Following the piercing effect of the global oil price plunge on the Nigerian economy, occasioned by the volatility of the foreign exchange market, investors, especially those from South Africa are groaning from severe financial hurts.
Among the biggest losers is South Africa’s Tiger Brands, majority owners at Dangote Flour Mills, which has lost over 53 per cent in the six months following the steady devaluation of the naira, coupled with the rising competition in the sector.
Other firms like MTN, Games and Shoprite have also felt the impact of a near 30% devaluation of the naira.
However, despite the business shock, the South African investors are beginning to see a brighter side to the situation, as Johan Stern, portfolio manager at South Africa’s Prescient Investment Management,said despite the short-term pain, Nigeria “retains its ability to out perform South Africa.”
Stern added:“there is no reason to panic and it certainly doesn’t make sense to sell now when so much bad news has already been priced in. it is possible to have a good growth in Nigeria, even with lower oil prices.”
Foreign investors held 14% of naira-denominated government bonds last in February, down from a high of 27% in 2013 according to estimates by Standard Chartered Bank.