Nigeria and numerous other developing markets are feeling the crunch from falling commodity prices. As result they been hit by falling currencies, forex issues, policy and government interference mixed with hapless and hopeless politicians.
After a recent trip to Nigeria, it really dawned on me repatriation alot of the countries issues are surely created by external factors, but these negative factors could have been mitigated by a proactive leadership, in particular when it comes to finance policies.
Currently, it seems like there is a total lack of understanding among the Nigeria leadership how international capital markets work and how they are constructed. Because, there is little understanding the decision making is often plain out wrong or faulty.
The examples are numerous, but the most glaring is insisting on pegging the USD to around 200 Nairas for way to long. this created an exodus of capital and decreases of inflow. Why would anyone in their right mind invest a dollar into Nigeria when they have no idea if they can repatriate it? Why take the risk of investing when the probability of further Naira devaluations? Mr Market usually win over inept Governments and sure enough, it does here too.
As i write this the Naira is 460 to the USD in the parallel market. Official rate is just over 300.
The sooner the Government takes proactive steps to encourage FDI/ investments into Nigeria, the better will it be for Nigeria.
Easy steps as for instance guarantee repatriation and tax holiday on all investments the coming 5 years.
In addition, appoint a point man or minister of investments who sole responsibility will be to facilitate investments and ease red tape. There are numerous other factors one can and should consider.
However, start with the basics above and it will send the right signals to the investing world.
Right now: there are NO positive signals at all from the Nigerian leadership
- News & Updates
- africa, nigeria, nigeria government
- October 4, 2016
