Dangote urges Lotus to expand private sector financing

Aliko Dangote, president of the Dangote Group, has called on Lotus Capital to broaden access to non-interest financing for businesses in Nigeria, particularly those operating in manufacturing, agriculture, renewable energy and other productive sectors.

He made the appeal recently at the 20th anniversary celebration of Lotus Capital in Lagos, stressing the need to harness non-interest finance as an important channel for mobilising capital to drive economic growth and development.

Dangote said deepening non-interest financing would help address the country’s shortage of long-term capital and support efforts to accelerate industrialisation.

According to him, Nigeria must look beyond government-backed infrastructure projects and explore opportunities for non-interest financing in the private sector.

“The next challenge is to extend this opportunity substantially to the private sector. We should increasingly see non-interest financing supporting manufacturing plants, industrial parks, ports, agricultural processing facilities, renewable energy projects, transportation networks and other productive investments,” he said.

Dangote said the significance of non-interest finance to Nigeria went beyond providing alternative investment products, noting that the country required substantial funding to develop critical sectors of its economy.

“For Nigeria, the significance of non-interest finance extends beyond providing alternative investment products,” he said.

“Our country faces enormous financing requirements for industrialisation, infrastructure, energy, agriculture, housing and small business development. One of the greatest constraints confronting Nigerian industries is the availability and cost of long-term capital.”

He noted that industrial investments often required substantial financing and long periods before generating meaningful returns, while much of Nigeria’s domestic financing remained relatively short-term and expensive.

“This creates a mismatch between the financing requirements of productive enterprises and the structure of available financial resources,” he said.

He identified asset-backed financing, leasing arrangements, equity participation, profit-sharing structures and Sukuk as instruments that could help bridge the financing gap.

The business mogul said appropriately structured non-interest financing could provide greater flexibility, broaden the investor base and create additional channels for mobilising long-term capital.

Dangote said Nigeria had demonstrated the potential of Sukuk through several issuances that supported road infrastructure development, adding that the country needed to diversify its financing options.

“For an economy seeking to accelerate industrialisation, we cannot afford to depend on a narrow range of financing instruments. We will need to enable every credible channel through which domestic and international capital can be mobilised for productive investments,” he said.

He also argued that non-interest finance should not be seen as a rival to conventional banking, noting both systems could coexist and strengthen the country’s financial markets.

“Both systems can coexist, complement one another and strengthen the overall capacity of our financial markets,” he said.

Dangote commended Lotus Capital for its contribution to the development of non-interest investment management in Nigeria over the past two decades.

He said the company had helped establish non-interest investment management as a credible segment of the country’s capital market through the introduction of Sharia-compliant investment funds, innovative investment products and participation in Sukuk transactions.

According to him, the company had also contributed to raising over N1tn to finance more than 4,000 kilometres of roads and the development of the NGX Lotus Islamic Index.

The Dangote Group president said the institution’s initiatives had expanded investment choices, encouraged financial inclusion and helped diversify Nigeria’s capital market.

Dangote said his association with Lotus Capital dated back to its early years, when members of his family became some of its first major corporate clients.

He recalled that he initially struggled to understand the concept when his sister introduced it to him but later became convinced by the results.

“I remember when my sister came to talk to me about this, I thought she was speaking Chinese. But later, I began to see the results,” he said.

He described running an established business in Nigeria for 20 years as a difficult undertaking, adding that Lotus Capital deserved recognition for sustaining its vision despite changing market conditions.

Speaking via Zoom, Sanusi commended the courage and vision of Lotus Capital’s founder and leadership, urging the company to expand its market reach and provide more long-term financing for critical sectors.

“It is time for us to innovate, it’s time for us to deepen the market, it’s time for us to increase our penetration of various sectors of the economy, providing long-term finance for development,” he said.

In her address, Managing Director and Chief Executive Officer of Lotus Capital Limited, Hajara Adeola, said Nigeria’s non-interest finance industry had grown to include five asset management companies, five Islamic banks, five Takaful insurance companies and more than 20 mutual funds.

She said the company would strengthen its support for the real economy through innovative financing for agriculture, manufacturing, real estate and renewable energy.

She said Lotus Capital was established to promote financial inclusion by providing Nigerians with alternative investment opportunities aligned with their values and Sharia principles.

She listed its milestones as including four Securities and Exchange Commission-registered public mutual funds, the development of the NGX Lotus Islamic Index in collaboration with the Nigerian Exchange, and the introduction of innovative investment products.

The event, which featured a panel discussion on “The Next Frontier: Innovation and Governance in Non-Interest Finance in Nigeria”, brought together prominent figures in Nigeria’s banking, corporate and political circles, including former Minister of Finance and Coordinating Minister of the Economy, Wale Edun, and Asue Igbodalo, the 2023 governorship candidate of the Peoples Democratic Party in Edo State.

https://punchng.com/dangote-urges-lotus-to-expand-private-sector-financing/