An Abuja Based Developmental Economist, Dr. Katch Ononuju, has revealed President Muhammadu Buhari’s role in the drastic decline of Nigeria’s foreign transactions, from N274.32 billion in December 2017, to N128.83 billion in February 2018.
According to the Nigerian Stock Exchange, NSE, Foreign Portfolio Investors’ FPI records, transactions at the floor of the NSE dropped by N123 billion in the first two months of the year.
Foreign portfolio investment, stood at N83.22 billion in February, 2018 compared to N206.48 billion recorded in December 2017.
Domestic transactions fell to N128.83 billion in February, from N274.32 billion recorded in December, total transactions at the nation’s bourse dropped by 55.9 percent from N480.80 billion in December to N212.05 billion in February, while a total of N394.44 billion transactions were recorded in January.
Part of the NSE’s statement reads: “There was a 51.07 percent decrease in foreign inflows from N91.75 billion in January to N44.89 billion in February. However, foreign outflows also decreased by 48.65 percent, from N74.64 billion to N38.33 billion within the same period.
“The institutional composition of the domestic market decreased by 37.44 percent from N121.56 billion recorded in January, to N76.08 billion in February 2018.
“The retail composition also decreased by 50.46 percent, from N106.49 billion to N52.75 billion, within the same period”, the NSE said.
Dr. Ononuju reacting to the huge decline in an Exclusive Interview with Post-Nigeria’s Business Correspondent, said:
“This shows the lack of confidence in President Muhammadu Buhari’s economic policies.
“We are talking about the market space, instead of an increase in foreign transaction, there is a drastic decline. For me am not surprised, because there is uncertainty in the political space, and is of course affecting economic performance and economic progression.
“Do not forget what undermined the economy in the first place, the interference in monetary policies by the Executive arm of government headed by President Buhari, which otherwise should be the sole responsibility of the Central Bank Nigeria. This led Nigeria into recession.
“Presently, Nigerians are saying for three years your policies are not working, there is no project we can pin point to have been initiated and completed by this administration; that is enough concern for investors or those who seek to invest in Nigeria.
“If the government is adjudged to be bad based on its wrong policies, no foreign investor will want to put his or her money on a risk.”
“The decline reported by the NSE is a polite way of telling the government there is problem, we have not fully recovered from recession, the economic policies are not working, and there is lack of confidence in the government of President Buhari”, Dr. Ononuju noted.
Meanwhile, the cumulative transactions from January to February increased significantly by 257.96 percent from N169.43 billion recorded in 2017 to N606.49 billion in 2018.
Based on research, since 2011, foreign transactions consistently outperformed domestic transactions.
“However, domestic transactions marginally outperformed foreign transactions in 2016 and 2017, accounting for 52 percent of the total transaction value in 2017”, the NSE stated.
Foreign transactions which stood at N1.539 trillion in 2014, declined to N518 billion in 2016, but increased significantly by 133 percent to N1.208 trillion in 2017, thereby accounting for about 48 percent of total transactions in 2017.
The former President, Nigerian Stock Exchange, Mr. Aigboje Aig-Imoukhuede, had in one of his statement said: “Nigeria is facing a huge growth challenge. Nigeria, indeed, has a big challenge in terms of growth. Employment rate must grow owing to the fact that the population is also growing very fast. Growth is difficult to realize; so, government must stimulate growth.
“Nigeria is only exaggerating the impacts of falling oil prices. This is because with a robust financial market, the economy can be sustained. The financial market must be encouraged.”
He described the Nigerian financial market as a ‘high-risked’ market, saying the situation was capable of attracting limited investors who could ultimately stop at nothing to maximise returns.
An Analyst at WSTC Financial Services Limited, Mr. Tola Oni, also reacting, said: in the last few years, the efficiency of the country’s economy had been constrained by policies – monetary and fiscal.
Mr. Tola noted that the country had not been able to chart the right path in the past few years, saying some actions by the Federal Government in recent times had shown a rethink, especially in the partial deregulation of the petroleum downstream sub-sector and the flexible foreign exchange market.
“Our concern is that this flexibility must mean flexibility in the whole sense of it. We have seen the capital market make progress recently owing to these. Any attempt by the government to interfere again could drag us back significantly”, he added.
A breakdown of Nigeria’s market performance, for the past few years, showed that in the first year of President Buhari’s administration, the market lost N1.732 trillion, as the NSE market capitalization on May 27, 2016 closed at N9.926 trillion from N11.658 trillion on May 28,2015.
In the same vein, All Share Index dropped by 5,408.12 points or 15.8 percent, to close at 28,902.25 points on May 27, 2016 from 34,310.37 points it closed on May 27, 2016.
In the second year of President Buhari’s administration, the market lost over N208 billion, as the market capitalization closed on May 19, 2017 at N9.718 trillion, from the N9.926 trillion it closed on May 27, 2016.
Recall, that the market for the first one year of Buhari’s administration was largely dominated by cautious and speculative tendencies, despite cheap valuations of equities across the sub sectors on the Exchange, on the backdrop of weak investors’ confidence, which was driven mainly by decline in economic activities.