Recent reforms in Nigeria’s foreign exchange (forex) market have significantly enhanced valuation transparency for companies, facilitating greater foreign investment in the economy, according to Kemi Awodein, President of the Association of Issuing Houses of Nigeria (AIHN). Speaking at the AIHN Annual General Meeting in Lagos, Awodein highlighted a series of successful transactions during the year, underpinned by these reforms. Major deals such as Heineken’s $24 billion acquisition of a controlling stake in Nigerian Breweries and Sahara Group’s $1 billion purchase of Eabin Power were particularly bolstered by the structural changes in the forex market. The improved transparency in valuations has instilled greater confidence among foreign investors, signaling a more favorable investment climate.
Awodein also remarked on the ongoing bank recapitalization efforts, noting that these initiatives have further stimulated growth in the equities market, contributing positively to the national economy. Two prominent economic reforms initiated by President Bola Tinubu’s administration—the abolition of fuel subsidies and the unification of various segments within the forex market—have had a transformative effect on Nigeria’s financial landscape. These reforms have enhanced investor confidence, improved liquidity, and redefined the environment for capital raising and mergers and acquisitions, allowing for a broader scope of investment banking strategies.
Significant transactions that illustrate this positive trend include Seplat Energy’s $650 million bond issuance aimed at expanding its energy operations and Airtel Africa’s $500 million capital raise to improve telecommunications infrastructure. Awodein emphasized that the improved economic environment resulting from the reforms has made these initiatives not only possible but also more attractive for investors. Furthermore, she underlined the advancements in transaction processing and reduced time-to-market, which are crucial for maintaining market efficiency and bolstering investor confidence.
The AGM also served as a platform for the AIHN to present its audited financial statements for the year ending December 31, 2023. The association recorded a modest income increase to N86.56 million, compared to N85.41 million in the previous year, showcasing a stable financial performance. In her remarks regarding the Nigeria Exchange Limited, Awodein pointed out the All-Share Index’s remarkable 33.8 percent return in the first half of the year, significantly outperforming its counterparts across Africa, such as the Ghana Stock Exchange and Nairobi Exchange.
Going forward, Awodein expressed optimism for the second half of 2024, forecasting that the equities market would be driven by several factors, including continued bank recapitalization activities, the completion of Dangote Refinery, strategic corporate actions, and the potential return of foreign portfolio investors. She described the recapitalization in the banking sector as a pivotal development, opening avenues for real investment and facilitating a more profound capital market. Awodein also indicated her commitment to advancing discussions with key market stakeholders, including the Central Bank of Nigeria and the Nigerian Exchange, in a collective effort to strengthen the capital market framework.
In summary, the recent reforms in Nigeria’s forex market and banking sector underscore a critical shift toward increased transparency, liquidity, and foreign investment confidence. The positive outcomes from large-scale transactions and steady growth in equity indices suggest a bright future for Nigeria’s financial landscape as the government continues to prioritize economic reforms. With varied stakeholders collaborating to capitalize on these improvements, there is a shared anticipation for continued growth and investment opportunities within Nigeria’s dynamic economy.
