Long-dated FX Futures to Boost FDI

• Long-dated FX Futures to Boost FDI

Experts have identified long-dated foreign exchange futures that was introduced by the Central Bank of Nigeria and the FMDQ Group as an initiative that will boost Foreign Direct Investments (FDI) in Nigeria.

The acting Managing Director, Coronation MB, Banjo Adegbohungbe, who spoke with pressmen during a breakfast session and the launching of the 2020 outlook titled, ‘Re-risking the financial system’, said the introduction of the Over-the-Counter – Non-Deliverable Forwards by the central bank was an opportunity to grow the nation’s FDI.

Banjo said, “We think that this initiative from the Central Bank will in the long term encourage foreign direct investment. FDIs are important to GDP growth, to address unemployment, create jobs amongst others.

“When FDIs are talked about, we are competing with other emerging markets and those other markets are coming up with initiatives as to how attract FDIs and we think that this is a good initiative that has come up and in the long term will attract FDIs”.

Iyobosa Sorae, the Head, Trading and Fixed Income, Coronation MB, also explained that while FPIs fit into a short term strategy, the FDIs are for long-term and for a nation like Nigeria to achieve long-term goals, both have a role to play as they complement each other.

Sorae said, “The FPIs play a significant role in our market but to get to a situation where one can say there is a reasonable growth of FDIs, there are certain things that needs to be in place.

“If we look at the tax reforms which was recently announced, certain incentives from the CBN to certain sectors of the economy, those are things that are enablers in which in the long-term, we will get the FDIs and before it materialises, one has to survive as a country and in doing that we have to recognise that we cannot give what we do not have.”