Oliver Wyman Hired to Recession-Proof Nigeria’s Market Custodian

(Bloomberg) -- Nigeria's biggest depository for equities and debt hired consulting firm Oliver Wyman to steer an effort to diversify its business so it depends less on securities vulnerable to downturns in oil prices.

The Central Securities Clearing System is looking to expand services to alternative assets such as commodities, according to Chief Executive Officer Haruna Jalo-Waziri. It could also purchase or partner with a fintech firm to acquire more know-how as it takes on additional responsibilities, he said in an interview in Lagos, Nigeria's commercial hub.

“If you are a monolithic company, where you rely on fees on your depository, whenever there's a shock in the market it affects your bottomline,” he said. “If you diversify -- earning other income not dependent on the market -- then you de-risk your single income source and so that helps sustainability.”

Read more: Nigerian Brokers Look to Commodities Trading as Stocks Plunge

Africa's top oil producer is coming off its second recession in four years after a sharp drop in crude production and lower energy prices. Just over a year ago, Nigeria's association of brokerage firms took a similar step by expanding operations to commodities trading to diversify earnings.

The clearing house plans to start implementing some of Oliver Wyman's recommendations by the second quarter as part of a program of expansion over the next four to five years, Jalo-Waziri said. The New York-based firm is a subsidiary of insurance broker Marsh & McLennan Cos.

“They are working with the board and management to define our strategy,” Jalo-Waziri said. “One business can be us becoming a depository for educational institutions from primary, secondary to university.”

The CSCS, as the depository is known, is a custodian for 10.3 trillion naira ($25 billion) worth of equities on the Nigerian Stock Exchange and 241 billion naira of corporate bonds, according to its website.

The clearing house is partnering with the Lagos-based Nigerian bourse to reduce the settlement time for transactions from as long as three days, according to Jalo-Waziri. It also wants to cut the documentation required to handle transactions to make trading easier for local and foreign investors, he said.

“We continue to work with the NSE and other stakeholders to simplify the market, starting from onboarding through to the structure of the trade,” Jalo-Waziri said.

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