Zenith Bank pooling $100 million with French Agency for International Development to raise Nigeria’s power supply says much about the bank’s pedigree as a global finance power house and also one sensitive to national growth aspirations. Correspondent SAM NWOKORO reports.
In these days of rat race and survival of the fittest in the finance world, it is worth applauding that a bank shows concern about how to solve a national problem it did not create.
Some other banks are devising crooked ways to dodge punches from Treasury Single Account (TSA), no public sector deposits, shattered foreign exchange (forex) market, and many other shocks.
But Zenith Bank endears itself to the public – not by meandering through the corridors of Abuja or hijacking looted funds, but – by partnership with an international development agency.
It sees the potential of Nigeria becoming a regional economic powerhouse, a height it has failed to attain because of unpatriotic and myopic leadership which bankrupts
key development infrastructure such as power and energy.
Zenith Bank earned the trust of the French Development Agency (the Agence Francais De Development, AFD), operator of France’s bilateral development mechanism, and last week signed a $100 million credit facility to inject new money into electricity generating (Gencos) and distribution companies (Discos).
The facility will be a reprieve for Discos weighed down by historic debts owed mainly by government establishments. Military and security agencies alone owe them over N93 billion.
A delegation from Zenith Bank, led by the Chairman, Jim Ovia, sealed the pact with AFD officials, led by the Chief Operating Officer, Laurence Breton-Moyet, at the agency’s headquarters in Paris.
Under the loan arrangement, a maximum $50 million can be on-lent to any single borrower at single digit interest for a tenor of between seven and 12 years, with a moratorium of between two and three and a half years.
The facility is aimed at reinforcing, rehabilitating, modernising, and stabilising existing power distribution networks. It also provides for technical assistance and other advisory services, both to Zenith Bank and power companies.
Zenith Bank is already a leading financier of investment in power and energy, as well as in other sectors, including oil and gas, agriculture, manufacturing, communication, transportation, real estate, and construction.
In the financial year ended December 31, 2015, Zenith Bank reported a profit after tax (PAT) of N105.66 billion, the highest in Nigeria’s banking industry, and total assets of over N4 trillion.
Problems of power companies
Two years after privatisation, Gencos and Discos still face huge challenges – insufficient supply from the national grid; obsolete networks; non-maintenance of equipment; unskilled manpower; poor customer data; low meter penetration; health, safety, and environmental issues; low revenue, and external funding constraints.
These problems can be summarised into the following broad categories:
• Grid energy insufficiency and instability.
• Network infrastructure. Overloaded transformers and feeders, obsolete equipment, limited network, a lack of automation, et cetera.
• Tariff and revenue shortfalls. Non-cost reflective tariffs, low collection, et cetera.
• Metering. Huge metering gap, estimated billing, poor meter maintenance, et cetera.
• Operational. Long feeders, low quality workforce, large operational areas, et cetera.
• Energy theft.
• Funding. Absence of long term funding, high cost of borrowing, poor credit history, et cetera.
These challenges have severely constrained the operations of power companies and thus, the non-realisation of the gains of the privatisation of the sector.
However, these problems were precisely the reasons privatisation was done in the first place.
The broad objective of privatisation is for the private sector to solve these problems that had plagued power generation and distribution under government ownership.
These challenges were underestimated, and in some instances completely overlooked by the Bureau of Public Enterprises (BPE), Nigerian Electricity Regulatory Commission (NERC), core investors and their financiers.
These are teething problems that core investors face, but will eventually overcome with time and right investment. This is where the intervention by Zenith and ADF is salutary.
Essence of facility
An entrepreneur, who gave his name simply as Ezeugwu, said the deal “shows the bank is truly a global bank. It shows the bank has more than profit motive.
“Few banks can advance credit these days at such liberal terms considering that the owners of Gencos and Discos stand the risk of losing their investment should the government, considering its mood these days, decide to wield the big stick against them.
“The partnership is a very timely salvage intervention for which Zenith Bank deserves the praise of well-meaning people and the government.
“It has proved that it is indeed a global bank, and before the policy makers, that is a very reliable partner in nation-building.”
Tradition of steadfastness
Zenith Bank has been consistent in helping to grow enterprises in Nigeria, Africa, and the world at large.
It is the most capitalised bank in West Africa, with portfolio investments traversing all sectors of Nigeria’s economy, and has in the more than two decades of its existence touched the lives of business people across the continent.
Zenith Bank
• Is executing a petrochemical project in Akwa Ibom State, due for completion before 2019.
• Is involved in telecommunication with Visafone, which was recently bought by MTN.
• Has won many prices as small investors prefer it because it supports the growth of small and medium size enterprises (SMEs).
Ovia, the face of Zenith Bank
Ovia obtained a Bachelor’s degree in business administration from the Southern University, Louisiana, United States in 1977, a Master’s in business administration from the same university in 1979.
And he is an alumnus of Harvard Business School.
He
• Is the promoter and founder of Visafone Communications, and proprietor of the University of Information and Communication Technology, Agbor, Delta State.
• Is the pioneer president of Nigeria Internet Group (NIG).
• Has over 23 years of banking experience.
• Was a co-founder of Zenith Bank and served as its group managing director and chief executive officer from 1990 to July 10, 2010.
Ovia joined IMB as a financial analyst in 1980 and moved to the management centre in 1987. He headed the corporate finance department of Merchant Bank of Africa from 1987 to 1990.
His picked interest in computers in 1977 when he worked as a part time computer operator at Baton Rouge & Trust Company, Louisiana.
He has been the chairman of the board of Zenith Bank since June 16, 2014 and non executive director since June 12, 2014.
