Nigeria is Africa’s largest economy and oil producer (though not for long if the Niger Delta Avengers have anything to say about that), while Kenya is East Africa’s biggest economy whose major exports are tea and flowers.
Nigeria’s Stock Exchange the NSE has returned -10.75 % year to date (YTD), while Kenya’s main Stock index the KSE has outperformed the Nigerian bourse returning -0.06%.
The Kenyan Shilling is free-floating and has remained relatively steady against the greenback, as investors pour money into the country.
Nigeria’s currency however has been kept artificially high by the CBN but has lost about 62% of its value (relative to the official peg) in the parallel markets and is trading near N320 per dollar.
Kenya is expected to grow by 5 % this year while Nigeria will be lucky to eke out growth of 2%.
Kenya’s Foreign reserves have risen about 10 percent in the past year to a record $7.6 billion as the import bill shrank and the central bank bought dollars to prevent the shilling from strengthening (lesson for Nigeria).
In Nigeria reserves have crashed 27 percent since mid-2014 to $27 billion, the lowest level in more than a decade as the Central Bank fights a failing battle to maintain an overvalued Naira through outdated capital controls and headscrathing daft policies that only an economic illiterate would endorse.
Stock and bond markets reflect the underlying strength or weakness of the economy and the markets are voting with their money in respect to Kenya (buying) and Nigeria (selling).
It also shows that sound economic policies are necessary for growth and Nigeria can learn a thing or two from Kenya on how to let the markets work for it.