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The Chief Executive Officer, EFG Hermes Nigeria, Lilian Olubi in this interview with Kayode Tokede speaks on Africa’s economic outlook, why investment in agriculture amid global unrest due to the war between Russia and Ukraine remains attractive.
EFG Hermes invests in numerous sectors ranging from real estate and manufacturing to the oil and gas industry, aiming to generate sustainable positive returns regardless of the industry. Which sectors in Nigeria are EFG Hermes most optimistic about?
With global supply chains disrupted, it looks increasingly like we are at the beginning of a commodity super-cycle, which must favour the mining and resources sectors. With inflation, eating away at disposable incomes, food will become a larger share of household consumption and therefore investment in agriculture should be more attractive. Although the valuations of global digital payment companies have declined aggressively since the start of the year, we remain very optimistic about the outlook for mobile/digital payments in Africa. This is because, mobile/digital payments are the most logical solution to reducing the cost/time of payments in Africa. Lastly, we would note that, with a young and fast-growing population, Africa’s Fast Moving Consumer Goods (FMCG) sector offers considerable scope for growth.
In what ways might the upcoming election present challenges or opportunities for developing Nigeria’s capital markets?
Elections are always a test of the maturity of a country’s democracy and this will be another test for Nigeria. Having said that, we are confident that Nigeria will peacefully pass this test yet again. The opportunity in this election is change. Post this election, we hope that the new Government will build on the successes and correct the disappointments of the current one.
Merger activity in Africa is growing, notably in the tech sector. We have noted recent M&A deals such as the Nigerian B2B e-commerce player TradeDepot’s acquisition of its Ghanaian analogue Green Lion and MFS Africa, Africa’s largest digital payments network’s purchase of Oklahoma-based Global Technology Partners. MFS Africa’s deal has been described as a rare case of an African group doing a tech deal in the US. To what extent can we say that M&A deal-making is making a return after being affected by the global pandemic, is merger activity in Africa growing?
We confident about the outlook for M&A in Africa, as the opportunities from increased digitisation are significant. The limitations of our physical infrastructure mean that, Africa must champion all things digital and welcome global best practices.
Can we expect the further implementation of the AfCFTA to support this, and are there other drivers that might increase or subdue the growth of geographic expansion and M&A activity in Africa?
Increased regional integration is key, as it makes all opportunities scalable
How has uncertainty between the war between Russia and Ukraine affected markets and what does it mean for Africa and Nigeria?
The war has driven-up global energy prices, which has imported a lot of inflation to Africa and Nigeria. There are also a number of African countries that were very reliant on Ukrainian and Russian wheat and they have suffered from wheat shortages and high prices.
With presence in 13 countries including Nigeria, across four continents, EFG Hermes has grown over 38 years of success to transform from a pure-play investment bank into an impact-driven universal bank. What would be your closing remarks, as far as doing business in Nigeria is concerned?
We are keen on having a lasting and positive impact on the Nigerian financial services sector and its customers.