A Chat with CNBC

Policy instability a major headache for Nigerian investors

by Aviwe Mtila

According to the findings from an investment survey by Nigerians in the Square Mile, policy instability and exchange rate volatility are the two biggest headaches investors have with Nigeria.

Nigeria can be a very challenging market, but these challenges can be offset by better knowledge of the local market, as well as precise contracts and engagement of knowledgeable local partners.

Gbite Oduneye, Managing Director, Eagle Capital Markets, Ikenna Iroche, Executive Member, NISM and Paul Onifade, Chairman, NISM, spoke to CNBC Africa about the findings in the investment survey.

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“The general good of what people are saying about Nigeria is that it’s one of the more exciting frontier markets. Nigeria is one of the places in Africa where one can generate very good returns. GE, for example, has invested close to a billion in the Nigerian market.”

• Managing Director of Eagle Capital Markets, Gbite Oduneye.

“Obviously there are bad ones, which is JP Morgan removing us from the bond index. We have Buhari, our president, who has refused to devalue for whatever reason, be it good or bad.”

• Managing Director of Eagle Capital Markets, Gbite Oduneye.

“We have the Nigerian stocks, of course, the lowest in quite a while. We have the Boko Haram issue in the northern parts of the country and the one which we can’t escape, which is our dwindling revenue in oil.”

• Managing Director of Eagle Capital Markets, Gbite Oduneye.

“Although there are a lot of good things which are going for us, we do have some negatives. Instead of us jumping into conclusions, what we did was that we asked people who invest in Nigeria a number of specific questions and they gave very detailed answers.”

• Managing Director of Eagle Capital Markets, Gbite Oduneye.

“The oil price hasn’t really been a daunting factor. If you ask ‘why would an investor be looking at a country like Nigeria,’ the primary reason is growth. An emerging market investor is always looking at growth dynamic.”

• Executive Member of NISM, Ikenna Iroche.

“Nigeria is part of the African growth story and Nigeria is the biggest African country and so that is the primary appeal. The whole point of the survey was to try and get away from all the rhetoric and get real hard facts.”

• Executive Member of NISM, Ikenna Iroche.

“For an emerging market investor, unless they’re oil investors specifically, the oil price really doesn’t affect them. What these guys are telling us is their main challenges are things that are creating uncertainty for them in either entering investments or at the time when they’re thinking about exiting.”

• Executive Member of NISM, Ikenna Iroche.

“High volatility in exchange rates, clarity about macro-economic policy consistency, those are the key findings. Nigeria is a very attractive market, but one that can be difficult to transact in and policy instability, exchange rates volatility, are the two biggest headaches that these people find.”

• Executive Member of NISM, Ikenna Iroche.