Nigeria in for some real pain as investors flee

Nigeria is paying the price for poor economic growth prospects, as her stocks fell to their lowest level in almost three years as investors exited, and South Africa faces a similar fate this week.

Investors in Nigeria, Africa’s largest economy, are voting with their feet due to fading hopes that President Muhammadu Buhari’s government can revive an economy growing at its slowest pace this century.

While Buhari, a 72-year-old former general who came to power in May, has prioritised stamping out corruption in Africa’s biggest economy and oil producer, investors were unnerved by a delay of more than five months in forming a cabinet, which he swore in November 11.

There is also concern that his support for the Central Bank’s currency-trading restrictions are choking businesses of the crucial dollars they need to pay foreign suppliers, with further pressure expected after the country’s central bank last week cut its interest rate for the first time in six years, taking already-nervy investors by surprise.

“The government has not come up with a definitive policy for the economy,” Pabina Yinkere, an analyst at Vetiva Capital Management Ltd. told financial data company Bloomberg by phone from Lagos. “The continued lack of clarity is affecting the stock market," he said.