Growth rate set to slow to 16-year low of 3.3% as oil falls
Naira policy is biggest concern, Citigroup analyst Howell says
When Muhammadu Buhari clinched victory in Nigeria’s presidential elections in March, stocks soared as investors looked to the former military ruler to reverse decades of economic mismanagement and policy inertia. Now hopes have fizzled in his ability to turn around Africa’s largest economy and oil producer.
Money that flowed into stocks and bonds in the West African nation, which McKinsey & Co. says could become one of the world’s 20 biggest economies by 2030, is now fleeing as growth prospects diminish along with oil prices. While Buhari, 72, has prioritized stamping out the graft that has plagued Nigeria since independence from Britain in 1960, policy-making appears as uncertain and haphazard as ever.
“After the initial euphoria, people have become disillusioned,” Ayodele Salami, who oversees about $500 million of African equities as chief investment officer of London-based Duet Asset Management Ltd., said by phone. “He would probably say that he’s being deliberative and cautious. But we expected more.” Duet’s Africa fund has cut its investments in the country to about 24 percent of the total from 38 percent in the last year.

Buhari waited five months before naming his cabinet, hasn’t proposed a clear plan to revive growth and backed foreign-exchange controls aimed at defending the naira. His retention of gasoline subsidies, plans to raise spending in the face of declining revenue and silence about a $5.2 billion fine levied on mobile-phone operator MTN Group Ltd. have added to investor unease.
Nigeria’s benchmark stock index has plunged 22 percent since reaching a year-high on April 2, the day after Buhari was declared the winner of the presidential race against incumbent Goodluck Jonathan. That’s the third-worst performance globally in the period, after the bourses in Ukraine and Egypt. The index advanced 12.5 percent in the two days after Jonathan conceded.

To be sure, Buhari inherited depleted government coffers and a bureaucracy that multiple probes have blamed for looting billions of dollars of oil revenue. The president has said he delayed appointing ministers because he needed time to vet suitable candidates.
Garba Shehu, a spokesman for Buhari, didn’t immediately respond to written questions after requesting they be sent that way.
The hiatus has compounded the pain caused by the slide in the price of crude, which accounts for two-thirds of government revenue and 90 percent of export earnings. Growth, which averaged 6.3 percent annually over the past decade, is set to slow to a 16-year low of 3.3 percent this year, according to the median estimate of 15 economists surveyed by Bloomberg.
Many filling stations ran dry this month as the government withheld fuel subsidies to suppliers, preventing them from restocking. Lengthening lines forced Buhari to ask lawmakers for permission to pay 413 billion naira ($2 billion) in overdue payments, an amount that hadn’t been budgeted for.
While next year’s budget has yet to be finalized, Buhari wants to raise spending by 56 percent, according to a person who attended a briefing on the government’s plans and asked not to be identified because the matter is private. Vice President Yemi Osinbajo says the government plans to spend its way out of a slowing economy and that an infrastructure fund will be created with public and private financing.

The penalty imposed on MTN’s Nigeria unit last month for failing to register about 5 million subscribers may be an attempt to plug the hole in government finances, according to Cobus de Hart, an economist at NKC Independent Economists.
“You cannot deny there might be a fiscal element to the massive fine,” he said by phone from Paarl, near Cape Town. “It will make investors a little bit more wary of investing in Nigeria.”
An even bigger concern for many investors is the authorities’ naira policy. The Central Bank of Nigeria, with Buhari’s backing, has burned through $4.3 billion of reserves this year and choked off supply of foreign exchange to banks and their customers to defend the naira, even as major oil exporters such as Russia and Colombia have let their currencies slide. The restrictions prompted JPMorgan Chase & Co. to remove Nigeria from its local-currency emerging-market bond indexes, tracked by more than $200 billion of funds, in September, triggering a selloff in the nations’ assets.
While the naira has been all but fixed at about 198 to 199 per dollar since March, forward prices suggest it will drop by almost one-fifth, to 243.5, in a year.

