“We’ve got to see a recovery in the primary market where investors start to think long term, start to trust companies to be able to commit cash to them. When we see a recovery in the primary market, the local market will be able to drive growth going forward,” Oladehin, a partner at ArgentilCapital Partners, told CNBC Africa on Monday.
Traded volumes on the Nigeria Stock Exchange fell 56 per cent to 2.9 billion naira on Friday. This reflects investor caution and a recent decline in foreign investor inflows.
Charles Robertson, global chief economist at Renaissance Capital believes that Nigeria will not see further foreign investment in the near future.
“There has not been much outflow on the Nigerian local fixed income market. I think what investors are going to be focusing on is what looks cheap and I think what looks cheaper today is the more established emerging markets. I don’t think we’re going to see a rerun of the rally in Nigeria that we saw earlier this year,” he said.
While Nigeria’s debt currently stands at 13 per cent, Winston Osuchukwu, the CEO of Harvest Capital, insists he doesn’t see a risk for local investors going forward.
“I would stay local, if you look at local currency debt, not just in Nigeria, if you look across Africa, the risk premier that’s charged on local currency debt over other emerging market countries are completely unjustified and what you find on local currency debt, you get a greater return for each unit of risk that you’re taking,” he said.
“Perhaps the other key variable that would drive this is inflation. If you continue to have a challenge in the inflation environment, then you would always expect that that premier is going to be there between the locally priced debt and offshore debt,” added Oladehin.