Booming banking and financial services attract interest

Solid economic growth is supported by financial reforms and robust regulations

Boasting one of the strongest economies in Africa thanks to its vast natural resources, Nigeria's GDP jumped by more than 6 percent year-on-year in 2012 as more than two million barrels a day of crude oil flowed from its massive oil fields and foreign reserves reached more than $44 billion.

As the country looks to achieve its aim of becoming one of the world's top 20 economies by 2020, Nigeria's banking sector is becoming more powerful thanks to better management that has improved its performance and increased security for international investors.

"If we can get China to invest in the private sector, to build refineries, develop the petrochemicals sector or build factories, the financial flows will be well provided by banks because banks just follow the money," said Sanusi Lamido Sanusi, governor of the Central Bank of Nigeria.

The Federal Mortgage Bank of Nigeria, FMBN for short, was established in 1956 and operates as an effective vehicle for increasing the mobilization of long-term funds, lending volume and expansion of mortgage lending services to Nigerians.

The FMBN created the management and administration of the National Housing Fund, NHF for short, contributory savings scheme - a pool that mobilizes long-term funds from Nigerian workers, banks, insurance companies and the federal government to advance loans at soft interest rates to its contributors.

Under housing sector reforms a few years ago, the FMBN began to concentrate more on secondary mortgage and capital market functions.

This change of focus has shifted operational emphasis to expand its functions from only social housing lending under the NHF to include commercial lending for housing, commercial mortgages refinancing, mortgage purchasing and warehousing and mortgage-backed securitization.

The bank's overall mandate is to promote the delivery of affordable and modern houses to Nigerians and the forward-thinking organization is keen to team up with Chinese companies and benefit from their expertise in the housing sector and affordable solutions.

Profitable solutions

Following a change to the business model and substantial investment in new technology, the bank recently made a profit for the first time in 21 years.

"The home ownership ratio in Nigeria is just 25 percent which is one of the lowest in the world," said FMBN Managing Director and Chief Executive, Gimba Ya'u Kumo. "The deficit is between 16 and 17 million housing units. Nigeria has huge housing needs, so for Chinese companies producing building materials -house ceramics, furniture, electricals, roofing materials - Nigeria is an excellent market to tap into, and is the only market that can guarantee continued sustainability for their production for the next 20 years.

"We have the largest population and the highest income. The market is here and the time is now."

The Lagos-based Central Securities and Clearing System Plc, CSCS for short, launched operations in 1997 and has since become one of the key operators in the Nigerian stock market as stock transactions cannot be completed without the clearing house's cutting edge interface.

The organization's depository, clearing, settlement and delivery functions ensure the speedy and transparent conduct of share transactions through the use of advanced technology that enables stocks to be processed in an electronic book-entry system to substantially reduce the time it takes a transaction to be completed.

The company has also designed a range of other innovative products which provide value added services to boost capital market growth.

CSCS Managing Director and CEO, Kyari Bukar, said "our mission is to create value by providing securities, depository, clearing, settlement and other services driven by innovative technology and highly skilled workforce".

"We are a critical component and the backbone of the Nigerian capital market and, by extension, a critical financial market infrastructure globally that helps facilitate services. We are a critical part of the modern global economy."

Currently Nigeria's only Islamic banking institution, Jaiz Bank Plc is a young and ambitious institution that commenced operations in January 2012. With a core focus on Muslim customers, the highly ethical bank is open to people of any religion and is expanding its domestic branch network. With best practice corporate governance and sound risk management framework, around 50 percent of the company's annual budget is invested in new technologies and Jaiz Bank is eager to develop its international network and is already working with several businesses from China.

"We want to be renowned for our ethical practices and want Jaiz Bank and non-interest banking to be practiced all over Nigeria," explained Jaiz Bank Managing Director and Chief Executive Officer, Mohammed Mustapha Bintube. "We have a lot of customers that have proposals for infrastructure development and openings in the oil and gas and energy sectors. I extend our hand of friendship to the enterprising people of China."

InFocus provided the story

(China Daily 12/02/2013 page5)