By UDUMA KALU with agency report
The reported death of Abubakar Shekau, the leader of the Boko Haram insurgency, is making foreign investors look favourably towards investing in Nigeria.
Such investors are said to be frustrated by the low level of profit they are currently making from the BRIC nations of Brazil, India, Russia and China, authoritative US journal, Forbes, has reported.
The report, published in Forbes, yesterday, said success in cracking down on security threats in the Niger Delta is also changing the security situation for the better.
And while terrorist disruption recedes, money keeps flowing into Nigeria.
In the last six months, U.S. corporations like Procter & Gamble PG -have committed at least $700 million to build new factories and agricultural facilities in the country while the Nigerian government itself announced a $1 billion fund to nurture the local software industry, which officials think can ultimately capture $20 billion a year from rivals like India, the magazine continued.
The leading American business magazine said though putting Lagos on equal footing with Bombay or Sao Paulo as a global capital hub in three years would be quite a feat, the foundations for such growth are already in place.
However, Nigeria, it said, was one of the world’s four best-performing markets last year with a 35.45 per cent gain and is the biggest and most dynamic frontier economy in Africa, with a GDP at par with global capitals like Hong Kong and Singapore.
Lagos, it went on, reminds fund managers of Houston multiplied by four times the population.
The report written by Hilary Kramer, who also writes for Wall Street Journal as equity analyst and investment manager, noted that though many investors still think of Nigeria as a dangerous market engulfed by unrest and corruption, “ the $31 billion currently moving on the Nigerian Stock Exchange represents annual economic activity of $268 billion.
To buy the same amount of productivity in Singapore, for example, would cost nearly $737 billion, or 23 times as much.
Even in relatively mature emerging markets like Brazil and Russia that are unlikely to enjoy much in the way of future growth, have domestic equity trades at a 200 per cent to 300 per cent premium over what it would cost in Lagos.
The Nigerian economy is growing at an annualised rate well above six per cent, faster than any of the top-tier emerging markets, short of China itself, Kramer noted.