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In the light of the prevalent economic realities of the pandemic across the globe, and its huge impact and implications for the financial market, top industry experts in the capital and financial market sector had taken the initiative to explore the changing dynamics of the Economic Landscape and Investor Preferences in Post-pandemic Africa to accelerate growth and sustainability.
At the maiden edition of the thought leadership series of ZIMVEST tagged, the “Zimvest Economy Conversations”, the experts highlighted key strategies for making smart investment decisions post Covid-19 and the need for all stakeholders in the value chain to embrace digital transformation in order to drive growth and create an entirely new user experience for sustainable competitiveness.
The virtual event which was moderated by Wole Famurewa (Anchor, CNBC Africa) had Koko Bola Onadele (CEO, FMDQ), as the Keynote Speaker and Adedayo Amzat CFA (Founder/GMD, Zedcrest Group), as the Co-host; with other distinguished panellists that comprised of: Esiri Agbeyi (Partner & Head Private Wealth Services, PwC Nigeria), Adetoun Dosunmu (Treasurer at FBNQuest Merchant Bank), Abiola Adekoya (Wealth Expert and Ex. CEO RMB Securities), Ini Ebong (Group Executive, Treasury & Financial Institutions, FirstBank) and Onome Komolafe (Divisional Head, Central Securities Clearing System Plc.) and Chiefo Ejiofobiri (Divisional Head, National Product Sales at Fidelity Bank Plc.) who was unavoidably absent.
In his keynote remarks, Koko Bola Onadele provided lots of insights on the impact of Covid-19 on the Financial Market in Nigeria, Africa and globally.
He stated that, “African economies are faced with similar challenges due to a large dependence on import and large informal population. The difference however is the degree to which each country’s economy was brought to the brink”
He further stated that, “Africa is faced with several crisis: bottomed out oil prices, falling commodity pricing, capital flight, halt in remittances and tourism, etc. Ten African countries count crude oil as one of their most important commodities and most oil producers are still recovering from the 2014 oil price collapse. Crude oil accounts for 90% of Nigeria’s export and about 65% of her revenue. About two thirds of revenue retained by the Federal Government go on debt servicing”.
On the outlook of the equity and fixed income market, Koko stated that, “On the back of the volatility amidst the uncertainties, the African market struggled to grasp the rapid impact of the outbreak and this was marked with re-pricing which occurred across all the asset classes, with less liquid assets facing the largest price adjustment. Investors as expected, took flight to safety towards the safest assets as their risk appetite for risk assets disappeared”.
While underscoring the severity of the times for financial institutions, the panellists provided deep insights on the changing dynamics of investor preferences in the financial market economic landscape and the need to rethink the business model, leveraging innovative technology to accelerate growth on a sustainable basis.
On his part, Adedayo Amzat warned against fraudulent investment schemes which has been on the increase in the economy. According to him, a decade ago, a large population of Nigerians did not know about treasury bills and all of a sudden it became the only asset class in Nigeria.
He stated that, “Asset managers became irrelevant as everyone could immediately invest directly in treasury bills just as the government latched on to that and came up with savings programmes. Today, there are lots of stories around what happened in the 90s in Nigeria, where we had an explosion of alternative asset providers and so-called finance houses coming up with beautiful products and in less than six months to one year, all of that money got lost. People died and some lost their pension and we are beginning to see all that again”.
He further stated that, “So, the caution is that we should see this year as a bad year and not a bad life, as long as capital is protected. Now, we are seeing an explosion of investment platforms, we don’t even know the guys behind those platforms. These people are taking advantage of the desperation of investors. People that were used to treasury bills of 22 per cent yield, now same treasury bills is around one per cent”.
“So, it is understandable that they are under stress, which is why we the advisers, regulators and industry have to come together to continue to sound caution to everyone because not all that glitters is gold. There is no investment that can guarantee 50 per cent returns in a market where GDP is not growth and risk-free rate is two per cent and negative productivity,” he added.
Zimvest is a company duly licensed and regulated by the Securities and Exchange Commission (SEC) as a Funds/Portfolio Manager. ZIMVEST is a member of the ZEDCREST Group, a foremost financial solutions powerhouse in Nigeria.
© Regtech Africa 2020
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