Bad Governance Hinders Investment Growth In Nigeria — Lawanson

Mr. Kehinde Lawanson, Executive Director, Corporate Banking of First Bank Nigeria Plc who was at the just concluded US-Nigeria Infrastructure Conference in Washington DC spoke with ABIODUN OLUWAROTIMI, LEADERSHIP Bureau Chief in the US on corruption, infrastructural development and the impacts of the bank in Nigerian economy.

Can you tell us the various ways that First Bank has helped Nigeria's infrastructural development growth?

The First Bank story is very different from the Nigeria story. This is a bank that has been in existence for well over a hundred years. For a bank to survive 118 years in Nigeria or in Africa, it means that there is something that the bank has done right. One of the strengths of First Bank is its governance. It is an institution with an excellent governance, that has helped the bank to survive so many storms in the financial service business. First Bank, being the biggest bank in Nigeria, a bank with the largest balance sheet, with the largest deposit base, we have in different ways supported infrastructural development in Nigeria. We have funded and financed a lot of road projects in the country We are still financing a lot too. The Lekki toll road is one? excellent example of a private sector initiative that the bank has funded substantially. There are numbers of other roads in some other parts of the country that we funded but the Lekki concession road is the key one as regards the Public-Private Partnership. The other roads are largely funded by the government but they borrow money from us to complete them and they pay back over time. We expect the same on the Lagos/Ibadan Express because we believe that this area is a very lucrative road, a road that will pay for itself except if the government want to look into the terms of the concession. We have also helped in the area of power. Many of those who bidded for the power supply contracts are our customers and we supported them in several ways. We issued to them letters of support. In the area of oil and gas infrastructure, we are the only bank in Nigeria that has empowered the Nigerian companies' investment in Oil. By doing this, the benefit of our oil wealth can impact on Nigeria and not just to serve foreign companies. In Telecommunications, apart from providing finances for telecom firms, we even invested in a telecom operator. First Bank is a shareholder in Airtel and infact, I sit on the Board of Airtel representing the bank. There is another Cable company. We are one of the main financiers of Main One Cable and all the other telecom operators have also benefited from us at one time or the other.

What infrastructural development projects is First Bank involved in at the present?

There are quite a number of things that we are doing now. As we speak, we are financing a lot of telecom infrastructure. We are helping in the area of technology as well. We have to finance a new technology and they pay us back over time. Also in power, a lot of things is happening in the power sector now. We have positioned ourselves as a bank to fund massively in power. There are a number of states that we are raising bonds for as we speak and I am sure that we have bonds for about 12 States in the country. This is apart from commercial loans, the capital market is now being gone to to raise bonds. We have an investment bank that helps in raising the bonds. Just as we are raising bonds for Lagos state government, there are some other states that we are helping to raise bonds. The state have to raise these bonds because of their long-term need for money to fund infrastructural development. We are also partnering with the government over the importation of plants in setting up factories to process cassava. we are funding a particular company in Taraba State in the area of farming.

All these that you have mentioned require a lot of fundings. Can we know the funding mechanism that First Bank has put in place to achieve rapid development in the infrastructural development growth?

There are two to three types of finances that we provide. The capital expenditure especially where it involves major construction or importation of major plant. We are providing long term funding in this area but at times when? the amount of money required is beyond the single figure requirement of one entity, what we do in such cases is to identify one or two friendly financial institutions that can partner with us. We are the requirement is too big for our own company to handle, we have invited friendly banks to join us or in some cases, our people have gone out to do a syndication of likely banks for the purpose of financing them. Infrastructure financing is not business as usual and it involves a more sophisticated financing structure than typical corporate lending. Funding required exceeds available capital from local commercial banks implying the need to work closely with other local and foreign pools of capital such as pension funds, DFIs, infranstructure funds and other pools of patient long-term capital.

I can say that lots of financing mechanism are available for private sector investors in infrastructure projects such as BOT, DBO and concessioning.

How has this been of benefitto Nigerian and foreign investors?

Essentially what our financing has done is to empower Nigerians to play. There is a company called BRORON where we invested about $36 to $42 million. I was in Norway about some months ago to inspect the investments that we funded for BRORON. This was possible because of local content. We invested in that because what local content has assured is that if a Nigerian company can demonstrate capacity, it must have a preference, so we put our money on BRORON and BRORON settles in Nigeria now.

Those are the kinds of ways that First Bank is now venturing out to finance Nigerians to compete with foreigners in the Oil and Gas area.

Do you think that the US-Nigeria Infrastructre Conference will bring positive change to the infrastructure sector of our country?

I believe that every opportunity to engage creates an advantage. We had a lot of foreigners at the conference and some of them were hearing for the first time, the investment possibilities in Nigeria. To that extent, i think that engagement was useful because some of them were getting to know what is possible in Nigeria.

Can you tell us what you see as the future of Infrastructural development in Nigeria?

The only limitation that Nigeria has today is the limitation of its governance. If this can be addressed and the problem of corruption which to a great extent has limited competativeness, we will get value for every investment. Once we get value for every investment, development is assured. Where there is development, there is surely going to be a future.

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