By Nkiruka Nnorom

The lull in the Nigerian stock market saw a drop in foreign portfolio investment inflow by 67.7% year-on-year in 2016. What do you envisage this year?

The drop in Foreign Portfolio Investment (FPI) is closely linked to foreign investors perception of our policy response to dwindling oil revenues in the last two years (caused both by falling price of the product as well as reduced production). Areas of concern for foreign portfolio investors range from our foreign exchange policy and its implementation as it affects ease of exit, the state of our foreign reserves and general sense of our willingness to deal pragmatically with our changing fortunes.

These led to the reversals witnessed and inability to attract fresh inflows. Consequently, our chances of seeing a turnaround in 2017 and beyond are linked not only to our ability to strengthen our economy but to our ability to inspire the confidence of foreign investors in terms of policy direction and policy response to emergent issues. Foreign investors will also be interested in how we tackle our infrastructure and security challenges.

•Oluwatoyin Sanni, GCEO, United Capital Plc

How soon do you expect the return of FPI in our market and what in your opinion should be a motivating factor for this return?

A motivating factor for return of FPI anywhere in the world is increase in trust/confidence in the intended market. If the Nigerian government can be clear on exchange rate and other policies, it would increase investor confidence. A similar example is Egypt that freely floated its currency in November last year and likewise restored investor confidence in their market

On the domestic side, do you foresee an increase in level of participation given that there was a 56.8% decline last year?

The domestic market has shown a modest degree of activity this month driven by strong fundamentals of certain stocks which bucked the market trend and also in anticipation of dividend payout in the coming months. To sustain significant activity, certain structural reforms need to happen. High interest rates remain a concern and an impediment to real sector growth and to the attractiveness of the equity market.

What are some of the measures that must be in place to bolster confidence in the market?

To bolster confidence in the market, government needs to be seen to be making the tough choices required for economic recovery in terms of foreign exchange policy, deregulation of the downstream oil sector, as well as interest rate policy. The Central Bank’s autonomy and policy consistency should be assured. A clearly articulated economic reform programme will also aid confidence.

As long as investors have a perception that our currency is being micro-managed, we will not enjoy the benefits of devaluation, hence our devaluation exercise last year did not bring the intended FPIs back and the gap between the black market rate and official rate has continued to widen.