While the nation’s forex market has seen increased liquidity in recent days on the back of the Central Bank of Nigeria’s new policy action, foreign investors are not keen on bringing back capital into the country.


Industry experts, including the Chief Executive Officer, Financial Derivatives Company Limited, Bismarck Rewane, say the issue of investor confidence remains unaddressed.

The Global Chief Economist, Renaissance Capital, Charles Robertson, described the increase in liquidity in the forex market as helpful, saying, “Foreign investors want to know they can take profits on their investments when they bring money in.

Robertson said investors might be slow to return, noting that in mid-2016, some foreign investors put money into Nigeria when the currency was floated, but then found out that they were stuck again.

According to Rewane, the policy framework, the implementation and the process have to be consistent.

The President, Association of Bureau De Change of Nigeria, Mr. Aminu Gwadabe, said the fall of the naira to 475 per dollar was largely due to the increasing pressure on the transfer segment of the market.

According to Gwadabe, the different applicable exchange rates and volumes by operators for the same product is also enhancing restriction to a single rate in the market.

The Chief Executive Officer/Partner, National Finance, a US-based firm, Tor Langoy, stressed the need for proactive measures to entice capital into Nigeria.

Citing the United Arab Emirates as one the countries that have successfully attracted capital, Langoy said, “By introducing business-friendly policies, the entire world is now aware of the benefits of doing business in Dubai. There is no problem of repatriating your capital, and you don’t have any forex issue; no capital controls.

He said, why should anyone invest a dollar in Nigeria when they could happily invest in Dubai or in any other nations in Africa without currency issues and fiscal and monetary policies unconducive for investments?

“The global capital markets are just waiting for a free float of the naira. The naira may depreciate. But take the pain and get over it. If it’s 1,000/dollar; it doesn’t matter. Look at what happened to the Egyptian pound. It dropped 50 per cent but now money is coming back into the country. It is just like a few months of pain with decades of happiness,” Langoy stated.

According to JPMorgan Chase & Co, until Nigeria devalues or makes a clear switch to a free-floating currency, the country will struggle to lure back foreign investors.