Since President Muhammadu Buhari’s inauguration in May last year foreign investors are dragging their money out of Nigeria’s troubled economy.
Bloomberg reports that this is evident in the slow and continual depreciation of the country’s stocks.
Trading activities at the Nigerian Stock Exchange sustained a negative trend with the market capitalisation dropping by N250 billion.
It recorded its 9th repeated daily loss.
Below are 3 reasons why foreign investors are pulling out of Nigeria.
1. Lack of direction
The leader of the nation waited more than five months before appointing his ministers.
Buhari hasn’t presented a clear plan to revive growth and backed foreign-exchange controls aimed at defending the naira.
2. Stronghold on the Naira
Naira policy is even bigger concern for many internationalinvestors.
President Buhari backed the Central Bank of Nigeria in burned through $4.3 billion of funds last year and cut off supply of foreign exchange to banks and their customers to defend the naira, even as key oil exporters such as Russia and Colombia have let their currencies slide.
However, while the naira has been all but fixed at about 198 to 199 per dollar since March, at the parallel market it dropped up to 300 per dollar.
3. Retention of gasoline subsidies
Buhari’s retention of gasoline subsidies, plans to raise spending in the face of declining revenue and silence about a $5.2 billion fine charged on mobile-phone operator MTN Group Ltd. have added to investor unease.
Nigerian president has won approvals from the world leaders comprising his American counterpart Barack Obama for his efforts to tackle corruption.
Buhari substituted the management of the state oil company, which was blamed for withholding billions of dollars from the government, and has stepped up the fight against the deadly Boko Haram sect.
The EFCC under President Buhari launched many investigations into the billions reportedly stolen by the immediate past government.
One of the biggest scandals is ongoing probe of arms purchase by former National Security Adviser Sambo Dasuki.