By Nkiruka Nnorom
At the backdrop of massive exit of foreign portfolio investors (FPI) from the Nigerian capital market as well as drop in total capital importation into the county, investment experts have indicated the need for the Federal Government (FG) to put policies in place that would facilitate the reversal of the capital outflows.
They also advocated for an increased investment in the agriculture sector if Nigeria hopes to raise its earnings from the non-oil sector post-COVID-19 pandemic.
The financial experts at EFG Hermes, a financial services company, who spoke at the company’s first virtual annual Investors Conference Media Roundtable, projected that exchange rate would hit N420 per dollar by the end of this year.
Latest report on capital importation by the National Bureau of Statistics (NBS) showed that total capital importation into the country fell by 31.19 percent year-on-year in the first quarter ended March 31, 2020 (Q1’20) to $5.85 billion from $6.30 billion in Q1’19.
Also, data from the Nigerian Stock Exchange (NSE) also showed that FPI commitment in equities fell to N35.24 billion in May, 2020 from N53.18 billion In April, indicating 33.7 percent decline.
Speaking at the event, Ali Khalpey, CEO, EFG Hermes Frontier, said investors are wary of investing in climes where uncertain policy environment makes it difficult to repatriate funds and cited concerns from investors trapped in Nigeria’s debt market due to low dollar liquidity.
He said: “Liberalisation policies need to be accelerated. You can’t trap people into markets because once they are able to get out, they won’t come back again. Nigeria needs to be compelling to attract needed capital into the country.
“Once you cannot take money out, you cannot put money in. The authority should help companies to facilitate repatriation of fund.”
Also speaking, Kato Mukuru, Head, Frontier Research, EFG Hermes, said: “There is a lot of uncertainty as regards consumption. There is a huge gap in exchange rate. What we need to do is to go back to the days where there is no gap in exchange rate. People are not going to spend money when they are not sure about price stability. Foreign exchange rate is key to everything. We are forecasting N420/$1 by the end of the year.
“We also seek clarity on policies, taxation and intervention affecting consumer spending. Once the market gets clarity, things will change.”