Foreign investors have little interest in doing business in Nigeria because of the country’s foreign exchange requirements.
Global Chief economist, Renaissance Capital Charlie Robertson told The Nation that “given the foreign exchange situation, there is little interest from foreign investors at present”.
He further explained that “given the difficulty in getting dollars out of Nigeria, there is little interest in putting dollars into Nigeria from foreign investors. So little attention is paid to local interest rate moves”.
Charlie Robertson was reacting to recent interest rate hike pronouncements made by the Central Bank of Nigeria (CBN) Governor Godwin Emefiele.
The international investment banker agreed with the CBN over the interest rate increase stating: “Hikes are the right way to contain inflation and usually rates need to be higher than inflation to achieve this goal – so more rate hikes may well be required”.
The CBN governor, while reacting to the aviation intervention releases made in August told reporters: “They did not say that you must repatriate all your dollars through the central bank. There is no law that makes it compulsory for you to buy your dollars from the central bank.”
Speaking to the airline operators, Emefiele assured that Nigeria “will do everything possible and we are determined to clear the backlog and we will do so consistently with all the retail interventions as long as the accounts of the banks are funded, we will continue to make the releases to make that the cumulative backlog is cleared”.
Emefiele also acknowledged the need to attract foreign investment, when he said, “another reason for the interest rate hike was the need to hold on to and attract foreign investment’’.
The MPC noted the moderate downturn in the equities market, attributing it to a continued outflow of portfolio capital as investors re-assigned their portfolios to more attractive United States dollar denominated fixed income securities.