Global investors are increasingly attracted to Nigerian assets as reforms initiated by the Central Bank of Nigeria bolster confidence in the economy. As the Nigerian economy moves towards recovery by 2025, various key indicators such as reduced sovereign risk spreads, improved currency liquidity, and oversubscription of debt auctions reflect this positive sentiment. Experts emphasize the importance of structural reforms and confidence in driving sustainable economic growth.
Investors worldwide are increasingly interested in Nigerian assets as the Central Bank of Nigeria’s (CBN) reforms begin to positively impact various sectors of the economy. This renewed investor confidence is reflected in rising stock values and declining bond yields, indicating a restoration of faith amid challenging reforms.
Bismarck Rewane, Non-Executive Director of Parthian Partners, forecasts Nigeria’s economy will recover from the most grueling phase of its reform process by 2025. He notes that the nation’s sovereign risk spread has decreased to levels not seen since January 2020, signaling a move away from the pandemic-induced premiums.
Despite global uncertainties, including the trade tensions initiated by former US President Donald Trump, Nigeria has managed to attract foreign capital. Investors are encouraged by recent reforms aimed at revitalizing Africa’s most populous nation’s economy, particularly regarding currency liquidity and profit repatriation.
Emre Akcakmak, a portfolio manager at East Capital, stated, “Nigeria appears to be back in business as long-awaited economic reforms take shape.” This sentiment underlines the market’s optimism in Nigeria’s efforts to stabilize its currency and improve the economic environment.
Portfolio inflows are believed to be bolstered by enhanced confidence stemming from structural reforms and better functioning foreign exchange markets. Analysts note that Nigeria’s local market is perceived to be less exposed to global risks compared to other emerging markets.
The yields on Nigeria’s $1.5 billion eurobond, due in 2034, have decreased to 9.69%, indicating a growing market appetite. Furthermore, there has been considerable oversubscription in domestic debt auctions, reflecting a significant investor interest in Nigeria’s financial instruments.
The outlook for Nigeria’s economy is brightening, with anticipated improvements driven by structural reforms and substantial budgetary commitments. Rewane forecasts a gradual exit from the harsher reform adjustments by 2025, emphasizing the necessity for effective policy execution.
He highlighted that while the fundamentals suggest a stronger naira, stability relies heavily on a well-managed foreign exchange system and pointed out ongoing challenges such as inefficiencies in power supply that must be addressed to facilitate growth.
Rewane further emphasized that investment plays a crucial role in economic prosperity, stating that confidence and transparency are essential for attracting necessary capital flows. Experts, including Professor Olayinka David-West, advocate for integrating technology to enhance fiscal discipline.
Chinyere Almona, Director-General of the Lagos Chamber of Commerce and Industry, identified high energy costs as a primary driver of inflation. She stressed the immediate need to rectify power supply issues to stabilize prices and facilitate economic growth.
Olufemi Shobanjo, CEO of NGX Regulation Limited, discussed the importance of market liquidity in bolstering investor confidence, while Yemi Sadiku from Parthian Group underscored the necessity of creating an environment conducive to infrastructure investments.
Olusegun Alebiosu, CEO of FirstBank Group, noted positive indicators such as improving government revenues and a healthy revenue-to-debt service ratio. He indicated that developments such as the stability of the foreign exchange market signal optimism about Nigeria’s economic prospects moving into 2025.
In summary, Nigeria’s financial sector reforms have prompted increasing interest among global investors, signifying a turn towards greater economic stability. The anticipated recovery of the economy by 2025 is supported by structural changes, improved investor confidence, and proactive government measures. Continued focus on resolving challenges and ensuring a stable currency will be crucial in maintaining this upward trajectory.
Original Source: businessday.ng
