How has Nigeria’s Corporate Sector Changed?
In Nigeria, the present administration recently set up the Presidential Enabling Business Environment Council. The task of the Council is to make doing business in Nigeria much easier and improve Nigeria’s rating on the ease of doing business. Currently, the council is meeting with various stakeholders with a view to try and understand hurdles in the way of doing business in Nigeria and eliminating them; with this laudable step, one expects that in the near future, doing business in Nigeria will not be as challenging as it currently is and allowing more foreign investors being attracted to invest in Nigeria. We speak with Segun Omoregie about Nigeria’s development: what has changed and what he foresees for their investment future.
Recent reports suggest that Nigeria’s insurance industry is poised to enter a period of consolidation; can you comment on this and how do foreign insurers contribute towards this?
This is true and going by what we saw in the banking sector during the banking reforms of 2005/06, we may be set to see significant M&A activities in the Insurance Industry. Over the years, the reforms introduced by the National Insurance Commission has led to a steady growth in the insurance sector in Nigeria. To meet capital requirements, insurance companies have had to consolidate and/or seek fresh capital. Other far reaching reforms have strengthened the sector making it potentially more profitable and attractive to financial and strategic investors. We have seen investments from the IFC in a few sector players and Sanlam Group in First Life Insurance; we have also seen interests from strategic foreign players which may end up in possible deals.
Over the years, how have you witnessed the international investment scope alter the M&A sphere in Nigeria?
Global trends have had a significant impact on the Nigerian M&A sphere. Changes in global trends such as the need for food security, interest in fast moving consumer goods (FMCG) and health (etc.) have led to a significant interest in sectors (such as agriculture, FMCG and healthcare). In addition, the increase in population in Africa (especially in Nigeria) and the forecast that the African economy will double in a decade have contributed to the influx of foreign investments in unusual sectors, resulting in an alteration of M&A transactions in Nigeria. We have seen strategic acquisition by foreign companies wishing to expand their operations not just in Nigeria, but in West Africa. In 2015, we advised Tolaram Group on Kelloggs’ acquisition of 50% of its sales distribution company.
How do you prepare for your client(s) when you are called to advise for a transaction?
The first important step we take is to understand the client’s requirements and set up the right team for the deal bearing in mind the need to achieve the client’s business objectives within their timeline. We also set up very efficient communication links between the deal team and the client’s contact person(s). With this we are able to get answers to questions we may have in order to perform our work more efficiently and resolve issues with the client timeously.
What are the biggest challenges you face when advising big, international corporations?
The biggest challenge with advising corporations will be meeting their business objectives in the face of the peculiarities of our legal and business environment. This is usually evident where foreign laws are significantly different from local laws or where it is impossible to meet deadlines on account of the clogs in our legal systems.
What would you advise young lawyers to consider when they are trying to ‘seal the deal’?
My advice to young lawyers when they are trying to seal the deal is to always have the client’s business interests in mind. Business clients always expect lawyers to understand their business objectives and appreciate ones that will help them achieve these objectives within the confines of the law. Innovation and creativity will always help a lawyer to achieve this, so will thoroughness and resourcefulness.
How do you see the petroleum industry progressing in Nigeria and what will this imply for other jurisdictions across the globe?
The 3 most obvious challenges currently bedevilling the petroleum industry in Nigeria are: (i) the unrest in the Nigeria Delta area which has affected oil production significantly; (ii) the uncertainty over the non-passage of the Petroleum Industry Bill (PIB); and (iii) the volatility of oil prices. Unfortunately, it is almost impossible to foresee how these issues will play out both in the short and long term. Even though as with previous governments, this government is taking steps to resolve the Niger Delta crises and the National Assembly continues to commit to pass the PIB into law; we are yet to resolve these issues. The best experts in the industry also continue to fail in predicting where prices will go.
Having said this, I think it is reasonably safe to predict some stability and growth in the midterm and this growth will attract more investments in the sector from global players.
