GTR gathered a group of trade financiers in Lagos to analyse what the future holds for the country, assess the implications of the 2015 election victory for President Buhari and address key developments within the oil and gas industry, among other topics.

Roundtable participants
Oladapo Adeigbe, vice-president, FI trade Nigeria, Barclays (chair)
Adebanjo Adegbohungbe, global head, corporate operations, Access Bank
Akorede Badmus, head of trade finance, Sub-Saharan Africa, JP Morgan
Lanre Bakare, head, finance & strategy, Pan African Capital
Olusola Balogun, assistant vice-president, FI trade Nigeria, Barclays
Ikenna Egbukole, business manager, structured trade & commodity finance, FBN Bank
Dele Kuti, head: oil & gas, power and infrastructure, Standard Bank/Stanbic IBTC
Funso Oke, vice-president, Synergy Capital Advisory
Henry Okojie, trade product manager, Citibank Nigeria
Dolapo Oni, head, energy research, Ecobank

Adeigbe: Let us begin with the issue around oil and gas, which is a bad place to start, considering that it is the life and soul of Nigeria.

Oni: There have been a number of developments in the oil and gas space. Since 2010, we have seen a massive decline in US interest in Nigerian oil. That is because shale oil production in the US has increased significantly. Shale oil is predominantly light and sweet, which clashes, essentially, with what Nigeria also produces in large quantities: light and sweet crude oil. As such, Nigeria has lost a major trade partner in the US. At some point, the US was importing close to a million barrels a day; as we speak today, data for August that was released by the International Energy Agency (IEA) shows that the US imported roughly 50,000 barrels a day, which is a massive fall.

In around June last year, we also started to see a decline in oil prices, following the massive oversupply in the oil market. A lot of crude oil came on to the market from Saudi Arabia, the Middle East, Africa and the US, and the oil price started to fall. Today we are talking about an oil price of US$49 from a peak of US$115 in June last year. That has had a big impact on Nigeria – a country that is solely dependent on crude oil.

Nigeria, since last year, continues to see oil and gas companies leaving various fields and selling off various assets and stakes. A lot of the international oil companies (IOCs) are interested in leaving more stakes. While divestments are still going on, oil companies are not relenting. New fields are being brought onstream by marginal field players and by IOCs. Just yesterday, ExxonMobil brought Erha North Phase onstream. That is 65,000 barrels per day, hoping to ramp up to 90,000 before the end of the year. They are among the marginal field players: Oando in the Qua-Iboe field, and Lekoil in the Otakikpo field. There are several other fields.

Towards the last few days of the last regime, we saw a hasty passage of the Petroleum Industry Bill (PIB) by the House of Representatives. I call it hasty because, at the end of the day, they tried to quickly put a lot of things into that PIB and push it on. The fact is that the PIB is still not passed. If you look at the messages coming out of the NNPC and the current regime, it looks like they want to send the PIB back to the drawing board, so we might see the PIB remaining unpassed for quite a while.
Refinery repairs are also coming up. The Kaduna refinery came up last week. Before that, the Warri refinery came back in August but had to be shut down due to vandalism. It has been given 90 days to come back to its full capacity of 125,000 barrels per day, but Kaduna and Port Harcourt 2 are up. Port Harcourt 1, however, is still a bit of an issue. We expect to see more of these reforms continue.

Okojie: On a more general note, because of the lower oil prices that we have seen and the thinner margins by the operators in that company, companies will have to be innovative and much more efficient, or they risk being out of business. Smaller players and probably some majors will build up some size and get some economies of scale in operations. Yes, we will see tough times but it will probably bring out the best in these companies and set a platform for better performance in the medium to long term.

Adegbohungbe: Even though the PIB will not be passed on time, there should be some demarcation of what the regulatory framework will be, within which the downstream players can function in an environment where there are no subsidies. There is an incentive to withdraw subsidies now because oil prices are forecast to remain low, which means the landing cost of the refined petroleum products will be low.

The bigger incentive is also when you look at the fiscal position of the federal government. Because of the leakages involved in the subsidy scheme, the implication is that, on paper, we are importing more than we consume. If you withdraw subsidies, the players will only import what they can sell within the country, because the government is not going to pay you any differently, and you are bearing the cost of funding from your loans from your banks. You are going to find that the FX import bill for refined petroleum products will come down, which should ease some pricing pressure on reserves. At the same time, however, the government’s fiscal situation should improve, because of what we are spending on subsidies right now.

