Managing Director of Ecobank Nigeria, Patrick Akinwuntan has described the federal government’s decision for a Eurobond issuance at the International Capital Market (ICM) as a step in the right direction, stressing that the fundamentals and potentials of the nation’s economy are strong with capacity to meet its debt obligations.
Akinwuntan, who was assessing the global market as Nigeria makes its announcement of multibillion-dollar Eurobond offering, during an interview on Arise TV Lagos, said the economy is showing strong trends owing to investments in infrastructure such as road and rail transportation which is giving a lot of positive impact to the overall economy.
He said the private sector is also making remarkable improvements in the power sector, telecoms, and information technology.
“You look at the fundamentals, what is the story of this economy? You look at Nigeria, the fundamentals are strong, coming from the lessons learned in being a mono-product economy that was dependent on oil.
We have since embarked on the journey of diversification and we are beginning to show early fruits. Exports are improving; Africa Continental Free Trade Area (AfCFTA) provides the opportunity to expand that even further.
So, you look at the fundamentals, look at the openness of the economy, the transparency of reporting, and look at the opportunities to enhance real growth, output, capacity improvements, and stability of policies. All these are factors to look at with a view of participating in the economy like that of Nigeria,” he said.
He observed that international borrowing will allow Nigeria as a country to access more foreign currencies, deepen external reserve, allows more confidence in the medium-term planning in the private sector, adding that it allows a benchmark to be established in terms of how funding and investment are priced within the local economy.
“It also gives more room for the local economy to be able to breathe a bit more because when the country takes on Euro bond that portion is reduced from local country financing or public sector debt within the country. All these factors play strongly to the benefit of the private sector and the entire economy at large.
“In the last two quarters, we have seen the global market rebounding from the very deep end of the covid-19 that plagued 2020.
“We have seen, since the arrival of vaccines, the gradual opening of the global economy such that there is much more optimism now in the market because we have learned that shutting down the economy is not the best way to handle an epidemic and we have seen support from sovereigns ensuring that there is steady growth within the various economies; supply chain has opened and we have seen in sub-Sahara Africa renewed interest in the Eurobond market in the international debt market; we have seen Benin republic, Ghana, Cote d’Ivoire, and Kenya all are approaching the market with significant success.
Oversubscription in each of them ranges from 200per cent to 300per cent and an all high in Kenya close to 600per cent or six times oversubscription.
“This is a positive period for major economies like Nigeria, which is the lead economy in Africa, to take advantage and invite the global community to hear our story, invest in us, and get good returns,” he added.
Citing example with Ecobank’s $300 million Eurobond offer earlier in the year which was over-subscribed by 300 per cent, Akinwuntan advised those approaching the international debt market to have clarity of purpose and state clearly their strengths and weaknesses.
“We are the first banking entity in Africa to do that in 2021 and it comes from our long-term planning in the economy of Africa; we are the pan African bank and when we look at Africa, Nigeria is a major player. Quickly we understood that arising from a scenario of pandemic and all-time lows of 2020 is time to look at the brighter side and we stepped out for the $300 million US Eurobond offer which met a positive response from investors across the globe within the country.
“We attracted more than 3 times in subscription. But we kept to the book of doing $300 million because it is based on our plan in participating in positioning Nigeria, as the leading export country in the AFCTCA environment in the continent, and giving our unique position as the Pan African bank, it was very clear to us and the market responded positively. Our experience also tells us that, what is critical is to have clarity on your strength, be very frank about your weakness or the areas of concern, and how you intend to handle that positively,” he maintained.