Nigeria’s Dulled Diaspora Disposition

Nigerian equities retrenched in early January as President Jonathan entered his last year in office faced with oil sale corruption investigations and a 15 percent foreign reserve fall from the $50 billion peak to defend the currency corridor, as the debt management office prepared to tap diaspora investors in a $100-200 million placement after sukuk innovation. Another Eurobond is slated for the second half after last July’s successful effort amid a global capital outflow spike, and another year of 6.5 percent GDP growth is forecast as the central bank reassures that reserves cover 11 months’ imports. It also intends to push the interest rate benchmark to single digits to spur private sector lending by the main half dozen banks accounting for almost 60 percent of system assets. Their capital adequacy ratio is 18 percent and NPLs are under 5 percent as the central disposal agency has absorbed post-2008 crisis portfolios. The recovery rally has attracted attention from prominent frontier investors like Templeton, but pan-African network Ecobank recently was condemned by regulators for poor corporate governance under its ousted chief executive. In West Africa, the bourse will launch cross-trading with Ghana and Cote d’Ivoire in March as the Finance Minister announced 2013 FDI at $7 billion led the Sub-Sahara category and a statistical revamp that could increase the economy’s size above South Africa’s. Energy industry reforms continue to advance slowly, but tax collection lags according to a World Bank report which placed the country at the bottom of payment ease rankings with 75 percent of small businesses escaping the net. The government has hired consultants McKinsey to close loopholes and boost compliance following a similar initiative in Ghana.

Officials there stand by the 2014 respective 7.5 percent growth and 8.5 percent of GDP fiscal deficit goals, even with rating agency doubts spawning downgrades. The stock market tops the region with a 55 percent annual gain on offshore energy enthusiasm and deal-making including the foreign takeover of major listing Fan Milk, despite the lackluster results at operator Tullow Oil. Over the next five years the industry aims for $20 billion in investment as domestic and external borrowing for infrastructure projects again raises sustainability questions and contributed to a 20 percent cedi slump against the dollar last year almost equal to the rand’s. In response the monetary authority has imposed new interbank trading rules to ensure two-way quotes and disclosure for all transactions, with international accounts due for further restrictions. In Kenya the exchange advance of 35 percent has been better supported by a firmer shilling-dollar level at 86, with the policy rate on hold at 8.5 percent on single-digit inflation. The Treasury predicts 6 percent growth this year on steady agricultural exports and tourism despite the Westgate mall terrorist assault. IMF Director Lagarde in a visit cited the trajectory toward middle-income status the next decade as program renewal helps with hidden snares.