ECOB Capital CEO: How rising insecurity is impacting Nigeria’s investment space

Nigeria's President has recently issued orders for security agents to shoot individuals found with illegal possession of sophisticated weapons like the AK-47, in a bid to combat rising insecurity in the country. This comes as the nation's external reserves experienced a significant decline of $1.4 billion in just one month, dropping to $34.9 billion as of the first of March. The combination of these factors has sent ripples across the investment landscape in Nigeria, with potential implications for both local and foreign investors. Emmanuel Odiaka, the CEO of ECOB Capital, shed light on the current situation during an interview with CNBC Africa. Odiaka highlighted the severe impact of insurgency on various sectors of the economy, particularly agriculture, leading to food inflation and hindering farmers' access to their lands. The escalation of insecurity has also prompted many investors to adopt a cautious approach, affecting investment activity in both the Northern and Southern regions of the country. Despite the challenges, Odiaka emphasized the importance of the government's recent strong stance on security issues, expressing hope that peace would be restored and business activities could resume without fear. Talking about the investment climate, Odiaka noted that while there hasn't been a significant risk premium attributed to insurgency, other factors such as inflation, exchange rate uncertainty, and low yields have influenced investor sentiment. He stressed the need for stability and positive developments in the socio-political environment to attract portfolio investors. On the topic of the exchange rate and external reserves, Odiaka expressed concerns over the recent decline in reserves due to reduced inflows from sources like oil revenues and foreign investments. He acknowledged the Central Bank's efforts to lure back foreign portfolio investors but underscored the importance of innovative strategies to boost revenue and enhance inflows. Looking ahead, Odiaka suggested that further depreciation of the Naira could occur if proactive measures are not taken to shore up the economy and attract foreign funds. He highlighted the role of global economic conditions and the need for the Central Bank to incentivize investors to stabilize the exchange rate. Overall, the interview emphasized the challenges facing Nigeria's investment space amid the escalating insecurity and economic uncertainties, calling for concerted efforts from both the government and financial authorities to restore confidence and drive sustainable growth.