There is still a subsidy regime for the NNPC right now. There is not enough transparency around that. The government is spending money heavily on those subsidies, regardless of who is importing: whether it is the NNPC or the private sector. It is a lot of money that can be channelled into other areas like infrastructure development and so on.

Adeigbe: The other issue we want to look at is the central bank. In the past few months, the central bank has been struggling to support the naira using administrative means to hold rates. Yesterday, the president also said there will not be any devaluation, but the international community is saying: ‘Let the naira find its level so that portfolio investment and foreign direct investment (FDI) returns to the country.’ What do we think is the position that the government should take at this point to ensure that the foreign investment that left this country, either as FDI or portfolio investment, returns and that the economic activities that have slowed down restart?

Adegbohungbe: If you look at the direction of the interventions from the central bank so far, we seem to be moving further away from an open economy and gradually towards a closed economy – a reversal of the direction in which we have gone over the last 10 years. You have to ask yourselves whether we are at a crossroads today. If oil prices remain this low, the capacity of the central bank to defend the currency is severely challenged. In the foreign exchange market, there are just three major sources: people bringing in foreign portfolio investment (FPI); holders of foreign currency within the economy; and the central bank itself, which is primarily from reserves.

If oil prices stay low, the central bank is not a very strong source of supply. If you are going to rely heavily on the other two sources, then, your regulations must provide an incentive for those sources to support the foreign exchange market. The current guidelines that are in place do not provide an incentive for portfolio investors to bring money, because of the perception that, if any devaluation happens, they will take a loss on their books, which they are not willing to do.

Also, because you want a free market where you can come in, with free entry and exit, there are some concerns about that now. If the perception of that risk is there, they are less likely to bring money. For the holders of foreign currency, there are restrictions now that, at the minimum, would dissuade them from selling what they would have sold to support the market. Whether it is the restriction on what banks can purchase from oil companies or the restriction on people with funds in export proceeds accounts or the restriction on people with funds in their own accounts, it is more difficult today for those people to support the foreign exchange market.

You then add the restrictions on the market itself, which is not freely functioning. We do not have forwards or two-week quotes. In essence, then, we need to ask ourselves, if we want to ease pressure on the reserves on the one hand, how we do that while, at the same time, providing enough confidence for these other two sources for function? That is the dilemma that the central bank faces. If oil prices do not go up, the pressure on reserves will not cease. There is no new source of foreign exchange revenues. It is primarily tied to what happens with oil prices.

If we continue in the direction we are seeing, what is likely to happen is that we are going to move further and further away from a freely operating market and probably closer towards capital controls and restrictions on outward flows of foreign exchange.

Egbukole: For me the word is ‘sustainability’: how is this sustainable? Nigeria primarily relied on the export of crude for its foreign exchange, which has been a fundamental issue to the position in which we find ourselves. Looking at the body language of the new administration, the president is, from what we can see, looking at diversifying other foreign exchange earnings for the country.

But it is not all about making the environment good for portfolio investors who are coming in with their money for a period of time and then leaving. We should look at the long run. We might suffer now for one to three years, but then the benefit will come. If we have the sustainability of support for the core raw materials and for local industries to produce, you will see the demand for foreign exchange reducing.

In the short run, it might look like we have closed off the economy but, in the long run, it is going to benefit us. For example, in terms of the agreement between Tolaram and Kellogg, what is the strategic importance for Kellogg? What is the attraction in Africa? The population is there. In West Africa, Nigeria is the hub, so the demand for consumables and commodities is quite high. Over 70% of them are imported. If this industry is coming and we are producing it locally, we will see the pressure on the currency definitely reducing.

Okojie: I think we have a situation where the government is in a fix and a bind. On the one hand, you are looking to see how you run your government and create enough confidence for those foreign investors to still come in; on the other hand, you are looking at how you begin to create local substitutes to those imports, so that, in the long run, you reduce the demand for dollars or just make it within what your supply is, assuming that our oil price levels remain as they are, which is a major source of foreign exchange.

