Investors across the globe are swooping on Nigerian assets as the impact of the Central Bank of Nigeria (CBN) reforms in the financial sector spreads to key sectors of the economy. Nigeria is finally getting a favourable nod from investors, pushing stocks higher and bond yields lower as painful reforms restore confidence.
“Nigeria’s economy is already exiting the most painful phase of the reform adjustment process in 2025, Non-Executive Director of Parthian Partners, Bismarck Rewane, has predicted.”
Already, Nigeria’s sovereign risk spread has fallen to the lowest level since January 2020, erasing the premium accumulated during the pandemic and subsequent strain on its economy.
While US President Donald Trump’s widening trade war has taken emerging markets on a wild ride, Nigeria has quietly held its own, attracting foreign capital reassured by currency reforms and other measures designed to revive the economy of Africa’s most populous nation.
“Nigeria appears to be back in business as long-awaited economic reforms take shape,” said Emre Akcakmak, portfolio manager at East Capital. Key measures include improved currency liquidity, leeway for investors to repatriate their profit, and the stable naira.
“We feel the Central Bank of Nigeria will continue to stem any sharp appreciation of the naira to limit profit taking from the fast money community,” Akcakmak said.
“Portfolio inflows have likely been supported by improved confidence amid key structural reforms, better FX market functioning, and moderating dollar-naira volatility, as well as the still-robust nominal yield buffer,” said Samir Gadio, head of Africa strategy at Standard Chartered Plc, to Bloomberg.
“Besides, Nigeria’s local market is seen as less correlated with global risk conditions than more liquid EM peers,” he said.
Yields on Nigeria’s $1.5 billion eurobond due in 2034 have declined to 9.69 percent, the lowest since its early December launch, and a domestic debt auction was three times oversubscribed recently, with the Open Market Operation bills allotted at 21.45 percent versus 22.65 percent.
Economic prospects turn positive.
Nigeria’s economy and businesses will have so many things to cheer for in 2025, and the impact of the economic reforms in the FX market, exchange, and huge budget outlays will begin to pay off for them.
Nigeria’s economy is already exiting the most painful phase of the reform adjustment process in 2025, Non-Executive Director of Parthian Partners, Bismarck Rewane, has predicted.
Rewane projected that the economy would begin to recover from the toughest phase of its reform adjustments by 2025, emphasising the importance of strategic policy implementation and institutional reforms.
He noted that while the fundamentals of Nigeria’s exchange rate indicate that the Naira should be stronger, achieving stability depends on an efficient and effectively managed FX system. He stressed that the primary challenge lies not in the reforms themselves but in their management, citing poorly sequenced policy changes and insufficient structural reforms as significant obstacles.
He underlined the critical role of investment in driving economic growth. “Revenue alone is not enough,” Rewane stated. “Investment is key, but it will be influenced by confidence, transparency, and the right policies.”
He also called attention to persistent challenges such as power supply inefficiencies and the lack of transparency in the oil and gas sector, which require immediate attention through structural reforms.
Rewane said that 2025 is going to be less hard, less painful, and less difficult than last year. He said the fact that things were so difficult in 2024 does not in any way indicate that the difficulties will persist this year.
Associate Dean of Lagos Business School, Professor Olayinka David-West, emphasised the importance of adopting a “digital-first mindset,” advocating for the use of technology and AI to improve fiscal discipline and economic planning.
Director-General/CEO of the Lagos Chamber of Commerce and Industry (LCCI), Chinyere Almona, identified high energy costs as a major driver of inflation and stressed the need to resolve power supply issues to stabilise prices.
CEO of NGX Regulation Limited, Olufemi Shobanjo, harped on the role of liquidity in capital markets, emphasising initiatives that enhance investor confidence and ensure market stability.
Executive Director of Parthian Group, Yemi Sadiku, highlighted the need for an enabling environment to attract infrastructure investment, urging the government to create policies that encourage private sector participation.
As Rewane aptly remarked, “The things outside our control far exceed what we can control, but by addressing these root causes, Nigeria can unlock sustainable growth and economic stability.”
Chief Executive Officer, FirstBank Group, Olusegun Alebiosu, said the improving government revenues, improved revenue-to-debt service ratio at 68 percent, and the growth in foreign reserve balances to over $40 billion represent positive indicators for the economy.
He further said, “Early signs such as the stability that characterised the forex market after the introduction of the electronic foreign exchange matching system in December 2024, the emergence of competition on the supply side of our nation’s downstream sector that is leading to falling prices in premium motor spirit (PMS), and the coming back on stream of the Port Harcourt & Warri refineries are indicative that there is, indeed, light at the end of the tunnel for us as a country.”
Alebiosu said the sheer timing of the emergence of these developments has strengthened optimism about the Nigerian economy, especially coming into the new year, 2025.
Also, the government’s proposed N49.7 trillion 2025 budget is expected to provide sufficient economic stimulus in view of the lower likelihood for poor budget implementation due to the improving government’s revenue position, adding that the projected GDP growth rate of 3.68 percent for 2025 is a very likely outcome.
(BusinessDay)
