- Investors Worry Over Funds Repatriation from Nigeria – IMF
Worries about repatriating funds out of Nigeria following currency controls last year still dominate investor fears, the International Monetary Fund has said.
But it added that the country was still on international investors’ radar.
An IMF senior financial sector expert, Miriam Tamene, said on Wednesday that there was interest in Nigeria’s securities market. However, investors were being careful because fears of getting trapped still exist, according to a report by Reuters.
Nigeria introduced capital controls following dollar shortages triggered by a currency crisis last year. The naira hit a record of 520 to the dollar, prompting the central bank to restrict fund flows.
In April, the bank liberalised the market to allow investors trade the naira at market-determined rates in a bid to attract inflows into debt and stock markets.
The stock market has gained 45 per cent so far this year, helped by demand for consumer goods and banking shares after the central bank lifted currency restrictions for investors.
Tamene’s comments came after her team visited Nigeria’s Securities and Exchange Commission as part of consultations on developments covering the economy. The report of the consultation will presented to IMF board in February.
“Investors are interested in Nigeria, but with difficulties they had in getting their money out recently, that confidence is not there yet,” Tamene said in a statement released by the SEC, adding, “It has improved though, but they are still watching.”
Nigeria’s currency market for investors has traded $22.37bn since it was launched, according to market operator, FMDQ OTC Securities Exchange.
On Wednesday traders said some foreign investors were booking profits from treasury bills and bidding to repatriate funds abroad, creating a liquidity squeeze on the currency market, after debt yields fell.
The Acting Director-General, SEC, Abdul Zubair, said several initiatives had been launched by the commission to increase investor confidence and grow the capital market.
The IMF called on the Nigerian authorities to lower inflation, currently at 15.91 per cent as of October, and increase access to local monies to grow the economy.
The government plans to repay some treasury maturities this month, in a move to lower borrowing cost, which has triggered a debt sell-off by foreign investors and caused treasury bill yields to fall across the board.