Under Jonathan, Global Confidence in Nigeria’s Economy Soars
One thing the opposition party can’t take away from the Jonathan administration is the fact that global confidence in the Nigerian economy has been on the rise in the last five years. The undisputable facts are there. Just recently, a survey released by Bloomberg projected that Nigeria, China, the Philippines, Kenya, India and Indonesia would rank among the 20 fastest growing economies in world this year.
In an accompanying chart by the New York-based financial newswire service, Nigeria with an expected growth rate of 4.9 per cent was ranked sixth behind China (7 per cent), the Philippines (6.3 per cent), Kenya (6 per cent), India (5.5 per cent) and Indonesia (5.4 per cent). So, Nigeria’s economy under Jonathan is the sixth fastest growing economy in the world.
According to Bloomberg, emerging markets in Asia and Africa, including Nigeria still reign supreme. “They’re at the top of global growth projections over the next two years. The world is expected to grow 3.2 per cent in 2015 and 3.7 per cent next year after expanding 3.3 per cent in each of the past two years,” according to a Bloomberg survey.
Nigeria’s economy is expected to grow faster than that of the United States and the United Kingdom. The United States and United Kingdom which combined account for about a quarter of global growth are expected to grow 3.1 and 2.6 per cent this year respectively. The euro area probably will expand just 1.2 per cent as European Central Bank President Mario Draghi deals with a fragile Greece and embarks on a bond-purchase programme to stimulate the region’s growth.
Nigeria’s economic growth prediction is real. Foreign direct investments have been massive in the last five years. Just recently, an indication of the confidence in the Nigerian economy, South Africa energy firm, Stefanutti kicked off a partnership with One Nation Energy Platform, to build a 500 megawatts (MW) coal-fired power plant in Enugu, bringing an upswing in the number of private firms that have firmed up plans to exploit coal to power generation in Nigeria. One Nation Energy Platform plans to set up the coal power plant and get coal feedstock from one of the coal mines in Enugu called Onyema coal mine.
Already, the company has signed a Memorandum of Understanding (MoU) with the federal government to amongst other things, fast-track the construction of the plant with minimal bureaucratic bottlenecks. Minister of Power, Prof. Chinedu Nebo said at the signing of the MoU that the addition of 500MW to the national grid from the plant when completed will immediately boost the economy of the south east as well as the country.
He described the project as a boost to government’s advocacy for a robust energy mix in support of Nigeria’s economic development.
Nebo also noted that the coal-power project will provide stable power, devoid of the challenges of sabotage from vandals who regularly break petroleum pipelines and disrupt steady flow of gas feedstock to thermal power plants in the country. The minister posited that Nigeria was blessed with abundance of coal deposits and should exploit same for improved power generation.
According to him, Enugu being the hub with three layers of coal deposits when compared with other parts of the country with just one layer of the resource deposited at a point. Nebo also noted that having the coal-powered plant in the Enugu axis was a welcome development considering that Ugwuaji, one of the settlements in state, houses one of the biggest transmission sub-station in the country, hence evacuation of power generated from the plant will not be a problem.
Also recently, Cantor Fitzgerald, a United States-based global investment firm with strong expertise in asset- backed mortgage securities, concluded plans to invest $1 billion in the Nigerian mortgage sector. The firm has also made arrangements to build 10,000 houses in Kaduna, Lagos, Enugu and Abuja within the next one year
Representative of the firm, Mr. Jack Heffernan, who is the Managing Director of the firm’s Debt Capital Markets division, signed an MOU with Professor Charles Inyangette, CEO of the Nigerian Mortgage Refinance Company (NMRC) at a ceremony presided over by the Coordinating Minister for the Economy and Minister of Finance, Dr Ngozi Okonjo-Iweala. The entry of such an important player into Nigeria’s mortgage sector is yet another signal that the Jonathan administration’s vision of making affordable housing available to Nigerians is earning the confidence of serious international investors. The prospect of achieving the core vision of the NMRC which is to get young Nigerians convenient access to the means of owning their own homes is making progress.
Cantor Fitzgerald’s presence in Nigeria shows that our mortgage strategy is attracting the right kind of attention from the right kind of people around the world and this will deepen and diversify and ultimately reduce the cost of mortgage and housing in Nigeria. It shows further that Jonathan’s vision of making housing available to Nigerians is working. Hefernan described the NMRC as “exactly the right business model to bring liquidity to Nigeria’s housing sector.”
The arrival of Cantor Fitzgerald in Nigeria marks a crucial milestone in a process that began in January 2014 when Jonathan launched the NMRC. NMRC is primarily a liquidity facility designed to expand the primary and secondary mortgage markets by bridging the lending costs of mortgages so that lending institutions can lend more and for tenors of up to 20 years.
