Following contrasting fortunes in political and economic stability between Nigeria and Egypt, Abu Dhabi asset manager Invest AD, part of Abu Dhabi Investment Council, said it is reducing exposure to Nigeria and boosting investments in Egypt on expectation that the North African country’s renewed political stability and economic reform will help drive growth.
The firm reduced the Nigerian share of its $50 million Africa equity fund to 5 per cent from 35 to 30 percent. The more stabilized Egypt now accounts for 35 percent of Invest AD’s Africa equity fund.
Nigeria, which depends mainly on revenue from oil, has been hit hard since global oil prices declined by over 50 per cent since June last year. Electoral officials have also delayed a presidential poll set for February 14 by six weeks after the government said army couldn’t guarantee voters’ safety in the nation’s northern part, where a six-year insurgency by Boko Haram has killed thousands.
Egyptian authorities have taken steps to attract investors including reducing energy subsidies, lowering income tax and devaluing the pound. The country this month secured billions of dollars in investment commitments at a conference billed by the government as a milestone in efforts to revive the economy.
Speaking in an interview in Abu Dhabi, portfolio manager Sherif Salem said the shift from Nigeria to Egypt was triggered by political instability.
He said: “The market is already factoring in quite a positive outcome. The trigger was political stability. From an economic standpoint, it’s been reassuring in the past six to eight months, the implementation of economic policies and investments that have been promised.”
Salem said he expected a return of 10 to 15 percent from the Egyptian market this year. “A lot of things can happen but what I can see is a positive outlook,” he said.
Invest AD manages fixed income and equity funds in the Middle East and Africa.
