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2017 Debt Capital Market Conference Debt Capital Market Development Project Update Presentation Emmanuel Etaderhi September 28, 2017 Outline Part 1 Preamble 2 Part 2 The DCM Transformation Agenda 3 Part 3 Project Update Report 4-5

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2017 Debt Capital Market Conference Debt Capital Market Development Project Update Presentation

Emmanuel Etaderhi

September 28, 2017

SLIDE 2

Outline

Part 1 Preamble 2 Part 2 The DCM Transformation Agenda 3 Part 3 Project Update Report 4-5 Part 4 Key Next Steps 6-7 Part 5 Other Updates 8-10 Part 6 Conclusion 11

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▪ Dubai’s rapid transformation from desert village to global player is encapsulated in the aspirational statement of its ruler, Sheikh Mohammed Al Maktoum: “We want to be No. 1” ▪ Can the DCMD Project Dream assist in replicating Dubai’s success story in Nigeria?

QUICK FACTS: ▪ Allows 100% foreign ownership ▪ Free repatriation of profits ▪ Open – no exchange controls, quotas or trade barriers ▪ Accessible – served by over 120 shipping lines and linked via 85 airlines to over 130 global destination ▪ International trade has grown on average by over 11% per year since 1988 and regional economic growth and liberalization should boost demand further

1990 2016

Dubai’s Success Story - It all started with a dream

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The Debt Capital Market (DCM) Transformation Agenda

Regulation Consolidation Housing & Infrastructure

Investors, Issuers & Intermediaries Engagement/ Education

DCM Transformation Levers DCM Transformation Aspiration 2020/2025 To become a world class, properly functioning DCM by 2020/2025 Time to Market DCM Transformation Strategic Objectives

▪ Facilitate Investor Readiness ▪ Champion Corporate Governance ▪ Enhance DCM Research & Corporate Credit Rating ▪ Improve Collaboration across the DCM Ecosystem ▪ Activate the Repo market and create liquidity ▪ Improve secondary market participation (treasurers/dealers) ▪ Promote the development

housing infrastructure in Nigeria ▪ Increase creation

new long-term infrastructure products/ instruments ▪ Engage in efforts to promote low interest rate structure ▪ Promote the harmo- nisation and streamlining

DCM regulatory frameworks ▪ Drive end to end issuance process improvement ▪ Optimise transaction costs

Market Depth (Debt to GDP) Investor Confidence Non-Sovereign Liquidity Product Innovation/ Instruments Diversification Investor Diversification Sustainable Finance

▪ Develop strategies for long-term financing market with focus

pressing environmental, social and governance (ESG) issues affecting business/ investment decisions ▪ Promote impact investing, green bonds, microfinance, credits for sustainable projects, active ownership, financial Inclusion, etc.

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S/N Activities Timeline RAG 1. Set-up of the Debt Capital Market Development (DCMD) Project Office

Apr. 2016

2. Formation and kick-off of the DCMD Project Sub- Committee Activities

Apr. 2016

3. Development of the DCMD Project Website July 2016 4. Presentation of summary reports at the Securities and Exchange Commission (SEC) Capital Market Committee Meeting (CMC)

Aug. 2016

5. Development of Position Papers on DCM initiatives Oct. 016

Project Update Report

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S/N Activities Timeline RAG 6. Activation

the DCMD Project Advisers, Transformation and Steering Committees

Nov. 2016

7. DCMD Project Launch

Nov. 2016

8. Reconstitution

Market Liquidity & Enhancement and Housing & Infrastructure SubCos

Apr. 2017

9. Addition

the Sustainable Finance Sub- Committee to the DCMD Project

Sep. 29, 2017

10. Strategic Partnerships

the Sustainable Finance initiative

Sep. 2017

Project Update Report…/2

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Way Forward: Key Focuses

S/N

Initiative /Activity Estimated Timeline RAG Status 1. Review of specific regulations restricting the insurance industry’s participation in the Nigerian DCM ▪ Commenced formal engagement with NAICOM to drive through reform initiative on September 13, 2017 ▪ Q3 2017 2. Securities and Exchange Commission (SEC) Corporate Governance Scorecard Sensitisation Programme for Directors and Compliance Officers- Raising Standards through Scorecards ▪ Initial engagements was made with SEC Financial Standard and Corporate Governance Department on April 24, 2017 ▪ A letter highlighting the proposed modalities and possible areas of collaboration was sent on July 24, 2017 ▪ Q2 2017

