Tag: Nigeria’s economic reforms

The Minister of Budget and Economic Planning, Senator Abubakar Bagudu, has called on the United Nations (UN) to show more deliberate support for Nigeria’s ongoing economic reforms.

Bagudu noted that such support would encourage other nations to make similar adjustments necessary for sustainable growth and development.

Bagudu made this appeal during a courtesy visit by the Deputy Director-General of the United Nations Industrial Development Organisation (UNIDO), Ms. Fatou Haidara, in Abuja yesterday.

Despite the substantial economic reforms introduced by President Bola Tinubu’s administration aimed at revitalizing Nigeria’s economy, Bagudu expressed disappointment over the UN’s slow response in backing these initiatives.

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“Over the past year, Nigeria has undertaken what we consider very bold and courageous reforms, almost at risk to our leadership. But we don’t think the system, particularly the United Nations system, has responded fast enough,” Bagudu stated. “We feel that we are missing maybe an element which will encourage other countries to embark on reforms if they don’t see the support.”

Bagudu conveyed to Haidara that many developing countries believe the UN has not been meeting their expectations. She urged the UNIDO deputy director-general to relay this message to the UN system for corrective measures.

“This issue was discussed at the Non-Aligned Movement Summit in Uganda. Many countries thought the United Nations system was deviating from the ideals of its founding fathers. We are telling you this so you can find a way of communicating the challenge or doing something about it,” he added.

Despite these concerns, Bagudu expressed gratitude for UNIDO’s support for Nigeria’s industrial sector over the past 40 years, particularly highlighting the establishment of one of its investment and technology promotion centres in the country.

In her response, Haidara acknowledged Nigeria as a significant founding partner of UNIDO and noted the rewarding cooperation between the two entities over the years. Her visit is intended to provide a status report on the ongoing cooperation and seek further guidance to enhance their partnership.

“My colleagues told me that all the meetings to design the Programme for Country Partnership (PCP) were held with your ministry and here. We are very honoured to be able to talk today about what we will be doing under this Programme for Country Partnership,” Haidara said.

Haidara revealed that UNIDO had developed ‘Agenda 2063,’ a strategic framework aligning with the developmental priorities of African leaders, to support the continent’s growth and development.

The meeting underscored the importance of mutual support and collaboration in achieving sustainable economic growth, with Nigeria urging for more proactive engagement from the UN system to bolster its ambitious reform agenda.

• Policy clarity, outlook build confidence

Foreign and domestic investors are swarming on Nigeria’s sovereign issues amidst growing confidence that ongoing macroeconomic reforms would lead to considerable improvements in the medium to long-term.

Investors opted for longest-tenored of the three tenors in the latest auction of Nigerian Treasury Bills (NTBs) by the Central Bank of Nigeria (CBN). The one-year NTBs were oversubscribed by 211 per cent, in what analysts said was a sign of confidence on the government’s reforms.

Nigeria’s dollar bonds have also turned into one of the world’s top performers in 2023, with a 25 per cent return. Nigerian equities had also closed the year with average return of 45.90 per cent, one of the three highest returns globally.

A Bloomberg report indicated that Nigeria’s bond returns put it as one of the world’s 10 best-performing bond, attributing the performance to investors’ positive perception of the major reforms in Africa’s biggest economy. Average performance for emerging market and frontier peers was 5.8 per cent, according to a Bloomberg index.

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The report attributed Nigeria’s securities’ performance to “a slew of economic changes” by President Bola Tinubu, who plans to simplify the country’s tax laws and improve electricity supply this year, after removing costly fuel subsidies and multiple foreign exchange (forex) rates in the previous year.

Emerging Markets Strategist, Societe Generale SA, London, Gergely Urmossy said investors were optimistic about the outlook for the Nigerian economic reforms.

“The market is buying into the idea that Nigeria has enough hard currency on its balance sheet. Given the government’s reformist agenda, fundamentals are more likely to improve than worsen,” Urmossy said.

Managing Director, Arthur Steven Asset Management, Mr. Olatunde Amolegbe, said the subscription pattern for previous day’s NTB auction was indicative of improving investors’ confidence.

“Interest seems skewed towards the longer end of the curve, which is an indication of confidence in the government and its reforms,” Amolegbe, a former president of Chartered Institute of Stockbrokers (CIS), said.

Investors had staked N1.87 trillion on the 364-day NTBs, 211 per cent above the initial offer size of N600 billion, enabling the apex bank to increase allotment by 51 per cent to N908.75 billion. The 91-day and 182-day NTBs were significantly undersubscribed, but the long stake by investors enabled the government to hit its N1 trillion target.

Amolegbe noted that the “massive oversubscription shows the significant system liquidity”, strengthening the prospects for government to pull through its ambitious economic targets.

Market pundits have also taken note of the changes in stakeholders’ relations and responsiveness to the market by the Ministry of Finance and the CBN.

Market analysts said increasing clarity on Nigeria’s macroeconomic management enables the market to accurately price Nigerian assets.

Urmossy said the narrowing risk premium in the Nigerian debt compared to South Africa shows a lot of the potential is already priced in.

“The next leg is following through and delivery. Without delivering, the spread could widen again if fatigue takes over the market awaiting the reform results,” Urmossy said.

Managing Director, Financial Derivatives Company (FDC), Mr. Bismarck Rewane, said the spike in NTBs rates should give the naira a major lift.

According to him, right policy steps would stimulate the recovery of the nation’s currency, which had earlier been classified as one of the worst-performing currencies.

He said the apex bank must maintain a clear and stable policy stance and should avoid “panic mode” in its efforts to restore the value and stability of the country’s forex.