Warning about Nigeria
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