FG to ease domestic crowding for sub-nation debt issuance – Afrinvest

by | January 24, 2018 4:44 am

The Federal Government (FG) is expected to ease out its domestic debt market crowding effect to create incentives for sub-national and corporate debt issuances as rates on sovereign instruments moderate towards long term average levels.

This was the position of  Afrinvest Securities limited on Tuesday in Lagos at the official unveiling of its 2018 outlook for the Nigerian Economy and Financial Market in a report titled, ‘The Virtuous Cycle… Again!’.

The report offers an assessment of growth prospects in 2018, in light of the notable recovery of the Nigerian economy in 2017.

Owing to upturn in commodity prices, impressive performance in the Oil sector, and adoption of pro-market foreign exchange market reforms by the Central Bank of Nigeria (CBN), the Nigerian financial market has clearly become more attractive to foreign and local investors. The report, therefore, highlights current macroeconomic conditions that have set the stage to consolidate on the growth the country began to see in the second quarter of 2017.

According to the Group Managing Director of Afrinvest, Ike Chioke, “2017 was indeed a year of recovery for the Nigerian economy. Through deliberate efforts from the government, we saw a rebound in economic activity, as well as strengthened investor confidence and business sentiments. It is against the backdrop of these improving macroeconomic conditions that we have taken a positive outlook for 2018, as we expect the economy to continue on its positive trajectory since its recovery.

“Akin to our last 2-year bull run in 2012 and 2013, we have been ushered into a “virtuous cycle” marked by stability in external sector indicators and fiscal balance, declining inflationary pressures, improving growth profile, increasingly accommodative monetary policy and strong capital market returns. In these early days, we have seen market capitalisation and the NSE All Share Index at record highs, and we advocate a cautious, active trading strategy in the current bull market.”

The report also addresses the slow recovery of the Non-Oil sector and proffers strong prospects for growth in anticipation of expansion in fiscal spending, deceleration of inflation rate and increase in private investments. Furthermore, it emphasises our 2-year long theme calling for structural reforms from policymakers to build long term macroeconomic resilience to mitigate fault lines that could break the cycle and plunge the economy back into a vicious cycle of macroeconomic instability and weak capital market returns.