By Michael Eboh

Managing Director/Chief Executive Officer, Stanbic IBTC Asset Management Limited (SIAML), Mr. Olumide Oyetan has advocated the use of mutual funds as a channel for funding development in the country’s real sector and also in addressing the lingering power crisis in the country.

Speaking in an interview in Lagos, Oyetan noted that the long term nature of the mutual funds, makes it effective for it to be used to fund projects in the power sector and in developing the real sector of the economy.

He said, “Mutual funds can be a channel for funding real sector developments that are long term in nature including power sector.
“Due to the long term investment horizon of these funds and the size of the assets under management, the funds can be used to contribute to the development of the real sector. However, this is subject to the investment guidelines stipulated by the Fund and approved by the Securities and Exchange Commission (SEC).

He lamented the absence of basic infrastructure facilities, a development which has led to the closure of factories.
Oyetan commended the federal government for introducing the on-going power reforms, noting that if the programmes are implemented, the country’s Gross Domestic Product (GDP) will rise significantly.

“The power sector reform,” he said, “Is one of the most important reforms today. We believe that an industrial revolution will not be possible without power.

“The government currently plans to generate 40,000 MW of power by 2020.  If this is achieved, we believe that cost of production will become significantly cheaper, operations will become simpler and more efficient, the profit margins of companies will expand and the GDP of the country will rise significantly. “

“The key to a successful reform however remains our ability to execute the power roadmap outlined by the current administration.”
He called on investors in the Nigerian capital market to focus on the fundamentals of quoted companies, hence the need to select the right fund manager to assist them in making the right investment decision.

Oyetan said, “I think the most important factors in considering a mutual fund are: the track record of the Fund including its strategy, performance, safety, and liquidity; the experience and qualification of the Fund manager, their duration of management and the composition of its Board of Directors.

“Furthermore, SIAML manages Nigeria’s largest open_ended mutual fund and its non_pension asset under management is in excess of N60 billion as at 30 September 2010.