DAILY INSIGHT – NIGERIA’S CURRENT INVESTMENT CLIMATE: WHAT’S THE OUTLOOK LIKE?

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Nigeria’s investment inflows have been largely dominated by Foreign Portfolio Investors (FPIs) compared to Foreign Direct Investments (FDIs). The pullback in FDIs inflow was largely due to policy volatility between differing government tenures while the sustained increase in FPIs inflow can be attributed to the impressive performance of Nigerian capital market in recent times.

The nation’s investment climate portends that of recovery and growth. Since recovering from the sting of recession, most macroeconomic indicators have continued to improve: Oil prices have stabilized above $60/b; Foreign Exchange (FX) has seen renewed stability; Gross External Reserves is currently over $47bn; Moderation in Inflation rate is down to 2-year low 13.3% in Mar18; Naira assets are broadly bullish and the outlook of the general economy largely positive.

The above notwithstanding, the uncertainties surrounding the 2019 general election remains a potential black cloud to the current investment climate, isolating common challenges such as corruption, insecurity, and power supply. Contrary to jitters in some quarter, President Buhari’s recent announcement to run again in 2019, should calm any potential storm in the short term. And whatever happens after the February 2019 election, the lesson from 2015 general the election is an indication that Nigeria can handle the outcome of the 2019 election.

 

UNITED CAPITAL RESEARCH

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