Jonathan saw the set-up of the NMRC as being a crucial component of his Transformation Agenda with a view to achieving the twin goals of jobs creation and economic growth/ development. This was done in recognition of the importance of housing construction to Nigeria’s long-term growth prospects – particularly when supported by a vibrant mortgage industry. Clearly, home ownership is a fundamental need. That large numbers of Nigerians dream of home ownership is not in doubt, indeed the success of the First 10,000 Mortgages for Affordable Homes Scheme launched in July 2014 is a further testimony to this fact. It was more than six times over-subscribed with over 66,000 applications. Close to 25,000 of these applications have been processed and prequalified and over 9,000 given offer letters.
The Jonathan administration is working on a number of initiatives to make sure many more Nigerians are able to take up the mortgage offers irrespective of the challenges they face including meeting the required down payment. The administration is at an advanced stage of discussions with the National Pension Commission on an arrangement whereby Nigerian workers are able to make a one-time deduction from their retirement savings account to make this down payment on their homes, among other initiatives.
The significance of the collaboration between NMRC and Cantor is that it would enhance the global credibility of Nigeria’s mortgage market. Nigeria will be counted among the League of Nations with world-class mortgage security platforms. Liquidity will be made available through a programme to be put in place by Cantor Fitzgerald. The exercise is expected to be completed within the next seven to eight months. Nigerian PMIs whose function is to sell mortgages to would-be home buyers, can continually do so, for tenors of up to 20-years, because liquidity will no longer be an issue.
As foreign capital is channeled into Nigerian mortgage securities, NMRC will continually refinance these mortgages and the PMIs can continue to originate new mortgages over and over again – essentially like an assembly line. The end result of this will be more profitable and better capitalised PMIs and lower mortgage interest rates which will ultimately fall to single digits. This will attract even more Nigerians into the housing market, especially first-time home owners, and a consistent and significant increase in the supply of affordable housing units.
As more houses are built, more jobs will be created – more construction workers are employed and they in turn spend more money on goods and services. The recipients of that extra money, in turn, spend more money on goods and services and the process continues. Higher housing construction means increased demand for steel, sand, cement, windows, doors etc. This increased economic activity translates to higher incomes and higher GDP growth rates.
Aviation is one other sector we must take a second look at when talking about the achievements of the Jonathan administration. People only talk about the transformation of our airports. But changes in this sector under Jonathan go beyond this. Improvements in airports aside, parastatals under the Ministry of Aviation have also been benefitting from the transformation agenda. One of such agencies that have improved greatly in the last three years is the Nigeria Meteorological Agency. NIMET’s weather forecasts are now more accurate and timely and meet world standard, thanks to the world class equipment procured for the agency in the last three years. NIMET can now effectively tackle wind shear, a major weather hazard that contributes to many aircraft accidents in the past. By means of modern equipment, the occurrence of low level wind shear can now be detected and early warning relayed to pilots via the ATC before take-off or landing. NIMET which has also acquired Doppler Weather Radar can now detect and track hazardous weather systems on real-time basis.
In compliance with ICAO requirement, NIMET underwent a Quality Management System Audit process in October 2011. The Agency was finally certified in March 2013. This certification is a confirmation of Nigeria’s compliance with international aviation standards and best practices in the provision of weather services for airline operations. It boosts the confidence of Airline Operators and other users of meteorological data and products. NIMET is the first meteorological agency in West African to meet the rigorous requirements and receive the ISO certification. It therefore re-enforces Nigeria’s position to become the aviation hub for the entire sub-region. This achievement is unprecedented in the history of meteorological service in Nigeria. It was made possible by the on-going Transformation of the aviation sector to guarantee quality of service and safety in the Nigerian airspace.
The Nigeria Aviation College (NAC) in Zaria has also greatly benefitted from the Jonathan administration’s transformation of the aviation sector. The college is now wearing a new look with new aircraft for training. A new aircraft simulator, helicopter simulator, gas turbine engine simulator as well as a high tech 360 degree 3-D control tower simulator have been procured and installed in the college for the first time ever. This College that had been all but grounded and extinct has been revived and is fast being repositioned to play its rightful role of developing high quality professionals for the country’s aviation industry.
The Perishable Cargo and Aerotropolis Initiative, a component of the transformation agenda for the airports have also been shaping up. The perishable cargo and aerotropolis initiative hold the key to the true development of the Nigerian Aviation sector. Aviation has the brightest potential, through the aerotropolis and perishable cargo programmes, to bring about a bottomup growth and development of the Nigerian society. The perishable cargo terminal at the Calabar Airport will provide a platform for farmers in the state and the neighbouring communities to live a good life beyond mere survival or existence.
Cross River state is known for her agricultural produce ranging from pineapples, bananas, plantain, cocoa, yam, cassava, etc. Today, much of what the farmers produce here is either grossly under-priced or rots away as a result of lack of local capacity to absorb the huge harvest. But with the perishable cargo taking off here in a matter of months, farmers will begin to secure real value for their hard work as their farm produce will find their way to the biggest cities and supermarkets not only in Nigeria but also in Europe and America.
The value chain that will result from this is also very immense. Just imagine the industries that will spring up to service this terminal like the packaging companies, transportation hubs, as well as the grocery stores that will feed off this facility. Thousands of jobs will be created and the entire landscape of this wonderful city will be greatly enhanced; the possibilities are indeed endless.
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