It is all well and good having the plans for local production, but are there any specific plans that have been put in place to boost local production? That is where I have a challenge to the current process. The central bank has released a list of 41 items for which you cannot go to the bank window to access FX. The reason was to encourage local production of those items. You would want to see, simultaneously, specific activities and policies that would drive the local production of those items. Whatever the challenges are – the production, the distribution or the preservation – you would have to have those specific policies in place, along with some kind of phased approach. As you are putting the restrictions in, you also have the policies that ensure that you are beginning to grow that.

Where you do not have that, what you are going to have is a big gap. The way to bridge that gap would typically be the fastest way to get those things across, so what you would have would probably be increased smuggling, etc. It is, then, a very delicate balance that the government has to try to achieve while still creating some confidence and not moving as quickly as they have towards that closed, restricted economic model. Getting that balance right is the key to moving out of these current challenges that we have been facing.

Adeigbe: As Henry has identified, while there may be a short-term gap, ultimately would the country or the economy not be better off in the medium to long term? If you look at that vis-à-vis short-term gain and long-term sustainability, which
would you support?

Badmus: Fundamentally, what we need to acknowledge is that we are facing the same challenges as we were 10 or 15 years ago. We have to move quickly from being a consuming economy to a producing economy.

The CBN’s current approach what I call a ‘holding strategy’, which is understandable given the global economic challenges particularly as it relates to the continuous significant decline in the crude oil price and its critical impact on the country’s foreign reserves. What we need now is clarity from both a fiscal point of view, and greater clarity on the monetary policy side. These two cannot work in isolation: they have to complement each other as a matter of necessity.
Furthermore, most countries that benefit from currency devaluation are those with a producing economy; some of the countries are using the devaluation as a deliberate strategy to grow their exports and they will benefit in both the medium and long term. In the case of Nigeria, we are a consuming economy; so the currency devaluation may impact us in the short and medium term but over the long term there could be significant benefits if we can successfully diversify our economy and become a producing economy with less reliance on oil.

Adeigbe: Is it not a contradiction? You want to build an export-based economy and you need foreign investors to come into your country to put funds into the system. The foreign investors are saying: ‘You need to liberalise your exchange system. You need to leave it to open-market forces’ and you are saying ‘no.’

Adegbohungbe: We have done it before in this country with cement. We are, I believe, self-sufficient in cement production today, but how was it done? The government gave a timetable, with fiscal policy incentives over a period of time. Over this period, these incentives would encourage people to set up their own cement plants locally, with tariffs
and taxes, etc. It was a policy mix that would provide the incentive for people to bring in their money.

That, however, is not enough; you also need to combine that with an exchange regime that has some degree of certainty. I need to understand, ‘If I import it today, it is x dollars to the naira. By the time I start producing and I am generating money and need to pay back those loans, what will it be? I can have my business plan, whereby I am going to borrow
from banks.’

With cement, the government said: ‘After three or four years, the importation of cement is banned, because everybody should have built their plant.’ If you take all the sectors where you want people to make this investment, you provide the fiscal policy incentives and you make sure you have clarity on the exchange rate regime. Over the period of time you give people, they will make the investment.

The last government started it but did not quite conclude it for car-assembly plants. We all thought initially that Toyota or Nissan would not come. They are all here with assembly plants. I said that they did not finish it because there is now some controversy over the importation of used cars, which was supposed to be banned. If they had followed it through, what would have happened is that assembly plants would be set up, then the manufacturing would start happening here. After some time, exports would start happening from here.
When you do that for the various sectors, you will find that the local production piece will grow: you become less dependent on exports, and you have a stronger capacity to support your currency.

Badmus: What the government needs to do urgently is to come up with an export diversification policy, taking each sector that we want to prioritise and creating self-sufficiency. The last administration talked about sufficiency in rice production, for example, we should sustain this, review how far we have gone and if we have not met our objectives look at what other incentives or measures we need to reach the self-sufficiency target. Nigeria spent US$2.1bn on rice importation in the past three years (according to CBN). This is not sustainable and we need to create self-sufficiency in our own agriculture sector.

Kuti: If we do analysis of the imports, as everybody has mentioned, oil and gas is close to 60% of that volume between automotive gas oil (AGO) and refined products. You can easily plug that hole by putting in a refinery in Nigeria that can generate enough oil, but not in the current regulated market; otherwise, we are producing the oil not only for Nigeria but subsidising the entire West African region. If we retain the current pricing, we will realise that most of our product is going to end up in those parts of the world.

