With close to N4 trillion gain recorded at the stock market post-presidential inauguration and renewed confidence that followed recent change in the central bank of Nigeria (CBN), stakeholders have expressed confidence that the outlook of the domestic economy is bullish with the hope that things will continue to get better as government begins implementation of its major policy thrust.
A day after President Bola Tinubu’s assumption of office, the stock market posted a gain of N1.5 trillion, a rare occurrence. On Monday, following a leadership change at the CBN that brought in Folashodun Shonubi, the capitalisation spiked again by approximately four per cent or N1.2 trillion.
Investors’ confidence is uptick with foreign investors said to have started aggressive stock acquisition with their dividends and proceeds of the stock sale, which they have been unable to repatriate home.
Indeed, the stock market mirrors broader rising confidence in the Nigerian economy – reflecting rising business leads. The confidence level was further fueled by Wednesday’s bold decision by the apex bank to activate the long-awaited rates harmonisation around the Investors’ and Exporters’ (I&E) window, a policy that promises to restore sanity to the market.
The rates harmonisation underscores the responsiveness of the CBN to the new administration’s agenda on economic growth and job creation. The President had disclosed that he would create additional one million jobs through the digital economy and grow the economy by six per cent.
While x-raying the economic outlook and impact on the capital market, stakeholders said there is an urgent need to build on the level of confidence the rates harmonisation has raised and pursue appropriate pragmatic strategies that would aid faster execution of reforms. Less than a month into the new administration, foreigners who have been waiting on the wing seem to watching the economy with renewed interest.
Findings by The Guardian revealed that foreign investors are excited about the economy. They had remained on the sideline due to uncertainty and macroeconomic challenges that bedeviled the nation’s political space over the years, but are now showing interest in the market again.
They are currently reinvesting the backlog of dividends, which they could not repatriate over the years due to the scarcity of FX in the equities market.
It was learnt that more local players that were showing apathy in the market are scrambling for shares in repositioning ahead of foreign portfolio investors’ participation.
Head of Equity,Planet Capital, Paul Uzum , said foreign investors are reinvesting the backlog of cash they could not repatriate over the last three years.
“Foreign investors are reinvesting the backlog of cash they could not repatriate over the last three years. We are yet to see an inflow of fresh funds. Most of the activities in the market at the moment are driven by local investors, who are anticipating foreign investors to join soon.
“This is one of the pillars of economic recovery. It is a good one for the banks as they will be declaring bumper profits when they translate their accumulated dollar reserve using the harmonised exchange rate. We expect to see these positive impacts from Q3 2023,” he said.
Uzum added that government’s actions so far are an indication that brilliant adversaries jettisoned for years are coming to play to jumpstart economic growth.
As part of efforts to consolidate the gains, Chief Executive Officer of Wyoming Capital and Partners, Tajudeen Olayinka, said the securities exchange’s data aggregation centre needs to aggregate foreign-related mandates and make them public.
“What brings capital inflow is the ease at which transactions can be consummated at the point of entry and point of exit, which the new foreign exchange market regime is intended to achieve,” he said.
National Coordinator of the Independence Shareholders Association of Nigeria (ISAN), Moses Igbrude, said if the renewed hope is sustained and promises kept, Nigeria would become an investment hub in Africa.
“There are many retrogressive policies that are disincentive to investments. If the President and his team will garner the political will to pursue these reforms more vigorously, Nigeria will become a great country again,” he said.
Professor of Economics, Olabisi Onabanjo University, Ago-Iwoye, Ogun State, Sheriffdeen Tella, said foreign investments would begin to return once they are sure that they would be able to repatriate their profits.
He said the harmonisation of FX rates and other positive reforms of the monetary tools have sent a strong positive signal that Nigeria is ready for business
