Nigeria’s Stymied Goodluck Streak
Nigeria’s share gauge battled for positive status after consecutive parliamentary and presidential elections which encountered delays and geographic-religious strife after Delta Southerner Goodluck Jonathan handily won a full term as chief executive. He will continue in office as oil prices are almost double the $65/barrel plugged into the budget, with an industry modernization package which was enacted the past year high on the immediate implementation agenda. The regime aims to align treatment of longstanding Western multinationals subject to recent tax and royalty increases with new deals struck with Chinese counterparts that have offered large infrastructure building programs in exchange for favorable terms. Bank cleanup has also featured with the central asset management agency issuing its first public bonds to cover bad loan resolution. Templeton’s emerging markets team also picked banks as a top frontier pick with valuations in single-digits. On the debt side, following an inaugural sovereign placement, foreign reserves and the naira have been steady, although regular intervention is designed to keep it in the 150/dollar range. As the level stabilizes, authorities may expand overseas access to domestic government bonds as they work with donor technical assistance on modernization plans.
Adjacent Ghana has progressively opened across the fixed-income spectrum and the stock market was up 20 percent through the first four months as the IMF predicts GDP growth will double last year’s 6 percent with the start of offshore oil production. However it also cautioned on budget and inflation outlooks, and on preserving post-HIPC external debt sustainability as another sovereign flotation is considered. Kenya too has gotten legislative approval for a maiden effort as it has pushed the average local maturities to over 5 years with double-digit coupons to compensate for 9 percent inflation as of March. A poor rainy season, and Hague Tribunal indictments against ministers for alleged crimes during the 2008 tribal bloodbath, have dented equity sentiment, with the bourse off 12 percent through April.
To the south, Botswana’s exchange has led with a 20 percent gain with diamond price recovery, while Cote d’Ivoire has paced the EMBI with a 25 percent rally as Gbagbo forces were finally defeated and removed from power. Former IMF official Outtara will take the helm with one missed Eurobond interest payment to satisfy as commercial and multilateral lenders look to resume operations. He has already called for an end to the cocoa export boycott, and will regain use of regional central bank reserves that were sanctioned as investors eye an end to a decade of bad luck and belligerence.
