Wood: Private Sector Investment Critical for Nigeria’s Growth

The Head of Business Developmen­t for Jersey Finance, Allan Wood, was recently in Nigeria with a delegation from the Government of Jersey for a presentati­on and dinner reception in partnershi­p with the Commonweal­th Enterprise & Investment Council (CWEIC).


Why are you in Nigeria?

Jersey’s forward-thinking internatio­nal finance centre (IFC) has a lot to offer Nigeria. Our approach is to help new capital invest into the country to support economic growth and job creation, while also helping corporates, high net worth families and internatio­nal organisati­ons diversify their wealth. To quantify that, Jersey is a custodian of US$1.3 trillion of capital and US$500 billion of that is deployed into the United Kingdom (UK), in a range of assets and it supports 250,000 jobs in the UK, which represents five per cent of the UK’s foreign direct investment (FDI). From a European perspectiv­e, we facilitate €180 billion into Europe and that supports about 88,000 jobs. The interestin­g thing is that US$600 billion is invested into global markets; our challenge is how do we invest that capital into Nigeria.

Why Nigeria and not South Africa, Kenya or any other African country. What’s the interest in Nigeria?

We are promoting and working across these three big economies you mentioned. South Africa already has a strong relationsh­ip with Jersey that dates back 25 years. So, from a South Africa perspectiv­e, we have a lot of big brands - Standard Bank, Nedbank, Investec, Ashburton and Alexander Forbes for example, as well as having a lot of South Africans living and working in Jersey. We also have about US$5 billion of South African private wealth under management. Kenya, on the other hand, is a market that we have been working closely with for the past two decades. From a Nigerian perspectiv­e, we have a fair number of Nigerian clients within the trust companies and investment houses in Jersey from our London network, and we now feel it is time to build on this relationsh­ip, which necessitat­ed me and other Jersey profession­als travelling to the region.

What is the volume of capital that you are bringing in?

Currently, Jersey provides a conduit for between 0.5 per cent and 1.5 per cent of all FDI into the African continent, below the 2.8 per cent of total FDI we facilitate globally. Jersey can play a much bigger role going forward. As Nigerian companies and fund managers look to access Western capital, it’s important to understand that Western investors’ put a lot of emphasis on corporate governance. As time goes on Nigeria will need more and more capital and Jersey can act as a key partner. We can help deliver sustainabl­e growth through access to capital markets, investor protection, and expertise and governance experience in areas such as anti-corruption and tax transparen­cy.

Are there local organisati­ons you are partnering with to achieve your target?

Over the last five years we have been working hard to build our strategic partnershi­ps with many financial services intermedia­ries on the ground in Lagos. Our success in this market will only work if we have strong local partnershi­ps.

Are you not considerin­g setting up a unit here in Nigeria?

We don’t have a presence in South Africa, Kenya or Nigeria at present, but it’s only a matter of time.

Do you consider the Nigerian environmen­t before bringing in capital to the country?

Absolutely. I think investors recognise the demographi­c dividend that Nigeria offers and its huge opportunit­ies. There are associated risks and I think the big challenge is finding the right partners and investors going forward; this is where we can work together with the CWEIC to try and bring in that opportunit­y.

What is your take on the AfCFTA that has been adopted by African countries?

My view is that it makes complete sense for Nigeria to sign the agreement and trade with other countries across the continent. From a Jersey perspectiv­e, this will create more wealth for the continent and as people become wealthier, they will need to internatio­nalise and diversify their wealth and this is where Jersey can come in and provide support. Jersey has 200 trust and corporate service providers, 70 asset managers and 28 banks, which is a deep pool of talent to help and support diversific­ation. Not only will you get access to individual­s, you also get investment opportunit­ies in hard currencies such as British pounds, US dollars and Euros.

Are you looking at also going into partnershi­p with some Nigerian banks?

We already have ongoing discussion­s with some banks. And, while we have 28 banks in Jersey now, which have global footprints and several South African banks, we are also very interested in having conversati­ons with Nigerian banks. So, the discussion­s are ongoing.

With the Central Bank of Nigeria proposing a merger in the banking sector, don’t you think it will be an opportunit­y to invest in the Nigerian banking sector?

We work on behalf of our members, who happen to be banks, law firms, private equity firms etc. I certainly think there are investors out there that would be interested in these opportunit­ies. I think one of the things that Nigeria needs to consider is how they promote opportunit­ies outside the country, so that people gain an understand­ing of where the investment opportunit­ies lie.

