Two South African firms in the financial services space have entirely opposite views on investing in Nigeria at this time.
Ashburton Investments, the money-managing unit of Africa’s biggest bank by value FirstRand, said Nigerian curbs on foreign exchange trading are limiting its ability to increase its holdings of stocks in the country.
Meanwhile Liberty Holdings Ltd., the insurer controlled by Standard Bank Group Ltd., said it wants to expand further in Nigeria as growth slows in South Africa, where it has reduced its headcount.
“The foreign-currency situation has made it difficult to add more exposure to Nigeria,’’ Paul Clark the head of African equities at the unit of Johannesburg-based FirstRand Ltd., said Wednesday in an interview with Bloomberg. “At the moment, there are no obvious buyers of equities in Nigeria.’’
On his part Thabo Dloti, chief executive officer of Johannesburg-based Liberty Holdings Ltd., said “West Africa is where we have to grow and conclude things. Even though Nigeria’s naira may be devalued this year, foreign-exchange issues aren’t going to delay us — being operational in Nigeria sooner is far more beneficial for us than waiting for the exchange rate to be right.”
Ashburton Investments holds Nigerian banking and oil stocks including Seplat Petroleum Development Co., and has seen the valuation on its investments in Africa’s largest economy slump by half to $5 million, from more than $10 million in 2014, in the wake of a plunge in crude oil prices and foreign currency restrictions imposed by the government.
The situation looks unlikely to change “until we see more foreign currency availability or an exchange rate at the level where the market wants to clear,’’ Clark said.
Liberty Holdings Ltd., already owns Total Health Trust Ltd., in Nigeria, having bought the shares it didn’t already own for 142 million rand ($9 million) in August last year, and has said it wants to buy a Nigerian insurer and asset manager.
“Despite the tougher environment, there’s far stronger growth available in the rest of Africa,” Dloti said.