Indications have emerged that Deposit Money Banks have increased their appetite for lending to the private sector.

The banks have led the way in Africa’s syndicated loan market so far this year, with more than $10bn of deals signed in the market.

For instance, MTN Nigeria last week agreed to a $3bn loan to expand its network through Guaranty Trust Bank Plc, Citigroup, Standard Chartered, Industrial and Commercial Bank of China, China Development Bank and China Construction Bank.

Meanwhile, Dangote Group, West Africa’s largest conglomerate, is in talks to raise a debut $3.5bn loan to fund fertiliser and oil refinery projects with lead banks Barclays, GTBank, Standard Bank and Standard Chartered.

Calculations showed that the two jumbo loans almost matched the $7.96bn all the banks raised throughout 2012. This remains the country’s highest-ever annual loan volume.

Reuters quoted a London- based banker as saying, “The feeling is that Nigeria will have outstripped South Africa as the top market by 2015 from a loan market perspective. You have already seen that this year – you can’t ignore Nigeria.”

Also this year, Nigerian National Petroleum Corporation agreed to a $1.5bn corporate deal in January, Indorama Eleme took a $800m project finance loan in mid-February to fund a $1.2bn green field fertiliser project; and oil and exploration company Neconde Energy marked its debut in the market with a $470m corporate deal in early April.

Nigerian banks have traditionally been rare borrowers in the loan market, but Skye Bank became the first since 2008 when it agreed to a $150m debut in May last year, while Fidelity Bank recently agreed to an oversubscribed $100m debut deal through co-ordinators Citigroup and HSBC.

Another banker said, “Nigerian banks have been through their reshuffle and I think there is a bit more trust and transparency from the banks than there previously was. Nigeria is a big economy and it poses as a very good window for investors to get started on the continent, which will benefit the whole of sub-Saharan Africa.”

The International Monetary Fund forecasts seven per cent growth in Nigeria over the next two years, in contrast with South Africa’s – historically a syndicated loan hot spot – forecast of 2.8 per cent in 2013 and 3.3 per cent in 2014.

Nigeria’s foreign direct investment is projected to continue rising, from $5.8bn in 2011 to $6.8bn for last year, once the figures are in, according to the IMF.

It projects FDI to grow to $7.3bn this year, $8.7bn next year and $9.6bn in 2015.

Source: Punch