Warn­ing about Nige­ria

Finweek English Edition - - IN BRIEF -

It’s not an easy time eco­nom­i­cally for Nige­ria. The prin­ci­pal way of know­ing this or il­lus­trat­ing it is by tak­ing a look at the price of crude oil since the mid­dle of last year. Save a re­cent uptick that’s not done nearly enough to re­pair the dam­age, the sit­u­a­tion isn’t pretty for Nige­ria’s big­gest ex­port mar­ket.

Last week, un­der­scor­ing to the out­side in­vestor what we in­side know very well is go­ing on, JP Mor­gan Chase an­nounced plans to drop Nige­ria from its Emerg­ing Mar­ket Bond In­dex, giv­ing share prices a whack and send­ing bench­mark bond yields higher.

As­sum­ing you’re the kind of per­son who fol­lows Nige­ria by stock mar­ket per­for­mance and cur­rency value, this is a big f lag up on the beach, ar­guably the best in­di­ca­tor to the in­ter­na­tional in­vestor of what’s hap­pen­ing here af­ter a squint at the crude price. A coun­try t hat was pre­vi­ously an emerg­ing mar­kets dar­ling be­cause of its surg­ing pop­u­la­tion and bumper GDP (and hey, let’s not mind about the po­lit­i­cal risk, the in­sur­gency in the north­east and the cor­rup­tion) is now well out of favour. If you’re me, the way you know these aren’t good or easy times for the Nige­rian econ­omy are rather dif­fer­ent.

I know be­cause the man who sells the news­pa­pers on the cor­ner of my street from dawn to dusk tells me he’s only bring­ing in ₦ 4 000 to ₦ 5 000 (naira) a day at the mo­ment com­pared with ₦ 15 000 a day in the later months of Good­luck Jonathan’s ad­min­is­tra­tion. When peo­ple aren’t spend­ing what a Nige­rian might call “small small” cash on pa­pers, they’re cer­tainly not spend­ing on big-ticket items.

I know be­cause when I go to change dol­lars into naira at my in­for­mal bureau de change (ad­mit­tedly against the in­struc­tions of the cen­tral bank), the money changer is no longer crow­ing about the early prom­ise Pres­i­dent Muham­madu Buhari brought when he won Nige­ria’s gen­eral elec­tion in March.

Now he tells me he’s wor­ried about the go­ings-on at the cen­tral bank; Gover­nor God­win Eme­fiele has been crit­i­cised for some of the in­ter­ven­tion­ist steps he’s taken no­tion­ally to de­fend the value of the naira. My money man’s also wor­ried that, while ru­mours abound, there’s still no fi­nance min­is­ter in place.

I know be­cause more and more peo­ple are com­ing up to me on the street and telling me they can’t f ind work, and I know of in­creas­ing num­bers of grad­u­ates qualif ied for work in of­fices and oil re­finer­ies who in­stead are train­ing as hair­dressers, though that’s hardly an un­sat­u­rated mar­ket in Nige­ria.

Be­tween JP Mor­gan’s an­nounce­ment and my chats with the pa­per man, the money changer and the many, many hair­dressers, the tales are very dif­fer­ent, but the con­clu­sions you draw are the same.

Whether you’re in my sit­ting room in Abuja, at a busi­ness lunch in Joburg, or at your hedge fund desk in Lon­don, you can’t say you weren’t warned. As it says on many build­ings in La­gos – where peo­ple are try­ing to pro­tect against 419 scams that would sell the houses out from un­der their right­ful own­ers – buyer be­ware. Gover­nor of the Cen­tral Bank of Nige­ria

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