President Goodluck Jonathan left the floor of the Nigerian Stock Exchange (NSE) after a visit two weeks ago to traders singing “For He’s a Jolly Good Fellow”. Since rising to a five-year high in July, Nigeria’s benchmark stock index has plummeted 30 percent and is now only 11 percent higher than when Jonathan took office in May 2010.
Stocks in South Africa and Kenya rallied 90 percent in the period, while those in Zambia and Ghana more than doubled. The naira fell to a record in February, and domestic government bond yields of almost 16 percent are the highest among 31 emerg- ing markets monitored by Bloomberg indexes.
“It’s been horrible,” Ayodele Salami, who oversees $200 million of Nigerian assets as chief investment officer of Duet Asset Management, said by phone from London on February 23. “Foreigners have been getting out of equities and fixed income. Bond yields in Nigeria are now astronomically high.” Jonathan’s failure to wean Nigeria off its reliance on oil, and save surplus revenue when crude prices were trading at record highs, is coming back to haunt his campaign for a second term in office.
A plunge in crude of almost 50 percent since June risks slowing economic growth in 2015 to half the pace set over the past 15 years. The outcome of tomorrow’s election may tempt foreign investors back to Africa’s biggest economy and spur a rally in Nigerian assets, according to Holger Siebrecht at Boston-based Acadian Asset Management.
The election was delayed by six weeks after security forces said they needed more time to defeat an insurgency by Islamist militant group, Boko Haram which killed 4,700 people last year according to U.K based risk consultancy Verisk Maplecroft. With lower oil prices slashing export revenues, the International Monetary Fund forecasts growth of 4.8 percent this year, about half the average of the past 15 years.
Buhari, a 72-year-old former military ruler, is seeking to unseat Jonathan, 57, in what is set to be the nation’s closest election since Nigeria ended military rule in 1999. (Bloomberg)
