Spotlight on Nigeria | Blog (September 2015)
Last Tuesday (8 September 2015) BSN City Group hosted a panel discussion on Nigeria and its financial markets. The panellists were: Razia Khan, SCB’s Chief Economist, Africa; Dr Ayo Salami, Chief Investment Officer, Duet Africa Liquid Strategies formerly senior equity analyst for Africa at Nomura International; Bayo Odubeko, Partner, Norton Rose Fulbright; and Ashar Quereshi, Partner, Freshfields. It was an informative evening covering topics such as Nigeria’s near-term and long-term economic outlook; the investment potential of pension reforms and Nigeria’s reliance on its oil industry.
Khan summarised her view of the outlook for Nigeria as “near term difficulties, long term optimism”, citing in particular the current FOREX controls and the recently announced exclusion of Nigeria from JPM’s Government Bond Index-Emerging Markets. Salami informed the discussion of the great investment potential of the Nigerian pension funds, reportedly worth $30bn, to fill the gap where Nigerian companies find themselves unable to raise sufficient capital on the international capital markets. It was suggested that this would in turn help fuel Nigeria’s economic diversification away from natural resources, by boosting varied private sector initiatives, such as manufacturing.
As often comes up in conferences about Africa, the issue of corruption was raised, however, the panellists were expectant, in light of the new Buhari government, that Nigeria would turn a new page. They agreed that the way to combat the “cancer of corruption” would be through ”clearer rules and less discretion”.
No doubt under the new leadership of Muhammadu Buhari – although it bloomed under Goodluck Jonathan – optimism towards Nigeria has given investors and observers of the country’s economy reason to see a “multi-decade story”. BSN City Group’s panel event was well attended owing to the importance of Nigeria in the future of the Africa-rising discourse. Nigeria is due to see a lot of change over the next few years. The panel concluded that reform is necessary to ensure that investors and their advisors, who are looking at Africa as a potential or existing investment, are encouraged to continue to see the potential return on capital and not worry about the return of capital. Investment yields are expected to be positive, in the long-term, if the BSN City Group’s Spotlight on Nigeria is anything to go by.
Francine Bello | Associate | Linklaters LLP, London