacations around Africa, finally having people to say hello to, as I tour the continent. Botswana may not have been on my list but Ghana was, and with Ghana I’d have seen you and Naa. A local airline had a BOGOF promo to Ghana just on Sunday. A colleague asked if I had ever been to Ghana and I said no, thinking it’s about time I visited this neighboring country now that I have two ILFA colleagues there. Of everything we share with each other on the group, I’m sure I speak for all if I say no one anticipated such news as this. Mrs. Edwin Coe - how you made the best of that Firm. “My boss is looking forward to some Nigerian headgear” you had said. For your boss I had my head wrapped for the Gala. I watched you dance
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