“The number-one issue is the exchange rate,” Andrew Howell, a Citigroup Inc. frontier markets strategist, said from Lagos. ”Access to foreign exchange is becoming a widespread problem.”
Nigerian Breweries Plc, the nation’s biggest brewer, controlled by Heineken NV, said it takes two weeks to obtain dollars to pay for its imports, twice as long as it took a few months ago.
Buhari has won plaudits from leaders including President Barack Obama for his efforts to tackle graft. He replaced the management of the state oil company, which was accused of withholding billions of dollars from the government, and has stepped up the fight against an insurgency being waged by Islamist group Boko Haram.
“The degree of transparency we’re starting to get with the new administration is hugely positive,” Douglas Rowlings, an analyst at Moody’s Investors Service, said in an interview in Lagos. “It gives investors the perception that operating in Nigeria will now be done following proper procedures.”
Jan Dehn, head of research at Ashmore Group Plc, which oversees almost $60 billion of emerging market assets, remains unconvinced that Buhari is up to the job. The fund manager sold all its Nigerian government debt in the past year.
“So far the Buhari administration has done all the wrong things,” Dehn said by phone from London. “Not only has he been incredibly slow in taking any action, when he finally has taken action on the economic front it’s been diametrically opposed to sensible policy. That is a major disappointment given expectations prior to his election.”



http://www.bloomberg.com/news/articles/2015-11-26/buhari-bounce-becomes-bust-as-nigeria-policies-annoy-investors

Ok

Ok

isokay

"So far the Buhari administration has done all the wrong things,” Dehn said by phone from London. “Not only has he been incredibly slow in taking any action, when he finally has taken action on the economic front it’s been diametrically opposed to sensible policy. That is a major disappointment given expectations prior to his election.”

The ban on small electric generators, lifting of the ban on rice import and fx restriction comes to mind.

Hmmm.

[size=3pt] choi I don dey turn wailer small small o [/size]

Crying foul...Cos it didn't favour them..

Cheeeeei! Is reality finally setting in?

"Even if Buhari presents NEPA bill as certificate, we shall vote for him!"

"5 year old girl donates her lunch money to Buhari's campaign team"

"Buhari's face scares armed robbers into turning a new leaf."

"Buhari's body language brings Nissan and Peugeot manufacturers back to Nigeria."

"Buhari's body language freezes the drinks in my refrigerator."

As I watched these dingbats - the illiterate, the educated and the pseudo-educated - reel out these baseless hero-worshipping bellows aimed at deifying and elevating a stark illiterate, I knew - sooner or later - that reality would soon come calling.

Fuel scarcity? Check
Rampant corruption? Check
Insecurity? Check
Boko Haram rampage? Check
Death of the corporate sector? Check
Death of the manufacturing sector? Check
Presidential jets? Check

I should probably start counting down the seconds it would take before I receive another hackneyed "Clearing-the-mess-of-the-16-years-of-PDP" quip. But then, prior to PDP, we also had about 38 years of the military which Buhari was a part of. What excuse do you have?

Abeg, abeg, abeg. Anybody close to Chei Baba should help me dedicate this song to him:

.
.
.

Oya shake body
Oya move body
Make you wake the mallam o
Oya shake body

Dem haters don dey feel me now
Cuz I dey journey, dem dey feel am now
Back then I dey lose anyhow
I don get planes, dem say "Sell them now"
But they can't lace my shoelace
Cuz I'm old and I'm dull and I'm clueless
What you vote is what you get.
I run trips from Daura to U.S.

- Buhari

I hate to say it but they are right.

mekd:
Crying foul...Cos it didn't favour them..

Bloomberg was founded by Michael Bloomberg, an Igbo man from Ohafia and a notorious IPOD financier. He is a wailer as is firms like the Ashmore Group and JP Morgan.

Sai Buhari!

Are we immune from the global economy situation, is there any BRIC nation not experiencing the same thing as Nigeria?

Nonetheless the Govt must do more and quickly too