By Matthew Page, Council on Foreign Relations
Africa’s largest economy is struggling to find its feet. Sliding oil prices threaten to derail President Muhammadu Buhari’s efforts to put Nigeria’s public finances back in order, fund planned infrastructure spending, and field much-needed social programs. Until global crude prices rebound or he undertakes more ambitious reforms, Mr Buhari almost certainly will need to borrow just to make ends meet.
The good news for Mr Buhari is federal government debt is relatively low as a percentage of GDP, which was estimated at $488bn in 2013. In 2005, Nigeria struck a deal with Paris Club lenders to write off over half of the country’s $30bn debt. Since then, however, Nigeria’s debt profile has steadily grown. As of the end of last year, Abuja owed domestic and international creditors roughly $55bn. Read more
By Charles Okeahalam, AGH Capital
Nigeria is facing a number of difficulties, most notably the absence of security in the north-east of the country where Boko Haram has killed thousands of people. Linked to this atrocity is the equally atrocious low level of civil, social and economic governance. Poor governance is correlated with social instability. It is also influenced by economic inefficiency. Therefore, only a simple or naïve analysis could attempt to wish away cause and effect.
Presidential and state governorship elections which were scheduled to take place in February have now been postponed to March and April respectively. As the elections approach we need to ask: what is the state of the Nigerian economy and what do we have to do to improve it? These are important questions that need to be addressed following the presidential election. Read more
By Peter Leger, Coronation Fund Managers
So you thought a six-month break on a desert island looked appealing and spent long hours in silent meditation, reflecting on self-actualisation, harmony and humanity’s ceaseless race to consume the planet. Now you’ve just made the return journey to find that the oil price collapsed from over $110/barrel to less than $50. Peak theorists having turned into piqued theorists. You didn’t see that coming. And, frankly, neither did we. Nor did we expect to see the Swiss franc jump 28 per cent in a single day – as it did recently.
The lesson being that extreme volatility has to be an assumption when building portfolios, and doubly so when investing in frontier markets, where volatility is often amplified. Read more
The Nigerian economy has enough resilience to ride out the wave of Boko Haram terror attacks, the country’s finance minister said in an attempt to persuade foreign investors to keep their holdings in local bonds and stocks.
Nigeria is Africa’s largest economy and a magnet for international investors, which have poured billions of dollars into factories, oil fields and its local securities market.
“We are sticking to our growth forecast of 6.75 per cent [for 2014]. It is realistic. Any losses in the northeast [where Boko Haram is more active] will be made up by activity elsewhere,” Ngozi Okonjo-Iweala told the Financial Times in an interview. Read more
Nigeria’s central bank has held its policy interest rate at 12 per cent for the 12th consecutive month. Can anything make it budge?
Analysts seem to think not. There are three factors that will keep rates locked: inflation, the naira and reserves. Read more
As African central bank governors go, few have a higher profile than Lamido Sanusi – and few have courted more controversy. Appointed in the midst of a debt crisis in 2009, his bold moves to fix Nigeria’s crisis-stricken banks toppled the chief executives of eight local lenders, and he’s not one to tiptoe around the political elite either.
After years of persistently high inflation, you would think taming the beast would be cause for celebration.
Not in Nigeria – or in the central bank, at any rate. Despite inflation falling to a 5-year low of 8.6 per cent year-on-year in March, the news has simply exacerbated the debate over what to do about interest rates. Read more
Nigeria’s economy grew 6.5 per cent in the third quarter, slightly up from 6.4 per cent in the previous period. Read more
Joining the club can bring a whole new bunch of friends. In the case of Nigeria, which last month was admitted by JP Morgan to its emerging market Government Bond Index with effect from October, it means a lots of new overseas investors – and borrowing costs dropping off a cliff.
But that doesn’t mean everything is rosy. Inflation is still stubbornly high, above the single-digit target, and the central bank is expected to hold interest rates on Tuesday. Read more
Falling inflation wasn’t enough to twist policy makers’ arms in Nigeria on Tuesday. The central bank’s monetary policy committee left its policy rate at 12 per cent for a third consecutive time.
Although Monday’s inflation figure of 11.9 per cent year on year in February surprised the market, it is still above the central bank target of 10 per cent. Read more