Okojie: When we talk about boosting local production capacity, it is not rocket science. We are looking at a few things. What has stopped us as a country from being able to go down that route? When you look deeply into that, you begin to think that this current regime of low oil prices might be a blessing in disguise for us as a country. We have had it very good. We have the FX and we are able to import. It is easier to import than to produce, when you look at the effort put in, so people have tended towards that. When you have something easy, corruption, etc, grows and attracts a lot of negative things.

Now, what you are looking at is the will to take those hard decisions that we are talking about to be able to plug corruption, and to take all of those decisions on subsidies, etc. The reality is that the current levels are not sustainable. All of these restrictions from the CBN are there because they do not have a choice. They just have to do it. The current levels are not sustainable at all.

My small fear in all of this is that these things that we are talking about – building local production capacity – are not short-term measures. They are all mid-term measures.

Oni: One last twist to the discussion, which is always a recurring factor in Nigerian discussions, is whether the decision is purely economic or whether
it also has some political connotations. In Nigeria, the decision is not always purely economic.
The tendency in the developed world is always to kick off the discussion from the economic viewpoint. For instance, the Fed hike started as an economic decision which, yesterday, descended into a political decision. In Nigeria, it starts mostly from the political side of things, which is something that we must always be aware of.

Bakare: This government has not come up with its own economic roadmap. We have had a gap between what the CBN used to do all along and what is happening now.

Adeigbe: What has been the impact of all this on trade finance? International correspondents are beginning to hold back. Local banks are also beginning to have challenges sourcing FX from the market. Where do we go from here?

Egbukole: It is quite clear that it has really nosedived at the two ends: both the import and the export side. If you look at the import side, for instance, the restriction on 41 items is quite clear. If you look at the ratio, these 41 items constitute a major part of demand.
On the export side, the policies say that exporters must sell their export proceeds to the banks as against the practice allowing them to sell it. That is what makes most of them reduce what they are exporting or, from the other angle, what has been exported on the invoice. Most of them will tell you that local cocoa farmers or traders are online checking the international cocoa price, so they are all aware. Competition is there to buy these products from them, so that has reduced. Most of them have only 180 days to repatriate these funds. They might have to wait, hoping that there will be no change.

Adegbohungbe: The new government has come in. Everyone wants to understand what the fiscal policy direction of the government will be. So far, what we have had are monetary policy interventions, like on the part of the central bank. We have all said that we need complementary fiscal and monetary policy to get us out of the woods. It remains to be seen if the fiscal policy direction of the government will be in line with the current monetary policy stance of the central bank. If it is not, you can expect that some of these interventions will be adjusted. If it turns out that the fiscal policy direction of the government is in line with what the central bank has done so far, then you can expect that it is likely to get worse before it gets better.

On the situation with obligations, I think we have an issue building up our credibility as a country. If we are saying that it will take five to 10 years before we get local investment and production capacity in place, what do we do between now and then? It all depends on what the government wants to do now to balance the situation. Right now, we have been removed from the JP Morgan Emerging Market Index. We are not under any significant pressure to devalue anymore, so we can use the holding strategy, as Akorede put it. In the short term, you will have a problem of worsening credibility. Exporters who have provided credit lines for their importers cannot get paid, even though the importer has the naira sitting in their bank. They are going to start withdrawing those lines.

It will then get to the foreign banks that are funding the local banks as well. There is only so much that local banks can fund on their balance sheets. At some point, they are going to need to have access to foreign exchange. If they cannot, they then start having an issue with banks’ lines. What will ultimately happen is that that devaluation will then have to happen, but in a more painful manner. By then, the obligations have built up. At some point, because you now have to solve that credibility problem immediately, we are going to have to just lose it all in one go.

Adeigbe: Let us assume that the CBN decides today that they want to meet outstanding trade obligations with Nigerian banks. What do you think the sum of that would be? The position most analysts have taken is this: the CBN is just taking a wait-and-see approach: ‘Let us see the worst that can happen. Either the local banks could independently find alternative means of funding to meet these obligations or we intervene. If we need to do it, what is the hit we are going to take?’

Adegbohungbe: The central bank asked all banks to provide this information a month to six weeks ago. They provided a template and said: ‘Give us all your exposures.’ Then, later on, they said: ‘Give us all your exposures for these 41 items,’ so I think the information is available. If you are asking how much that will be, however – not just for the 41 items but for everything that everybody has past due – I do not see it being less than US$3bn.

