By Peter OBIORA InvestAdvocate
Lagos (INVESTADVOCATE)-The fund managers association of Nigeria (FMAN) Thursday said it’s seeking ways to compete globally.
Michael Oyebola, president of the association disclosed this in Lagos Nigeria at a breakfast meeting by all registered members of the FMAN in order to seek global competitive relevance, strengthen the associations relationship with regulatory units such as Nigeria’s securities and exchange commission (SEC) as well as rub minds on issues militating against the growth of the sector in relation to the Nigerian economy.
‘’We are seeking to be acceptable internationally, I think the securities and exchange commission is a member of IOSCO, in the euro zone for example if you have your fund registered as a unit trust scheme, undertaken for a collective investment trust, you can then transport those mutual funds across Europe’’ oyebola said.
He said there is no reason a country cannot ensure that appropriately registered collective investments scheme (CIS) cannot be transported to other parts of the globe.
‘’I do not see the reason we as a country cannot ensure that all our collective investment schemes be registered appropriately as well as transported into the rest of Africa and Europe,’’ Oyebola said.
According to him, FMAN would do its best to ensure that all local funds are accepted internationally.
‘’We would also like to make mutual funds generally popular locally. There are about 45 funds out there, when they are launched, they were launched with huge publicity; but what happens thereafter; everybody is left to their devices, but we are as an association will like to speak to the regulators and try to come together as a common body to promote this savings scheme and ensure that they become acceptable within the industry,’’ the FMAN president said.
He affirmed that distribution platform is one of the challenges the industry is facing and would want to create a singular or multiple platforms for distribution which everybody can recognise and use as distribution for local mutual funds as well as all other products that surrounds them.
‘’Banks do have branches, but as we all know, the universal banking scheme has now been scrapped and this has placed a bit of pressure on the distribution of collective investments schemes’’ he said.
In the same vein, Doyin Salami, of the Lagos Business School (LBS) said that there is a slowdown in inflow of portfolio investment and subsequently the trend will reverse.
Salami who spoke on economic outlook for Nigeria said in the third quarter of last year, the size of portfolio inflow was about half what we had in the third quarter of 2012.
‘’The expected outcome of tapering quantitative easing in emerging markets is slowing down and a reversal to capital inflow,’’ he said.
Salami said over the last five years, there are some startling and significant shift in asset holdings, ‘’I started by looking at deposits that people hold, you will be surprised that within 2009 and now, the average size of current account deposits has reduced by about 25 percent, the average size of tenured funds has also reduced; but in the same period the average size of domiciliary account balances has doubled,’’ he said.
He said it’s all about asset holders perception of the risk, ‘’what is pertinent is that asset holders see exchange rate risks as a bigger risk than domestic naira value risk in terms of inflation. Which therefore means if you people are going to be successful fund managers, then the portfolio cannot be the same old mutual funds; managing the risk that people do not agree to be significant is important,’’ he said.
‘’This is telling us about asset holders perception of risks, what is pertinent is that asset holders see exchange rate risks as a bigger risk than domestic naira value risk in terms of inflation. Which therefore means if you people are going to be successful fund managers, then the portfolio cannot be the same old mutual funds;but managing the risk that people do not agree to be significant,’’ Salami said.
He further affirmed that a lot of people complain about the interest rates, but they also have to understand the dynamics of the market place and that of the risk of an environment. ‘’Right now inflation have gone down from 12.5 percent headline to eight and half percent in 2013, it’s a diminishing risk.’’ he said.
Salami said Nigeria is doing about $8.5 billion to $9.0 billion a year of foreign direct investment (FDI), ‘’between 2012 and 2013, we did about $38 billion dollars of foreign portfolio investments,’’ he said.
According to him, Nigeria is over a $400 billion a year economy and the real challenge going forward is what product FMAN have on the table that can enable investment activities, not just in the narrow sense of portfolio management asset investment, but in terms of been able to channel investments to the various sectors of the economy.
‘’My sense is that you are going to lose out potentially big time to the international players if you do not do some of these things. When an economy is $270 billion, it’s a different proposition from when it’s recorded as the one having $400 billion. International players who ordinarily would be looking at Nigeria are now going to sit back and take sharp notice of Nigeria,’’ he said.
Salami said the real challenge for FMAN is how you create products that are relevant to them, without creativity FMAN will go nowhere. ‘’ without creativity, we are not going to get where we expect.’’ he said.
He also advised FMAN to protect its clients by instituting consumer protection schemes and regulations before the government does it. ‘’If you allow the government to do it, it will be done without your input, which is not good for your association,’’ he said.
