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Nigeria’s Weaker than Expected Growth Chasing Investors



  • Nigeria’s Weaker than Expected Growth Chasing Investors

The sluggish economic growth rate in a period when developed economies expected to have peaked with little room for growth are doing better than an emerging economy with higher risk level is chasing foreign investors from the Nigerian market.

Nigeria’s economy expanded by 2.01 percent in the first half of the year, according to the National Bureau of Statistics, which was below the 3.1 percent recorded by the United States. Similarly, the U.S grew by 2.9 percent in 2018, while Nigeria, Africa’s largest economy with lower investment ratings, expanded at 1.9 percent.

Growing at a slower rate than the less risky US market makes Nigeria unattractive to investors who feel they need to be properly compensated for taking a risk by investing in an emerging market with numerous economic challenges.

This explains why Nigeria has struggled to attract foreign direct investment in recent years. Last year, Ghana, a nation of about 20 million people recorded more capital inflow than Nigeria, according to the United Nations Conference on Trade and Development (UNCTAD).

While embattled Egypt received the highest foreign direct investment in 2018 and expected to grow at 5.9 percent in 2019. Again, Nigeria will grow less than half of that number in 2019, around 2.1 percent to 2.3 percent, according to IMF.

Nigerian Stock Exchange (NSE), a key indicator of economic performance, has lost more than 10 percent in value this year as investors are skeptical of the current economic situation without an economic team months after general elections.

Egie Akpata, a director at Union Capital Markets, said: “For a big investor, there’s little motivation to take so much risk to invest in Nigeria when the return doesn’t promise to be higher than what is obtainable in a country like the United States.”

Since Nigeria plunged into economic recession in 2016, it has not fully recovered rather it is sustaining the initial recovery even three years later.

Big investors will rather invest in China (even with trade war) and other emerging economies growing between 5 to 6 percent. In the last 27 years, China has averaged 6.5 percent despite growing at 6.2 percent in the second quarter of the year.

That is a nation saddled with tariffs, consumer spending issue, household debt and weaker than usual sentiment.

“Big investors probably feel they are better off staying away from Nigeria and investing in other emerging economies with better economic indicators and stronger growth prospects,” Akpata added.

Despite the weak investment sentiment, Nigerian stock investors are to pay Value Added Tax (VAT) of 5 percent on every transaction performed on the NSE. This is expected to further weigh on the exchange performance given the current situation.

Until Nigeria constitute an economic team with a clear growth path, investors are likely to remain wary or even abandon Nigeria for other emerging markets with healthy growth in the near-term.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade experience in the global financial markets.


FG Launches New N25bn Youth Fund to Address Some of the Concerns Raised by #EndSARS Protesters



Zainab Ahmed

FG Introduces N25 Billion Youth Fund

The Federal Government has introduced a new N25 billion youth fund to address some of the issues raised by the Nigerian youths who took to the street to demand good governance, among others.

The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, disclosed this at a stakeholder meeting held with the Deputy Governor of Kaduna State, Dr. Hadiza Balarabe, in Kaduna.

Ahmed said the fund would be increased from N25 billion to N75 billion within three years to ensure new job creation for the youths.

The meeting was constituted as part of the directive of President Muhammadu Buhari to ministers and governors to dialogue with stakeholders on some of the concerns raised by #EndSARS protesters.

The finance minister said the aim was to support the Nigerian youths to actualise their innovative and entrepreneurial minds in business and general development of the nation.

On her part, Balarabe said the essence of the meeting was to brainstorm on how to tackle security challenges faced during the #EndSARS protests.

Dr Mohammad Abubakar, the Minister of Environment, who was also at the meeting, reiterated Federal Government’s commitment to people-friendly policies and reforms.

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Kwara to Support Looted Businesses With N500 Million



Kwara State to Fund Looted Businesses With N500 Million

Kwara State has joined the list of states supporting businesses that were looted and vandalised by hoodlums masquerading as #EndSARS protesters.

Mr. AbdulRahman AbdulRazaq, the Governor of Kwara State, during a visit to the Kwara Mall and Agro Mall on Saturday said the state will support affected businesses with N500 million, adding that the funding is to reduce the negative impact of the looting on the state economy.

On Sunday, in a statement issued by the governor’s Chief Press Secretary, Rafiu Ajakaye, the Governor said the vandalism and looting may bring several businesses to their knees and lead to massive job loss with an increase in poverty rate.

He said, in order to avoid this, “We are setting up a N500 million fund for those that were affected to access.”

“The application form is live and active on the state government’s website and can now be filled by interested parties. We are going to get them back as soon as possible,” he assured.

The governor, who described the situation as a mindless looting of people’s businesses, said there can be no justification for such criminal behavour in our society and commiserated with affected owners.

Speaking on accusation of hoarding of palliatives, the Governor said the palliatives were donated by Private sector led CACOVID to specific vulnerable households and were being distributed gradually across the state.

What happened was bareface stealing and some people are playing politics with it. This is not the time to play politics. It is a time for all hands to be on deck. It is not just Kwara they wanted to burn down. They wanted to burn the whole country down. I urge all of us to stand up and resist that,” he said.

“We engaged the #EndSARS youth in Kwara and it worked out for us. They were not violent. They had a five-point agenda which the federal government has agreed to and has started implementing. In Kwara State, we have also set up a judicial panel of inquiry to look into the allegation of Police abuse. I also visited Police barracks to see how we can improve the welfare of the Police in the state.

“While the hoodlums were looting (on Friday), I was holding a meeting with executives and members of the National Association of Kwara State Students and National Association of Nigeria Students, Kwara axis. It shows students and youths were not part of the looting. Those involved were just hoodlums and thieves,” he said.

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IMF to Review Nigeria’s Growth Forecast Amid Destruction of Businesses, Properties




IMF Says it May Review Nigeria’s Growth  Amid Recent Development in the Country

Following the destruction of businesses and properties that trailed the #EndSARS protest, the International Monetary Fund (IMF) has said it may review the nation’s growth forecast in view of the new development in the country.

Abebe Selassie, the Director, African Department, International Monetary Fund, made the statement while responding to questions during a virtual IMF press conference on the economic outlook of Sub-Saharan Africa on Thursday.

According to him, the protest is difficult given that Lagos is a very important economic hub and contributes to the overall Nigeria activities.

Selassie said, “On the growth projections in Nigeria, I mean, these protests happened of course, after we had closed, after the period where the data we looked at in making the growth projections for this economic outlook.

“And much will depend really on how these protests evolve.

“Lagos of course, is a very important economic hub and contributes quite a bit of economic activity to overall Nigeria activities.

“So, if these persist and are showing significant effects on economic data, we will internalise them in due course.”

He further explained that the nation’s economy had been a difficult one in the last four years ever since oil prices plunged in 2015-16.

He said, “I think this is exactly why we have been on the record in Nigeria about how really critical it is to get all of the policy induced barriers out of the way to facilitate stronger economic growth.

“For the government to do more to raise revenues through the area of non-oil resources to be able to invest in health education which would, you know, allow people to be more successful at getting jobs but also improve the economy’s potential.

“So, I think that development agenda that Nigeria has, I think, has to be tackled with gusto and vigor so that the millions of jobs that the country needs can be created.”

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