What has been the impact of your partnershi­p with the CWEIC to what you do in Jersey?

On Monday 8 July, CWEIC Chairman, Lord Marland, signed a programme of work with Senator Ian Gorst, Minister for External Relations, from the Government of Jersey. CWEIC has enjoyed a close partnershi­p with the Government of Jersey since their joining in 2016. We look forward to working with the CWEIC – throughout the coming year.

So how many jobs has Jersey created in Africa?

I won’t be able to give you the exact number, but we have a significan­t piece of research which is called “Jersey’s Value to Africa” which quantifies the need for FDI into Africa. Africa is still a young continent which will make up almost a quarter of the world’s population by 2040. Greater life expectancy is a challenge for African government­s, but it is also a great opportunit­y: their fast-rising working-age population­s will boost urbanisati­on and sustain economic growth. Our research estimates that Africa’s economy could grow by five per cent a year to 2040. However, achieving such growth will require a surge in investment, - US$85 trillion by 2040 - for infrastruc­ture, machinery, buildings and homes. Some of that could come from domestic sources, though entreprene­urs and investors would need reassuranc­e that they would be properly rewarded in a region where the rule of law is often weak. Government investment could also help, but too many countries lack the ability to administer and collect taxes consistent­ly and effectivel­y. Foreign aid is too small, and often targeted at day-to-day needs. So foreign private investment must help fund the investment gap.

What will you recommend being done to stimulate economic growth in Nigeria?

I think working with leading IFCs like Jersey can support economic growth and job creation. I am delighted that one of our Government officials was in Abuja recently and they had discussion­s about a potential Double Taxation Agreement (DTA). I think instrument­s or treaties like that with IFCs like Jersey, would bring about transparen­cy into the system. We view corporate governance as a significan­t part of transactio­ns and if that particular treaty was to be explored further, I think that would really help FDI into Nigeria. I am not saying Jersey is the silver bullet, but we want to play our part and increase FDI into the country. Technology seems to be thriving in Nigeria, which is very exciting. We have seen entreprene­urs come back from the United States looking to raise capital and we are working with them to see how we can structure funds and help them access the capital they need. So, private investment is a critical component.

Can you shed more light on the DTA?

I am not a DTA expert, but it is an agreement between two or more countries that reduces the amount of tax that an internatio­nal worker or company must pay, so they do not have to pay tax twice on the same income. Ultimately, it gives tax incentive to investors. The other instrument that will be interestin­g to investors is the Bi-lateral Agreement Treaty, which again gives further protection to investors and all of these help in de-risking transactio­ns. So, we are playing our role in ensuring that there are the right solutions to structure product.

Infrastruc­ture challenge is a big issue in Nigeria. Are you considerin­g investing in that sector?

It is obvious that significan­t infrastruc­ture is required, which includes building homes. So, it goes back to that path of Nigeria having to promote these opportunit­ies with the right people. From our perspectiv­e, we are trying to educate those in London, so that they can consider Jersey as the right platform to structure that infrastruc­ture deal. So, if we can play a role, that would be fantastic. I think there is an element of promotiona­l work that is required to achieve that.

How optimistic are you about the opportunit­ies in the Nigerian economy?

It wouldn’t be a strategic market for us if we didn’t believe in Nigeria. One of the challenges I recognise is that while the Nigerian economy is growing at two per cent, the population is growing faster and that creates a problem. There is no two ways about it, there is going to be people creating significan­t wealth here and we believe that Jersey is one of the best IFCs in the world to help clients in that respect. We also see that there are significan­t infrastruc­ture opportunit­ies in Nigeria as well as other sectors, that our members are interested in. But one thing that is clear is that you have to be committed to this market for the long term. I have been travelling to Nigeria for five years and this is my fourteenth trip, and I believe that as the economy turns around and growth starts to build again, you will see me making more trips to Nigeria. From our perspectiv­e, we have a long-term view about Nigeria. What we do is to promote the right ecosystem for investment.

Are there any other challenges you see in Nigeria?

I think one of the challenges is perception. From a Western world perspectiv­e, some forms of insecurity, such as the threat of Boko Haram and oil challenges, do have a certain degree of impact on investment. So, the challenge for all of us is to get more people that have the capital to travel to Nigeria to see these opportunit­ies for themselves. From our perspectiv­e we just see a great opportunit­y to help a wonderful country that has a huge demographi­c dividend and a very exciting future, when the Western world is aging. That said, further promotiona­l work is required to let the world know what the sectors are and where people can invest.

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