Indications emerged weekend that bank loans to the Oil & gas sector of the nation’s economy are estimated to have reached $5.7 billion in the past five years.
The Chief Executive Officer of Seplat Petroleum Development Company Plc, Austin Avuru disclosed this in Addis Ababa Ethiopia while speaking at the tenth edition of the US-Africa Business Summit.
He said, “Unlike in the past when the Nigerian banking sector did not lend up to $20 million to any sector for over 20 years, the oil and gas sector in the country alone has accessed credit facilities to the tune of $5.7 billion within the past five (5) years.
He noted that indigenous entrepreneurs must work towards attaining international standards of operation as a way to attracting more fund injection either through the banks or public offerings, while advising companies to pursue good corporate governance and institutional framework as a means to accessing funds for growth and development.
The CEO of Seplat noted that there are various sources of funding for companies which present a good governance structure in the country.
Avuru, who was a panelist at a session on ‘ Financing Africa’s Private Sector Growth’ noted, that there are funds actually sitting and waiting for investable opportunities, citing Pension funds and Insurance companies.
He advised African businesses to take advantage of these opportunities to develop their businesses and grow their country’s economy.
Sharing the experience of Seplat which is the first upstream company to be dual- listed on the Nigeria and London Stock Exchanges, Avuru told the audience that while going public remained one of the most veritable ways of raising funds for a business entity, any company aiming at being listed on the stock exchange must be prepared to open itself up to public scrutiny.
“A company must have world class governance requirements to be able to list and attract funds. To achieve its listing on the London Stock Exchange, it took Seplat seven and half months against the usually eight or less weeks before the company received the UK Listing Authority approval after due diligence,” he said.
The CEO of Seplat added that the company put itself up for scrutiny because it knew that it desired a long term world class governance and institutional framework, high quality of board and management of the company ensuring that they and the company can be trusted.
“Seplat put itself through these laborious and stringent rules because the company knows that its long term survival as a company depends on these qualities that fund managers require. And since going public, Seplat has adhered to this checklist of world class governance structure; keeping to a good track record. Companies which do not follow this high level of governance and proper framework will not survive in the long haul,” Avuru added.
Also, he noted that the current economic crunch in the country which has led to the devaluation in the value of the naira was a disincentive for a lot of investors , stressing that that a lot of portfolio investors could move out their investments thus leaving gaps in the Nigerian Stock Exchange.
This, according to him, presents a very useful window for indigenous entrepreneurs and capital to move in and save the stock exchange. Hence he stressed the need for a very viable indigenous private sector.
Shares of Seplat at the close of last week’s trading on the Nigerian bourse gained 25.10 percent to N243 per share from N194. 25 per share traded the past week.