Economic Confidential, August 18, 2009

NATIONAL

NDIC Board Inaugurated as Foreign Direct Investment Hits $13.95bn

Finance Minister of State, Mr. Remi Babalola, has inaugurated the new board of the Nigeria Deposit Insurance Corporation (NDIC) in Abuja, where he said a strong and virile financial sector was imperative for the realisation of the country’s Vision 2020 agenda. He emphasised the need for competent and credible boards of directors and managements of financial institutions as the country strides to realise the National Vision 2020.

He said that for a nation which aspires to the league of top 20 economies by 2020, a strong and virile financial sector is imperative. This is why our institutions must be spear-headed and managed by competent, credible and visionary Board of Directors and management team.”

The new NDIC board is chaired by a former minister of Environment and Agriculture and Rural Development, Ambassador Hassan Adamu, who is the Wakili of Adamawa.

Members of the newly inaugurated board also include: the Managing Director of the corporation, Mr.  Ganiyu Ogunleye; Executive Director (Operations), Prof. Peter Umoh; Executive Director (Corporate Services), Alhaji Umaru Ibrahim; Director of Home Finance in the Federal Ministry of Finance, Mr. Lexy Omoha Lexy; Director (Banking Supervision) in the Central Bank of Nigeria , Mr. Sam Oni; and former President of the Institute of Directors, Ms. Bennedikter Molokwu.

Others are: former Chief Internal Auditor of the Nigerian National Petroleum Corporation, Chief David Oghene; former Managing Director/Chief Executive of United Bank for Africa, Mr. Abdulrahman Dikko; former Chairman of Total Realty Property and Financial Services Limited, United Kingdom , Chief Oyebisi Ilaka; former Director of Northern Nigeria Investment Limited, Mr. Lawan Gana; and former Managing Director/Chief Executive of International Merchant Bank, Mr. Razaq Lawal.

The Federal Government through the NV2020 seeks to place Nigeria among the top 20 largest economies in the year 2020. Nigeria is currently placed 44 among the world’s largest economies.

The global financial crisis has thrown up issues in corporate governance and the imperatives of stringent financial reporting standards that can be ignored only at the risk of the nation’s banks and the future atrophy of the economy.

In his remarks at the occasion, the Chairman of the newly constituted governing board promised to put in place a committed effort in ensuring the attainment of the NDIC objectives.

Meanwhile in another development the Finance Minister of Stat, Mr. Remi Babalola, has disclosed that full deregulation of the oil and gas sector had become necessary due to the fact that subsidies on petroleum products were not sustainable in the long run.

The minister stated this in a paper titled ‘The Challenges of Managing Business Enterprises in Nigeria ”, presented at the annual management lecture of the Department of Management and Accounting of the Obafemi Awolowo University , Ile-Ife.

Babalola, who was represented his Special Assistant, Mr. Bode Agunbiade, noted that the subsidies on petroleum products accounted for about US$4.5 billion in 2008.

According to him, the diversion of these scare resources was not sustainable in the long run.

He said, “Oil remains our biggest blessing but the sector also faces enormous challenges. These challenges have discouraged private sector investments in new refineries and contributed to making existing refineries cost centres.

“Our aim is to maximise the opportunities in the industry, grow the downstream and deregulate the sector completely. Full deregulation of the oil and gas sector appears very imperative. This will encourage investment in refining and marketing infrastructures.”

He added that the legal and regulatory framework for the comprehensive reform of this oil and gas sector of the economy was currently being considered by the National Assembly.

He reiterated the need to move away from government-owned and government-run institutions to avoid failed institutions or enterprises.

“If we must liberalise the failing institutions, we must encourage privatisation and public private partnerships as the appropriate form of getting the best out of our resources. Weak infrastructure is the single most important binding constraint in Nigeria ’s quest for enhanced firm level competitiveness.

“The huge resource gap of government shows there is an urgent need for alternative funding source for infrastructure.  We believe strongly that Public Private Partnership ( PPP ) will deliver real value for money if properly managed under the Infrastructure Concessioning Regulatory Commission (ICRC),” the minister disclosed.

He assured the audience at the lecture that the Federal Government was deepening, institutionalising and accelerating the ongoing economic reforms initiated since 2003.

He added that the government was introducing a new generation of reforms in the oil and gas deregulation, power sector deregulation and election related reforms.

 “Our aim has been to ensure these reform programmes form the bedrock for the Nigerian system. Major reforms have been implemented in the areas of taxation, public service, pension, insurance, capital market, banking, public expenditure, the judiciary and telecommunications. All of these remain critical to national development.

“Also, laws which had hitherto hindered private sector investments have been either amended or repealed for orderly divestment of government’s shareholding to private operators in vital areas of the economy such as mining, transportation, electricity, telecommunications, petroleum and gas and petrochemicals, among others.

“Indeed, a lot of investment incentives have been put in place by the Government to stimulate private sector investments from within and outside the country,” he said.

On Foreign Direct Investment (FDI), he confirmed that the investment recently peaked at US$13.95 billion from its level of USD$2.1 billion in 2004.

The bulk of the funds, he stated, was for the oil and gas sector; telecoms, beverages and banking.

“We have adopted a strategy that is more inclusive, Arabs and the Chinese are joining the Europeans and mostly Americans investing in Nigeria . We are open to all, as investment has no colour,” he added.