Okojie: A lot of corporates left their funds here over a long period of time and, due to the risk of availability and uncertainties, etc, they just took it out – not because they needed it elsewhere but because they wanted it somewhere safe. Those are funds that provide a very good buffer to carry you until when you are able to put up those other plans you have in terms of local production capacity. You want to try to restrict demand to meet your supply, but if there are restrictions on demand, they reduce your variable supply sources for that. You have to have a way of opening up that demand, as far as you do your homework properly, to ensure that, if you open up that demand, you get increased supply, so that the net effect is a positive inflow of foreign exchange into the country.

Of course, it is not as simple as just saying it like this, but that objective has to be there for us to survive in the medium term. I think that we are in a very tough situation right now if we look at the FX flow in the market. It is really tough for a lot of companies and a lot of people. If a company takes a decision today to move out of Nigeria, it is a decision at two strategy sessions over a three or six-month period. To get that company to reverse that decision is not going to take three to six months, but a couple of years. We need to stop companies – traders and businesses – from reaching that point where they have to take that exit decision, because getting them back in is going to be an even bigger challenge.

Adeigbe: What should be the three things that the new cabinet should prioritise in setting the tone for the country?

Bakare: For me, I would say power, infrastructure and the financial system.

Adegbohungbe: We need fiscal policy direction first of all. Right now, we have that vacuum, so we need to understand what the direction is. That will probably envelop a whole lot of things. There are some key things that need to be tackled, so I am not listing them in any order of priority. We need reforms in the oil and gas sector. What are we going to do about the PIB, deregulation and subsidies – all of that uncompleted?

We also have uncompleted power sector reforms. We privatised the distribution and generation companies but the reforms were not completed, so what is going to happen with Nigerian Bulk Electricity Trading (NBET), which is still government-owned? What is going to happen with the issue of gas? The privatised plants do not have enough gas and are not generating at full capacity. What is going to happen with the transmission grid? All of that is still unfinished business.
The third thing is the investment climate, which I think revolves around the financial system, the exchange rate and the capital market. We need a cohesive, comprehensive strategy around this. You can say 100 days or six months, but whatever time period is set, everyone needs to understand. The president has already picked some things, such as security. He has also picked the fight against corruption. You can see some traction behind these two.

Badmus: One major thing I would like to see is an industrialisation policy outlining how they plan to grow and drive exports. This would go beyond just asking people to come in and invest; it would go to the extent that we need to have a strong institutional framework and to build necessary manpower.
Also I would like to see the government chart a new path for our educational system that would be able to support and align with our drive for industrialisation as a way to address our current economic situation. There must be a convergence between our educational system and our drive for industrialisation.

Egbukole: We need to open up other sources of revenue for the country, especially in agriculture. Looking at other developed economies, agriculture has a lot to do. You can start exporting cassava and rice, so there is a lot to do in that source of revenue.

Oni: The striking thing is that, if you look at commodities generally, there are two or three that have maintained an upward trend throughout this year: cocoa and palm oil.
Agriculture and industrialisation are key to how Nigeria can resume being number one in palm oil exports. We used to be and that industry is almost dead, but we still produce it. We need to get back to that. If you go to the Pressco office in Benin, they have to auction the quantity of palm oil that they have. We do not even produce enough of the industrial palm oil that is required by the likes of DUFIL Prima. Pressco has to import it. It is indigenous to this region and our kind of vegetation, so we need to support that industry.
Cocoa, as has been said, is a strong industry. For someone from the north, who has a lot of agricultural background and owns a lot of livestock himself, I would expect that to be one of the president’s focus areas.

To get that up to speed, power is going to be important. The issue of power is one where we have placed the cart before the horse. Unfortunately, we dove headlong into trying to get power on the ground without even looking at gas. Now, we are thinking: ‘We need to fix gas.’ Now we have gas, we are thinking, ‘We do not have enough transmission.’ As we speak today, active capacity that is available and that come onto the grid far exceeds what the grid can accept.

We will come back to the gas issues when all that capacity eventually lands on the grid. Power, then, is one that he needs to focus on. We need to get transmission. It might be a case of splitting up the Transmission Company of Nigeria (TCN) and regionalising it, or looking at off-grid solutions.
The last one would be financial markets. They are not deep enough. The oil and gas industry is really constrained by the fact that it is heavily debt-loaded, with very little equity.

