Elumelu confident of Nigeria’s economic recovery as gains in equity markets persist


By Staff | This Day, Nigeria January 23, 2018

On the eve of his departure for the World Economic Forum (WEF) in Davos, Switzerland, the Chairman of Heirs Holdings and Founder of the Tony Elumelu Foundation, Mr. Tony Elumelu, has expressed confidence in Nigeria’s economic recovery on the back of fiscal and monetary policies that have steered the country in the right direction.

Elumelu particularly commended the governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, saying that his impressive monetary policy management helped in great measure in steering the country through extremely difficult times.

Speaking in an interview with THISDAY, Elumelu who is also the Chairman of United Bank for Africa (UBA) Plc, said: “The fruits of patient and judicious central bank interventions are being rewarded by increasing local and international investor confidence, demonstrated by the recent unprecedented performance of the Nigerian equities market and the broader improvement in the domestic macroeconomic environment.”

According to him, the Nigerian stock market, which was ranked one of the top-five best performing bourses in 2017 worldwide, “is, I believe, set for further strong performance this year”.

“Consolidating on the 42 per cent rally in 2017, the benchmark All Share Index has gained 18 per cent year-to-date, an unprecedented return in recent times, driven by renewed local and foreign investor confidence in the Nigerian economy and markets.

“The valuation of the Nigerian market, which is currently on a 14.5x P/E, still trades at a discount to its frontier market peers and more so, at a gross undervaluation to emerging market peers, especially when we take the improving fundamentals of the economy in perspective.

“Further reinforcing prospects for the equities market, is the moderating yield on fixed income securities, given the lower interest rate outlook. I fully expect fund managers to continue to allocate increasing money to Nigerian equities,” he added.

Elumelu said it was gratifying to see how tough, but astute reforms and diligent execution had changed the narrative of an economy and its markets.

“I salute the unwavering tenacity and enterprise of the CBN governor, Godwin Emefiele, for his initiative in creating the Investors’ and Exporters’ (I&E) window and, more importantly, the commitment of the governor in ensuring the efficient functioning of this market.

“The I&E window has attracted over $15 billion to Nigeria, enhanced the liquidity of the FX market, reduced speculative demand for foreign currency, stabilised the naira and provided the vital foundation for renewed local and foreign investors’ confidence in the Nigerian market.”

He also lauded the chief executive of the Nigerian Stock Exchange (NSE), Mr. Oscar Onyema, for the professionalism that he and his team had brought to the market, “their commitment to governance and market integrity, which has increased investors’ confidence in the market”.

Speaking further, Elumelu said: “Nigeria’s external reserves, which are now at almost a five-year-high, have grown to over $40 billion, just as trade and current account balances are now positive. This strong performance underpins the naira today and will indeed ensure its stability in the near and medium term.

“Inflation, which peaked at 18.7 per cent a year ago, has continuously trended downwards to 15.37 per cent in December 2017, with a benign outlook of further moderation, as both food and core inflation ease.

“These impressive positive developments are a clear demonstration of effective monetary policy management and businesses across Nigeria need to recognise the role of the CBN governor,” he maintained.

The progress, he noted, more broadly reflected the clear and coherent policy making framework put in place by the Muhammadu Buhari administration, “its undoubted commitment to transparency and accountability, its clarity in tackling historic issues, including the positive engagement with the Niger Delta people, which has returned calm to this oil producing region of the country leading to the current daily production of 2.2 million barrels of oil equivalent”.

Elumelu noted that the improving recovery in corporate earnings, the improvement on the World Bank’s Ease of Doing Business Ranking, and the passing of the long-awaited Petroleum Industry Governance Bill by the National Assembly, once signed into law by the president, will further boost investors’ confidence in the Nigerian economy.

He, however, cautioned that Nigeria must translate these recent improvements into a long-term strategy of ensuring economic success for all.

“I hope that these positive economic successes will materialise into the much needed inclusive growth that generates jobs and creates improved living standards for our rapidly growing population.”

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