Reviewed Investor's Guide 2006

Investor’s Guide 2006 – Privatisation: fast channel to the Nigerian economy

The privatisation of the Public Enterprises is one of the important elements of Nigeria’s economic reforms through which the hitherto commanding heights of the economy are being transferred to the private sector. The key strategies of the privatisation programme include:

–       Market the right public enterprises to the right strategic investors with the appropriate financial resources and technical-cum-managerial competence at the right prices

–       Utilize the best global practices

–       Apply a wide range of sales methods e.g. core investor, public offer, concession etc as considered relevant to each enterprise

–       Assure transparency in the application of the established procedures for privatising each enterprise

 

In this respect, the government of Nigeria has continued to improve the enabling environment for the success of the Privatisation programme to the delight of the investors. Some of these efforts include:

–       Crimes Commission Act

–       Economic and Financial Crimes Commission Act

–       Money Laundering (prohibition) Act

–       Competition and Anti-Trust Bill

–       Energy/Electricity Reform Bill

–       Labour Reform Bill

–       Extractive Industries Transparency Initiative

–       Independent regulatory commission for each sector

–       Port reforms

–       Generous tax holidays

–       Highly skilled local manpower

–       Improved capacity building in the Bureau of Public Enterprises (BPE) for the effective management of the privatisation processes

–       Open, fair and just engagement of all relevant stakeholders for all enterprises, including labour and environmental issues, with the support of the World Bank and other agencies

–       Guarantees from the World Bank, Multi-lateral Investment Guarantee Agency and Overseas Private Investment Corporation, and

–       Political will and commitment at the highest level of government

 

In the past five years, over 25 public enterprises have been privatized in Banks, Insurance, Cement and Sugar manufacturing, Oil & Gas, Hospitality, Shipping, Vehicle assembly and media sectors of the economy. The following Table shows the Stock Market performance of some of these privatized enterprises:

 

Post-Privatisation performance of some enterprises sold via IPO

EnterprisePre-TS priceSales priceStock price 30/06/04Stock/Sales price +/- /- %
ASHAKA6.888.2521.5013.25+161
CCNN2.322.505.503.00+120
WAPCO20.5927.5017.00(10.50)-38
AP19.3428.5042.8714.37+50
NOLCHEM

(CONOIL)

24.8025.00179.00154.00+616
UNIPETROL

(OANDO)

26.8829.00108.0079.00+272
FSB3.504.201.35

(ex-div)

(2.85)-68
IMB0.810.751.040.29+39
NAL2.102.751.900.85-31

With all hands practically on deck as the programme reaches the critical phase for the privatisation of the very large and complex enterprises, the prospects for its success are becoming brighter, noting:

–     The increasingly ‘magnetic’ attractiveness of investors to the Nigerian economy as Africa’s most entrepreneurial, and its second largest, economy with GDP of about $40 billion and one of the most profitable stock markets in the world, with annual ROI of about 105%.

–     Its relative peace and stability, along with its current role as the “peace Prefect” of Africa

–     The unique diversity of its natural resources

–     The openness of its economy to foreign investors from all over the world

–     The robustness of its privatisation programme relative to the rest of Africa in terms of the wide range of sectors covered by the enterprises.

–     The generally lower cost of acquiring controlling shares in the management of the enterprises compared to the large investments required to start them.

On behalf of the National Council on Privatisation and the Bureau of Public Enterprises, I am therefore very pleased to present this ‘Investors’ guide’ on the marketing profiles of some of the public enterprises scheduled for privatisation in the short to medium term to all investors who wish to utilize this fastest channel for achieving a profitable entry into the Nigerian economy.

We at the Bureau of Public Enterprises eagerly wait to give you the warmly enterprising Nigerian welcome and all the professional assistance you may require in boarding our express ‘privatisation train’ successfully.