By Ben Zwinkels. FMO is an investor in Capital Alliance Private Equity (Mauritius) Ltd., an investment fund completely dedicated to the Nigerian economy. The fund has been founded in 1999 just after the final democratic elections of the President Olusegun Obasanjo and the removal of a long period of military power. It was the American Dick Kramer, a well experienced Private Sector Developer and the Nigerian Okey Enelamah, a medical doctor who wanted to become Private Equity Manager, who had a vision of Nigeria entering into the era of economical growth and progress.  
 
Yes, they were right. With the fund the managers invested a total amount of USD 11,7 million in 10 Nigerian companies in different sectors (telecom, communication, transport, security), of which one has failed to deliver and the rest of investments were successful or extremely successful. One investment in MTN-Nigeria, Telephone Company with South Africa as strategic partner was the most successful one with an IRR of 100%!
 
The fund is actually managed by Capital Alliance Management, a professional team of mainly young and well-educated people who studied especially in Nigerian and London Business Schools. During the meeting of investors in Lagos on the 27 and 28 of February 2007 a very good flavor could be obtained of the new wind blowing in the field of international investment. High standards of Corporate Governance and Transparency have been implemented and with these results a new Private Equity Fund of USD 100 million has recently been launched and put into operation. With the positive experience of the first fund the present team of 20 Investment Managers is ready to tackle new opportunities in the business environment in Nigeria. 
 
2006 was a decent year for Nigeria with the country experiencing 7% real GDP growth, and single digit inflation. The non-oil sector, mainly telecommunications, banking and construction, also picked up substantially. The quotations at the Lagos Stock Exchange are showing a steady growth and have now risen to an uncertain bubble. Politically Nigeria is not an easy country, especially with its 130 million inhabitants and different cultures. However, the firm and overwhelming refusal towards the third term of Obasanjo has given a lot of strength to the majority of the Nigerian population, who want to support modern democratic principles. Also the relation between the Moslem Northern Regions and the Christian Southern Regions seems to be cordial and constructive. The Muslim Sharia law, which has been introduced in the Northern regions some years ago and which was given a lot of international attention, is now not any more an issue and not anymore always used. Corruption and the Niger Delta with its oil explorations are still subjects of great concern. It is not expected that those frustrating problems will be stopped in the near future. Especially the problems in the Niger Delta have to do with distribution of wealth and poverty alleviation. 
 
The outcome of the presidential elections in April 2007 will be crucial for the next step. The major candidates, all from the North, do not show great difference of view on how the economical development should proceed. Predicting the economical outlook for Nigeria in 2007 and 2008 depends a lot on a peaceful and successful political transition in 2007. However it is expected that telecommunications, banking and construction will continue be the major drivers of the non-oil sector in the Nigerian economy in 2007.
 
The new Nigerian elite, the thousands of well-educated young Nigerians will follow the line of progress during the last 8 years of Obasanjo. The growing number of shopping malls, communications, improvement of infrastructure and the availability of better education will support this progress.
 
With this and its great reserves of oil, Nigeria will grow and will steadily become more important in the economical development and political stability in the sub region. Very important in this respect is which role the young generation of Nigerians can play and how those Nigerians can help to change the bad and somehow unfair negative reputation of Nigeria.
 
Ben Zwinkels is a Senior Investment Officer of the Equity Department at the Netherlands Development Finance Company (FMO).

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