Most Nigerians’ purchasing power has been negatively impacted by the decreasing naira, the high cost of living, and inflation, which has reduced their desire to invest.
The naira has been under constant pressure since it hit an all-time low on the official market, also known as the Nigerian Autonomous Foreign Exchange Market, and Nigerian inflation surged to 28.92 percent last year, the highest in two decades.
PwC Nigeria’s forecast, Nigeria’s GDP projects expansion at 3.50% in 2024, while inflation is predicted to slightly decrease.
Mosope Arubayi a Market Strategist anticipates Global interest rates might have peaked and a turn in fortunes may be due, but rates certainly won’t be going back to zero as central bankers are still talking tough.
” We could see some rate cuts in the coming year that will dampen the dollar’s color a little but USD-denominated assets are still non-negotiable. I will also be keeping an eye out for US stocks in the wake of the US Fed pivot.
Nigeria’s stock market, the NGX, broke above the psychological barrier of 100,000 index points for the first time, driven by increases spearheaded by banks and cement firms.
Major listings including Dangote Foods, IHS, Dangote Refinery, and NNPCL will support market growth in 2024 after a strong showing in 2023 that put the Nigerian stock market above its African peers.
Nonetheless, PwC, given the ongoing difficulties, foreign portfolio investment flows to the capital market might continue to be cautious.
“Downgrades from FTSE Russell and MSCI, specifically due to delays in capital repatriation, may dampen investors’ outlook,” it stated. Despite this, Moody’s, Fitch, and S&P kept their speculative credit rating because of the shortcomings of the reforms and several ongoing budgetary issues.
Ifeanyi Duru JNR Vice President – Sales and Partnerships Moniepoint
A money market fund would ensure that the money has been invested and it is yielding returns, but it also has the flexibility such that, due to its flexibility you can always take your funds out any time when and if a better investment opportunity or an emergency comes while a dollar fund would not only diversify the portfolio but also hedge against devaluation.
The proverb, “desperate times call for desperate measures,” resonates deeply in today’s Nigeria. With headline inflation of 28.20% as of November 2023, a volatile exchange rate, and global inflationary pressures eroding the value of both investments and everyday purchasing power, everyone is constantly seeking a haven.
Ifeoluwa Atunde Treasury Specialist.
While the Nigerian stock market and USD/Eurobond investments form the core of my strategy, I’ll remain open to exploring niche opportunities with attractive risk-reward profiles.
This could include investing in specific commodities benefiting from global supply chain disruptions or venturing into carefully vetted real estate projects with long-term development plans.
In conclusion, 2024 demands a calculated and multifaceted investment approach. My strategy prioritizes risk management through diversification and a keen focus on long-term potential.
By diligently researching individual assets and sectors, I aim to navigate the current economic turbulence and emerge with a strong and resilient portfolio positioned for sustainable growth in the years to come.
Annie Olaloku-Teriba. PhD Candidate at Birkbeck
In recent years, dollar earners in Nigeria have enjoyed a distinct advantage in the country’s economy, capitalizing on favorable investment opportunities as the real value of the Naira depreciated.
However, this advantage is now set to wane with the government’s decision to remove fuel subsidies and embrace a floating exchange rate system.
I would buy Naira and spread my investments across a diverse portfolio in the Nigerian economy. I would focus on bonds and mutual funds which are reliable with decent gains (much of Nigeria’s debt portfolio is financed domestically) and put some of my energies on the sectors that stand to gain the most from deregulation, such as oil, banking, and telecommunications.
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