Nigeria’s Harrowing Hostage Hosting
Nigerian stocks struggled to overcome double-digit decline as the World Economic Forum-Africa opened in the capital against the backdrop of Boko Haram’s snatching of hundreds of schoolgirls and a travel ban imposed on former central bank chief Sanusi as his allegations of billions of dollars in missing oil funds are investigated. Finance Minister Okonjo-Iweala has hired Price Waterhouse to conduct a forensic audit as she announced wealthy executive Dangote would finance his own search for the kidnap victims along with the state security services aided by international teams. The WEF originally was slated to trumpet ascension to the continent’s largest economy with output over $500 billion after data recalculation, despite per capita income half of South Africa’s and entrenched poverty which has hurt profits at consumer good listings betting on expansion. Heavyweight Dangote Cement for its part has stressed cross-border entry as a common West African tariff under ECOWAS goes into effect, even as it added power assets to the group portfolio and expressed confidence that the upcoming presidential transition will be smooth pending the incumbent Jonathan’s decision on a second term. Foreign investors have returned to local bonds on reserves nearing $40 billion and the naira at 160/dollar, particularly with the need to diversify from Europe’s geopolitical predicament within EMEA allocation. Fiscal and monetary policy have offered support, with the excess crude account up one-third to over $3 billion and the new central bank governor spurning devaluation as inflation stays in single digits. Despite 6 percent predicted economic growth the budget deficit will continue as the rebasing underscores poor tax collections at just 5 percent of GDP. The terrorist campaign in the North has claimed thousands of lives in recent years and officials have targeted aid initiatives and a more visible military presence in an effort to counter Boko Haram’s disgruntled Muslim youth appeal and capture its elusive leadership. Banks have been asked to pursue corporate and retail customers but are cautious in view of the physical threat and tighter capital adequacy and margin rules. With post-2008 consolidation many have turned to external bond markets to maintain competitiveness and size and forge potential relationships abroad in anticipation of an EU-ECOWAS free trade pact.
Kenya too was hit by an alleged Somali militant bus bombing as the MSCI Index remained positive with the 8.5 percent benchmark interest rate on hold. A sovereign bond road show has been organized to bridge chronic fiscal and current account deficits which could improve this year on public wage restraint and better agricultural and tourism performance and oil discoveries. Ghana still plans a $1 billion Eurobond as it considers IMF program renewal, and in the franc zone petroleum powerhouse Cameroon will debut despite a recent Fund Article IV visit criticizing wasteful subsidies which have helped keep President Biya in power for thirty years with the opposition hostage to spending and police shutdowns.