Okojie: The first thing I would look at is corruption. It has been mentioned here that they are already doing something about it, but to have a sustainable programme fighting corruption, you need to have system-based solutions beyond catching one guy and taking him to court, etc. A very simple one is having an automated payroll system, which a lot of state and government entities refused and pushed back for a long time.

Also, in terms of our culture and our way of thinking, there are a lot of borderline moral and ethical things for the younger generation that you would look at as purely no-no, whereas they see nothing wrong with it. We need to have that to fight corruption, of course, in addition to regulatory prosecution.

Second are infrastructure, power and industrialisation. Those are drivers for the economy. What the government has to do now is to encourage the people to be able to do something, if they have a business idea and they want to go into it. There has to be private-sector participation in all of these things. The drivers for inclusive participation include the right infrastructure and industrialisation. Something to note here is that you can do too many things at once, so there has to be a specific focus identifying a few key areas, some of which have been mentioned here, such as agriculture and oil and gas.

Government participation has to be very limited or close to zero. It should just be encouraging people with regulation and facilitating businesses to come in. They should stand back and allow that. Once you have that private sector-led industrialisation, you will find that you will go further, because you would have efficiency and people who are profit-minded and looking for returns and long-term sustainability.

Kuti: I would also mention a focus on fiscal discipline. The cost of running government is quite high. There are a lot of ghost workers in different departments, so fixing that would go a long way to getting it down.

Oke: I think 90-95% of all the relevant points have been made, but just to reiterate: The president is taking on the corruption battle, which is fundamental. He is taking on security. Let us not forget that security, as he has defined it, at least in the press, has meant the fight against the terrorist threat, which has largely been localised but remains a threat to economic activity and lives all over the country, including the south-west, where we sit right now. Security concerns at the top level must not isolate the terrorist threat from social crime, which remains rampant. We need to stress a broader view of what is defined as the need for a security upgrade.

Of course, we are here to discuss the economy. The president mentioned during his first few days that what he wants to drive at regarding the economy – and rightly so – would be geared towards creating jobs. We have a sustained double-digit unemployment and underemployment rate.

Over the last 100 days, as you have all said, the president has had a positive impact. To sustain it, however, he is going to have to drive employment. Unemployment ties into corruption. Most corruption is down to people being unable to see a future without trying to line their nest, because their employment situation, one way or the other, is suboptimal.

In terms of security, as we well know, the hordes of young, angry men who joined with the terrorist groups not only in the north but in the southwest and the east, are again tied to economic opportunities and employment. If the president is going to have a grand plan for employment, it is not going to be via a command/control-type economy. It is not going to be via creation of vast public sector works to employ hundreds of thousands or millions of people: it is going to be by supporting (mostly small) companies.

The SME mantra is a catchphrase, but it has to be driven as a proper platform for absorbing, employing and empowering people, so that we go from poverty alleviation to wealth creation. If people are made redundant from the bloated public service or even the private sector, and they know that they can set up some mid-level firm to gainfully sustain them, it becomes attractive. We have a new boss of the Federal Inland Revenue Service (FIRS), whose number one focus seems to be, from what I have heard, to increase the tax base and tax revenues. If you had an entrepreneur or a mid-sized firm that is struggling to bring its own infrastructure – security, power and roads – and, at the same time, you tell him: ‘You’ve been underpaying tax or not paying tax at all, so we are going to seal your office,’ you think you are helping the federal government by increasing revenues but you are not helping the people or the employment situation.

It ties in with our focus on trade finance, the FX regime and the clarity that has to be brought. There has to be that sincere and strategic emphasis on employing people and supporting larger industries as well as the likes of the Manufacturers Association of Nigeria (MAN) and other advocacy niches and catchment areas, to see where their needs are and press those points. Beyond that, at a strategic level, there has to be a way to support the 6 million registered companies in Nigeria, according to the Corporate Affairs Commission (CAC). Maybe a small fraction of that number is sustained business. Where does it hurt them and what can a federal government do to make sure that their hurt is minimised? That is the only way to sustainably bring leadership to the economy, in my view.

Balogun: Another important factor is banking reform. The banks should be reformed in a way that they are focused on long-term funding and not just looking at short terms. There are three or four banks in Nigeria struggling to fund major projects. Most of them are focused on short-term funding.