The implementation process has commenced on some of the SteerCo approved recommendations via SubCo Implementation Teams (SITEs) comprising of groups of two or three members from various SubCos for driving through the specific advocacy initiatives and sub-projects.

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Way Forward: Key Focuses../2

S/N

Initiative/ Activity Estimated Timeline RAG Status 3. Framework for the issuance of interpretive guidance notes in line with global standards to aid the understanding of regulation, drive transparency, consistency and fairness in capital market regulation ▪ Preliminary discussions has been kick-started with SEC on this initiative ▪ Further deliberations and position papers will be presented to the Commission for consideration and execution ▪ Q4 2018 4. Identify and provide lasting solutions to the issues affecting corporate debt issuances in the Nigerian DCM ▪ Discussion by Panelists at DCM Conference ▪ September 28, 2017 5. “Get a Rating Campaign” ▪ Enhancing the Culture of Rating by Existing/Potential Issuers ▪ Q2 2018

In progress Completed

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Other Updates

S/N Sub-Committee Initiative/ Activity Estimated Timeline 1. Regulation Consolidation

Tax Waiver on Bonds

Equalisation of the tax exemption incentive for

sovereign and non-sovereign bonds. e.g. equal treatment of tax status of corporate and FGN bonds ▪ Q3 2018 Drive Proper Documentation amongst Issuers to Improve the Bond Issuance Process & Overall Time- to-Market for Bond Issuance

Creation of alternative models for streamlining the

approvals cycle for applications for bonds issuances ▪ Q3 2018 Regulatory Costs for Perfection of Securities

Reduction in cost of perfection of security documents

for secured instruments ▪ Q2 2019 Tax Efficiency

Asset-Backed Securities Transactions ▪ Improve tax efficiency of Asset Backed Securities (“ABS”) by issuance through Trust Structures ▪ Q4 2018 Guideline on Liquid Asset Status for State Bonds

Removal of tenor limit on the granting of liquid asset

status or alternatively, an extension to ten- (10) year tenor at the minimum ▪ Q3 2018

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Other Updates../2

S/N Sub-Committee Initiative/ Activity Estimated Timeline 2. Investors, Issuers & Intermediaries Engagement/ Education

▪ Deepening of industry knowledge, improve capacity building and increase participation by all market stakeholders ▪ Q4 2018 ▪ Promoting mandatory continuous assessment program and continuing education for capital market participants ▪ Q3 2018 ▪ Increase in knowledge of fixed income products, by intermediaries, thereby promoting their ability to market the products ▪ Q4 2018

3. Housing & Infrastructure

Innovative DCM Products for Infrastructure Development ▪ Increase the development of innovative debt capital market products for infrastructure development, e.g. infrastructure bonds, infrastructure debt funds, project bonds, securitised bonds, wrapped bonds, green bonds, etc. ▪ Q1 2019 ▪ Implementation of appropriate regulatory framework to promote housing development ▪ Q3 2018

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Other Updates../3

S/N Sub-Committee Initiative/ Activity Estimated Timeline 4. Market Liquidity & Enhancement

▪ Adoption

a risked-managed approach for securities lending by Pension Fund Administrators (PFAs)/Custodians (PFCs) ▪ Q4 2018 ▪ Activation of automatic settlement systems for money market transactions upon maturity ▪ Q2 2018 ▪ Improvement

price formation, transparency, tradability and valuation of DCM products ▪ Q2 2018 ▪ Development of a clear program for wider financial inclusion, exploring various channels, e.g. mobile banking ▪ Q4 2018