The UK’s development finance arm, CDC Group, may invest more than $1 billion in Nigeria over the next four years as the government looks to increase business ties with Africa after it leaves the European Union in March.
CDC, which has investments ranging from listed Nigerian banks to an Ethiopian wine maker and a bakery in Zimbabwe, aims to put as much as $4.5 billion into the continent in that time, which would almost triple its existing African portfolio of roughly $2.6 billion.
“A reasonable figure for Nigeria, given the size of its economy, would be about $1.2 billion,” Nicholas O’Donohoe, CDC’s chief executive, said in Lagos, the nation’s commercial capital.
CDC will also open offices in Lagos and Nairobi, Kenya’s capital, adding to one it has in Johannesburg. The Nigerian office will open early next year and have around 10 people, Mr O’Donohoe said.
The group has been active in Nigeria, where it has $400 million of investments, for 70 years. It injects money into companies directly as equity or debt, or through private-equity funds. This year it loaned $100 million to the Nigerian unit of Indorama, which is building a fertiliser factory in the south of the country. It also committed $25m to Synergy, a local private-equity firm focused on small businesses in West Africa.
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UK Prime Minister Theresa May visited South Africa, Nigeria and Kenya earlier this year, saying she wanted the country to become the G7’s biggest investor on the continent by 2022.
Mr O’Donohoe said CDC, which has stakes in Nigerian lenders including Diamond Bank, Guaranty Trust Bank and Zenith Bank, will probably invest more in the banking sector.
“If you look at the larger banks, there’s a strong case that they’re through the worst,” he said. “It’s more problematic when you look elsewhere.”
CDC is working with the administrators of Kenya’s ARM Cement, part-owned by CDC and which has been exploring a sale since last year to help manage its debts.
Mr O’Donohoe said he doesn’t know if Nigerian billionaire Aliko Dangote is mulling buying the company.
“We’re in the risk-taking business and that one did not work out well,” he said. “But it’s an attractive asset.”
CDC will still look to invest more in Kenya and other East African countries, including Ethiopia, said Tenbite Ermias, the group's head of Africa.
“Ethiopia could be a big opportunity,” he said. “It depends on how the economy and politics progress.”