Nigeria's new president, in office for less than a month, is pushing to put Africa's largest economy on a reform track that investors have eyed for decades, fuelling excitement that money could flow to a nation that many had deemed uninvestible.

President Bola Tinubu's bold actions, including removing restrictions on the naira currency that allowed it to hit a record 790 to the dollar and subsidy removals that tripled petrol prices, could take stress off the battered finances of Africa's largest economy.

But investors, burned by previous reforms that ultimately proved hollow, say it will take time to build trust and listed myriad questions over the final shape of the economy.

"The reaction is one of, 'finally'," said Tunde Ajileye, a partner at Lagos-based SBM Intelligence. "If this stays, then it would mean that (Tinubu) had been able to remove the two subsidies that have crippled Nigeria fiscally and monetarily for the last decade."

Tinubu is from the same party as predecessor Muhammadu Buhari, dubbed "Baba Go-slow" for his pottering pace - taking six months to appoint cabinet members.

By contrast, Tinubu lifted fuel price caps days after taking office on May 29, suspended controversial Central Bank chief Godwin Emefiele some 10 days later and on Wednesday removed FX restrictions.

The tangle of multiple exchange rates for everything from international school fees to food imports created foreign currency shortages and hobbled investment due to issues getting money out.

"Just the fact that you have seen quite a bit of movement in a relatively short space of time has gotten a lot of people in the market excited," said Goldman Sachs economist Andrew Matheny.

Nigeria's international dollar bonds and the country's stock market have been boosted by the speedy reforms.

BACKLOG, AND BURNED BEFORE

Investors, though, remained wary, citing years of damaging currency controls; Goldman Sachs pegged the backlog of FX demand at a staggering $12 billion.

"We are still to see whether this will allow the FX backlog to clear, where the new market rate will stabilise, whether this will catalyse inflows into the country and ... that there will be no issues pulling money out of the country," said John Mumo, a partner at Blakeney, an Africa-focused equities fund management firm.

Joe Delvaux, a portfolio manager at Europe's largest asset manager Amundi, said it could take months or more to lure longer-term cash.

"Ultimately, you also have to keep in mind that the biggest provider of FX will still be the CBN," Delvaux said.

"We need to see that the system works."

Tinubu will also have to tackle the perennial corruption that has hobbled the country for decades. Nigeria is ranked 150 out of 180 in Transparency International's 2022 corruption perceptions index - and has been on a downward trend since 2016.

Investors also worry about low tax receipts and falling oil output - structural reforms that will take far longer to sort.

Some are also hoping to see a more orthodox interest rate policy. Inflation hit a near 20-year high of 22.41% in May and a weakening naira will amplify price pressures. Meanwhile interest rates, which Tinubu has said he would like to see fall, were hiked by 50 bps last month to 18.5%.

"Investors will need to see positive real rates and evidence that they will be able to repatriate their earnings before local currency debt is back in play," said Patrick Curran, senior economist at Tellimer.

Ciscogod:
Thou I doubted his ability to run a complex nation like Nigeria due to his age. But seems he has proved me wrong in some certain areas .

Ciscogod:
Thou I doubted his ability to run a complex nation like Nigeria due to his age. But seems he has proved me wrong in some certain areas .

Odin13:
Tinubu like Ngige before Obi was forced to glory. Out of sheer pressure to deliver

That never stop Obi from reclaiming his mandate after years

Following the tribunal.. is so glaring with his evidence and facts he’s laying as foundation..

Not even the Lucifer .. talk more supreme court OG humans will deny fact and figures

We’re observing.. everyone is .. except tinubu praise singers

A thief remains a thief till restitution..

Not even asiwaju is confident of that sit tomorrow

FreeStuffsNG:
The backlog they keep referring to is looking like a blackmail and FG needs to be wary of these foreigners if they are still second guessing the genuine intentions of these bold reforms by my President.

Nigeria is not Russia, China nor Iran so they should come in and do business, real investment and not bring hot money to pump the mostly undervalued Nigerian stocks then dump on the Nigerian retail investors like they did during the global crisis of 2008.

We want more of FDI than FPI so we all win together.

triple996:


Wailler how far.... how is d manhood

plrvipclub:


I think the "Back Logs" that they kept talking about and rightly so, are monies of foreign companies (eg airlines) that are stuck in the Nigerian economy sue to the policies of the Geniuses Emefiele and Buhari. Nothing is enough to ensure confidence from foreign investors, except knowing that they can easily cash out their gains.

FreeStuffsNG:
I am not disputing the fact that some may need to repatriate their profits earned here. I am just not carried away not to know that the interest of my own country comes first.

Airlines sell tickets in naira and want to repatriate in usd, in that case, they will wait until we have enough forex or take the naira like Russia did with EU. Emefiele is generally seen not to be doing things right but when he was encouraging them to invest in Nigerian export and keep 100% of the export proceeds overseas, he was doing protectionism not running free market.

The Asians doing business in Nigeria innovated and were able to move their profits out and that's why you do not see them complaining like those from the west who mostly want to come in briefcase to Nigeria to pack forex back home.

For years now, most of the cargo planes bringing goods to Nigeria go back empty and not until NAHCO got an Indian MD did these airlines realise they can partner with NAHCO to take Nigerian goods for export and since our CBN policy under Emefiele allows you to keep your export proceeds, they get paid from the export proceeds of NAHCO.

In business, if you don't innovate you die. Nigeria will not be a dumping ground and we will not open our stock exchange to unfettered free entry and free exit of hot money or proceeds of illicit funds.

They should bring in the forex as FDI like they were forced to do by Emefiele then grow and create value here, sell and repatriate real profits home.

Not for them to come in, pump Zenith bank share price to N120 from N30 then dump on Nigerians and take the naira capital gain to CBN , get USD and repatriate, creating no value for us and our economy.

FreeStuffsNG:
I am not disputing the fact that some may need to repatriate their profits earned here. I am just not carried away not to know that the interest of my own country comes first.

Airlines sell tickets in naira and want to repatriate in usd, in that case, they will wait until we have enough forex or take the naira like Russia did with EU. Emefiele is generally seen not to be doing things right but when he was encouraging them to invest in Nigerian export and keep 100% of the export proceeds overseas, he was doing protectionism not running free market.

The Asians doing business in Nigeria innovated and were able to move their profits out and that's why you do not see them complaining like those from the west who mostly want to come in briefcase to Nigeria to pack forex back home.

For years now, most of the cargo planes bringing goods to Nigeria go back empty and not until NAHCO got an Indian MD did these airlines realise they can partner with NAHCO to take Nigerian goods for export and since our CBN policy under Emefiele allows you to keep your export proceeds, they get paid from the export proceeds of NAHCO.

In business, if you don't innovate you die. Nigeria will not be a dumping ground and we will not open our stock exchange to unfettered free entry and free exit of hot money or proceeds of illicit funds.

They should bring in the forex as FDI like they were forced to do by Emefiele then grow and create value here, sell and repatriate real profits home.

Not for them to come in, pump Zenith bank share price to N120 from N30 then dump on Nigerians and take the naira capital gain to CBN , get USD and repatriate, creating no value for us and our economy.

Dabronze:
Are you telling me that Former CBN governor Emiefiele has delivered a lot good job to nigeria economy so far

KingOfIsoko1:
Baba Stole the mandate, he didn’t win the election ,


He is a wicked leader, removed fuel subsidy instantly which we support, Oya create avenues to ameliorate the stress of the fuel subsidy removal hes is speaking grammar