Olatunde Amolegbe, the Managing Director/Chief Executive Officer of Arthur Stevens Asset Management Limited, has offered a nuanced perspective on the Nigerian economy under President Bola Tinubu’s two-year tenure. While acknowledging the hardship faced by Nigerians due to recent economic reforms, he underscores the capital market’s resilience as a bright spot amidst the challenges. Amolegbe argues that Tinubu’s aggressive reform agenda, though seemingly harsh and rapid, was crucial to avert an impending economic collapse. He posits that the economy was on life support prior to Tinubu’s intervention, necessitating a swift and decisive action plan. The reforms, while painful in the short term, are viewed as essential medicine to revitalize the nation’s economic health.
Amolegbe points to several key policy changes as drivers of renewed investor confidence and market growth. The floating of the naira, removal of fuel and electricity subsidies, and comprehensive tax reforms are highlighted as instrumental in bolstering government finances and stimulating market activity. These actions, perceived as positive for the country’s financial outlook, have triggered a positive response from the stock market, evidenced by a significant surge in the Nigerian Exchange’s All Share Index. This key benchmark indicator, reflecting the overall performance of the stock market, has reportedly gained over 40% in the past two years, signalling renewed investor optimism and a revitalized market.
The return of foreign portfolio investors, a significant vote of confidence in the Nigerian economy, further underscores the positive impact of these reforms. Coupled with an increased number of companies seeking to raise capital through the market, these trends point to a revitalized investment landscape. Amolegbe credits the Central Bank of Nigeria’s recapitalisation directive for banks as a significant contributor to increased market liquidity, which in turn has spurred renewed interest in equities. This directive, aimed at strengthening the financial sector, has deepened the capital market and created a more robust platform for investment.
Beyond the equities market, Amolegbe also notes the increased activity in the fixed-income market, with the federal government leveraging bond issuances to address infrastructural and budgetary deficits. He highlights the issuance of Nigeria’s first US Dollar Domestic Bond and the first Eurobond in over a decade as significant milestones. These actions demonstrate the government’s proactive approach to leveraging international capital markets for national development. The recent signing of the new Investment and Securities Act is lauded as a potentially transformative piece of legislation, poised to revolutionize the capital markets in the coming years. This legislative reform is anticipated to further streamline investment processes and enhance the overall attractiveness of the Nigerian market.
Despite the positive momentum in the capital market, Amolegbe advocates for further action to solidify these gains and alleviate the hardships faced by businesses and households. He suggests accelerating the privatization and commercialization of non-performing public assets to unlock their inherent value. He also emphasizes the need to prioritize lowering operational and financing costs for businesses, thereby stimulating production and reducing unemployment. These measures are crucial to creating a more conducive environment for businesses to thrive and contribute to overall economic growth.
Amolegbe acknowledges the significant pain experienced by Nigerians due to the rising cost of living, a consequence of the necessary but challenging economic reforms. He urges the government to intensify efforts to mitigate these challenges and ensure that the benefits of the reforms eventually reach the populace. Addressing the persistent challenges of electricity supply and insecurity, which hinder food production and manufacturing, is also crucial. Achieving sustainable economic progress requires a balanced approach that addresses both macroeconomic stability and the well-being of the citizens. Therefore, while celebrating the positive strides in the capital market, Amolegbe emphasizes the importance of addressing the social impact of these reforms and ensuring that the benefits of economic growth are broadly shared.
