Nigerian assets are attracting global investors as CBN reforms boost confidence, pushing stock prices higher and bond yields lower. Predictions indicate a recovery phase by 2025, with significant structural improvements expected. Nonetheless, ongoing challenges like energy costs and market inefficiencies require strategic attention for sustained economic growth.
Investors worldwide are increasingly interested in Nigerian assets as reforms from the Central Bank of Nigeria (CBN) are positively influencing key economic sectors. The reforms have restored investor confidence, resulting in rising stock prices and lower bond yields. Bismarck Rewane from Parthian Partners noted that Nigeria’s economy is on track to exit its challenging reform phase by 2025.
The sovereign risk spread for Nigeria has dropped to its lowest level since January 2020, recovering from pandemic-induced premiums. In a tumultuous global trade environment, Nigeria has successfully attracted foreign investment, bolstered by currency reforms that enhance market stability and trust. According to Emre Akcakmak, portfolio manager at East Capital, these reforms signify Nigeria’s resurgence as a viable investment destination.
Portfolio investments have risen due to improved confidence linked to structural adjustments, better currency market functioning, and ongoing dollar-naira stability. Samir Gadio from Standard Chartered highlighted the decreased correlation of Nigeria’s markets with global risks, making them attractive to investors. Yields on Nigeria’s eurobond have fallen markedly, indicating positive investor sentiment.
Positive forecasts for Nigeria’s economy suggest that further reforms in the foreign exchange (FX) market and government spending will yield benefits by 2025, as noted by Rewane. Investment is anticipated to significantly contribute to economic recovery, with transparency and pro-investment policies being essential. Optimizing the FX system and addressing systemic challenges are crucial for long-term stability.
Concerns remain regarding inefficiencies in power supply and the oil and gas sector which require urgent reform. Rewane suggests that, despite challenges, the economic landscape is improving, leading to optimism for 2025. Professor Olayinka David-West from Lagos Business School emphasized leveraging digital technology for better economic planning.
Chinyere Almona of the Lagos Chamber of Commerce pointed out that high energy costs are currently driving inflation and stressed resolving power supply issues. Olufemi Shobanjo of NGX pointed out that boosting market liquidity is pivotal for sustaining investor confidence.
Executive Director Yemi Sadiku underscored the need for policy frameworks that facilitate infrastructure investments and private sector participation. Olusegun Alebiosu from FirstBank Group mentioned that the government’s revenue improvements and shifts in the FX market are positive signs of economic progress, enhancing optimism heading into 2025.
In conclusion, Nigeria’s economic landscape is improving, aided by CBN reforms that restore investor confidence and attract foreign capital. While challenges like energy costs and transparency in key sectors persist, the outlook for 2025 appears promising with predictions of economic recovery and growth. Stakeholders emphasize the importance of strategic reforms, digital integration, and addressing systemic inefficiencies to ensure sustainable growth moving forward.
Original Source: businessday.ng
