Nigeria’s investment bankers should create investible products to drive financing, galvanise commodities market, increase export, says LCFE chief

Nigeria has been characterised as a major player in terms of demand in the global commodities market, despite the huge resources and manpower it has to be one of the leading exporters in the market.

This characterisation was made by Akin Akeredolu-Ale, managing director and chief executive officer of Lagos Commodities and Futures Exchange (LCFE), who, therefore, called out investment bankers in the country, along with others in the finance industry, to work towards the development of investible product in a bid to drive financing, galvanize the commodities market and increase the export of agricultural products.

Speaking at the business a.m. / GTI Finance and Investment Dialogue (FID), Akin Akeredolu-Ale, explained that the biggest problem of the commodities market, most especially the agricultural sector, is financing, adding that despite the federal government’s numerous efforts it continues to fail, because of the absence of private investors in the financing of the sector.

He added that if investment bankers can be creative and leverage the Nigerian Stock Exchange and FMDQ, the many investors who are looking to invest in the country would be attracted.

“The biggest problem of agriculture in Nigeria is financing, we need private investors to start participating actively, the government has pumped a lot of money into the sector, through SMEs, Anchor Borrower Scheme and other financing schemes. People say if you want to grow your economy, you look at the commodities market. During the Obamaregime and now the Trump regime, America continues to leverage its commodities market, but if you come to Nigeria, nobody is raising their hand, investors are interested in this country because they know our potential, but when they come, they don’t see anybody,” he stressed.

According to him, agriculture employs 60 percent and contributes 25 – 40 percent of the GDP and the banking sector only supports with 5 percent, but he said the banks are not to be blamed.

“I was at a presentation and Diamond Bank [now merged into Access Bank] was there and they were like ‘we are willing and ready to invest but we can’t give money to faceless people’. Let me tell you, many of the people who benefited from the Anchor Borrower Scheme are at large. Nigeria has lost $10 billion in annual export opportunities from groundnut, palm oil, cocoa and cotton due to decline in production and between 2011 and 2015, agro-processed exports declined by 41 percent,” he told the audience attending the FID.

Discussing the potential of the Nigerian commodity market, Akeredolu-Ale stated that the fact that Nigeria has a very large GDP in comparison to other African countries like Ethiopia and Kenya, who are making waves in terms of agricultural exports, in addition to the population, resources and intellect owed by the country, he said the country ought to be the hub in West Africa.

He criticized the low level of intra-regional trade amongst African countries and the over-reliance of the continent on food import, saying, “Africa has the population and topography to thrive in agric, but our reliance on food import poses a huge trade imbalance, imagine if these countries, which we import food from, decide not to export to us? There is also a strong need for African countries to do more intraregional trade, right now there are no energy exchange in Africa, no West African partnership.”