Nigeria, along with Angola and Kenya, is positioning itself as an attractive destination for foreign investment in the aftermath of sharp currency declines.
Citigroup Inc. has identified these nations as prime contenders to draw increased foreign investment due to significant currency adjustments.
George Asante, Citi’s Head of Markets for Sub-Saharan Africa, shared his insights during an interview in Nairobi, stating, “Countries where we’ve seen significant FX adjustments are clear winners from an investment perspective. All these, from a local market perspective, offer opportunities.”
This comes as Nigeria’s naira takes the lead as the worst-performing African currency in 2023, depreciating by over 40% against the US dollar. Nigeria has embarked on a series of challenging financial reforms, including the removal of fuel subsidies and a revamp of its criticized exchange-rate system.
Nigerian President Bola Tinubu’s reform agenda aims to redirect funds previously allocated to fuel subsidies towards investments in healthcare, education, and job creation.
In June, the central bank implemented substantial changes to the nation’s exchange-rate policies, effectively devaluing the naira. According to Asante, these reforms are pivotal for Nigeria, particularly the removal of subsidies, which he referred to as a “very important reform.”
Also, the merger of multiple exchange rates is expected to enhance liquidity and facilitate smoother operations in Nigeria’s official foreign exchange market. Asante expressed optimism about the impact of these changes, stating, “I believe that this will be a significant catalyst for flows back into the Nigerian market.”
Foreign investors are closely monitoring these developments as Nigeria’s commitment to economic reform signals potential long-term stability and growth in the region.
The reforms, though challenging, are seen as necessary steps to address longstanding economic issues and attract foreign capital.
As the economic landscape in Nigeria undergoes transformation, there is a growing belief that foreign investment will play a pivotal role in driving the country’s recovery and development.
Nigeria, with its vast market and abundant resources, remains an enticing prospect for investors seeking opportunities in Africa.