While there are indications that investors are wary about the possible effects of the coming 2015 elections on the Nigerian business environment, those in the property market say they are more concerned about who succeeds Central Bank of Nigeria (CBN) governor, Sanusi Lamido Sanusi,who leaves office in June this year.
Investors who spoke to BusinessDay said they are now being cautious about where they put their money, explaining that the trend of investments in the economy depend on the monetary and fiscal policies coming from the CBN.
Omorinsola Ipaye, an investor in commercial real estate, told BusinessDay in an interview in Lagos recently, that there is anxiety among investors in the sector, over inflation, interest rate, exchange rate and devaluation of the naira, explaining that nobody knows what the outlook of the next CBN governor will be.
“We are worried as to what is going to happen post Sanusi as CBN governor; whether the incoming governor will continue with this drive—retain the value of the naira, the interest rate, the exchange rate etc or not. We are more worried about all this than with the coming election”, she said.
A property market analyst with a private equity investment firm, who does not want to be mentioned, agrees with this position, adding however that beyond the Sanusi succession “there are some shocks which we are seeing with the planned devaluation of the naira. People are going to adjust and prices are going to go up. Interest rate will rise and if this happens, it means the cost of construction will be higher, which will be bad for real estate.
Unlike Ipaye who says the election issue may not mean much to the property market, the analyst notes that beginning from this year, which is generally regarded as an election year, there will be too much cash in the system which is going to affect everything, because that is going to trigger inflation. “Depending on what happens in the political front, this period will affect the rate at which people come into the country to do business. People may decide to wait until the election is over. The election year may affect investment in general”, he posited.
Ipaye, who is the CEO of K.Parkwood Property Services, said that as an investor, she expected the Monetary Policy Committee (MPC) which met recently and retained the interest rate at 12 percent to have brought it down a little bit, pointing out that the CBN governor has given enough explanation on the rationale for retaining the rate.
She sees both prospects and potential in the new Nigerian Mortgage Refinance Corporation (NMRC) which was launched recently by the Federal Government, adding that what is interesting about Nigeria is the vibrancy of its private sector.
“The reason why we see a lot of foreign interest in this country is because the private sector is empowered. In other economies, especially in the communist countries, it is all about the government and the public sector. Without the private sector, you won’t see the kind of dynamism we have in the economy today”, she further said.
According to her, because the NMRC is a private sector initiative as opposed to the Federal mortgage bank of Nigeria (FMBN) which is civil service oriented, “we can see foreign interest in the corporation, like the World Bank which has given concessionary loan of $300 million for its operation”.
“ Apart from this, some local interests including the pension commission, some primary mortgage banks (PMBs), National Sovereign Wealth among others, have also shown interest in the corporation. With all these interests and their subsequent investments, there is going to be regulatory oversight on the operations of the corporation”, she said.
By: CHUKA UROKO
