BusinessDay... the voice of business: $462.9m invested in AFC with presidential approval, says Soludo

$462.9m invested in AFC with presidential approval, says Soludo
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Sola shittu on 30 April, 2008 02:00:00
 
An insight into Nigeria’s investment in the Africa Finance Corporation (AFC)
was given yesterday with the Central Bank of Nigeria (CBN) saying $462.923
million and not $480 million as widely reported was invested in the corporation.
The investment had precipitated a seeming controversy, prompting the attorney
general of the federation, Michael Aondoakaa, to set up a panel to investigate
the authorisation of the venture.
Yesterday, Chukwuma Soludo, governor of CBN, responded to an invitation by the
House of Representatives committee on banking and currency which had also began
its own investigation into the apex bank.
Responding to questions from the committee members, Soludo said the AFC
investment was not made from the CBN account with the Bank of England but from
the naira account of the CBN.
According to him, it was not possible for the CBN to make any withdrawal from
the Bank of England account because it had only 16 million pounds in 2007.
The CBN governor however gave assurance that if the National Assembly decides
against Nigeria’s participation in the AFC, her investment with the bank would
remain intact and even yield interest.
“If the Central Bank says we want to get out of this tomorrow, other
investors are willing to buy us out because this is an institution with a huge
muscle. How many institutions in the world started with that level of capital?
So our money is safe. It is not only safe it is even yielding and growing as it
were,” he said.
Soludo admitted that the money was dormant for a while till November last year
after which it was transferred to accounts set up by the AFC. “Part of the
reason they remained idle was that AFC was working through the processes of
opening accounts”.
He explained revealed that two other African countries - Guinea Bissau and
Sierra Leone - have joined the AFC on January 20 and April 7 this year while the
corporation commenced full operation also in April.
Soludo listed investments from Nigeria’s private investors to include $101
million from United Bank of Africa (UBA), $100 million from First Bank of
Nigeria, $50 million each from Oceanic Bank, Zenith Bank, Access Bank and Union
Bank. This brings investments from Nigeria in AFC to $863.923 million.
He also told the committee that two Chinese companies have invested $50 million
each in AFC while Canadian concerns have already signified their intention to
put in $100 million. He also noted that prospective investors from Ghana, the
Central Bank of Francophone countries (BCEAO), among others are waiting in the
wings to invest in AFC.
Pointing out that the CBN Act empowers its board to embark on such ventures,
the governor confirmed that he has been selected as protem chairman of AFC
against his opinion but the appointment has not been approved by the general
assembly of AFC’s shareholders.
Apart from the $462.923 million, Soludo said the CBN did not incur any other
cost except the cost of hosting meetings. He said up till now, members of the
board are not being remunerated.
Soludo explained that the signing of the AFC treaty by both Guinea Bissau and
Sierra Leone means that they are ready to grant AFC the same privilege and
immunity in their respective countries.
“When AFC goes to do business in their places, they are bound by all the
rules. The investment by their governments can only happen through their central
banks and you could see that they signed after we closed the first schedule
because we are now doing preparation to open up the second phase. Once we open
up, I am sure their central banks would now come in but we are also encouraging
their own private sector people to begin to invest.
“Secondly, as at the time we closed the first offering, the dominant
shareholders happened to be Nigerian companies which was what we expected when
we are starting off in the sense that many people outside Nigeria would say,
well let us wait and see this Nigerian thing, would it work and that was exactly
what happened,” he said.
According to the CBN boss, approval for the AFC venture was granted on two
occasions by former president Olusegun Obasanjo while the then attorney general
of the federation and minister of justice, Bayo Ojo, signed the corporation’s
charter on behalf of Nigeria. Only afterwards did the CBN proceed with the
investment, he said.
in her remarks, Betty Apiafi, a member of the committee, said the AFC venture
is a “commendable effort.” Her views were echoed by Ogbuefi Ozongbachi,
chairman of the committee, who said that when the charter comes to the law
makers for ratification, members would have been adequately acquainted with its
provisions.