The Governor of the Central Bank of Nigeria (CBN), Mallam Sanusi Lamido Sanusi, Thursday described the Nigerian investment environment as clement, even as he urged foreign investors to take advantage of the investment opportunities in the country.
Sanusi made the call in a keynote address presented in Lagos, at: "The Nigeria Banking and Capital Market Conference," organised by the Euromoney conferences.
The central bank governor maintained that Nigeria clearly has a competitive edge in the international capital market, adding that the country's economic growth was robust. He predicted that inflation rate in Nigeria would remain within the single- digit band throughout 2014.
Nigeria's inflation fell to 8.2 per cent in August. The Nigerian economy grew on average above 6 per cent in the last decade and is projected to grow by 7.6 per cent in 2014. Total investment as a percentage of Gross Domestic Product was 22 per cent in 2012 and is projected to increase by 23.6 per cent in 2013.
Sanusi, whose speech was read by the Deputy Governor, Financial System Stability, CBN, Dr. Kingsley Chiedu Moghalu, added: "The risk of overheating that makes international capital sometimes undesirable is minimal, as the economy possesses deep absorptive capacity especially in infrastructural investments.
"In fact, there is the drive for public-private partnership (PPP) as a deliberate policy of government with several incentives. There is also the opportunity for higher returns on investments on account of the interest rate differential between the country and most developed countries. There is evidence that Nigeria is a preferred investment destination."
Furthermore, Sanusi pointed out that the adoption of the International Financial Reporting Standards (IFRS) by all banks would enhance transparency and improve comparability in banks' financial reporting in a global environment. According to him, the establishment of the Asset Management Corporation of Nigeria (AMCON) in 2010 had addressed the problem of non-performing loans in the Nigerian banking industry making it more sound and effective.
On his part, the Executive Director, Corporate Banking Group, First Bank Nigeria Limited, Mr. Tokunbo Abiru, who was among the panelists, said the positive response of investors to the most recent Eurobond issued by the federal government was indicative of the attractiveness of Nigeria's sovereign debt to the investment community.
The interest on the dollar-denominated instrument, according to Abiru, was buoyed by the relatively high yields and the commitment of the monetary authorities to a stable exchange regime.
"Capital raising will expectedly become more competitive as the global economy inches back to recovery after the 2007/2008 crisis.
Managers of the economy will be increasingly challenged to position the nation as a destination that is attractive to capital.
"There is still the need to effect the necessary tradeoffs between a managed exchange rate regime and a floating rate regime. This should guide decisions of which regime would be most appropriate to drive long-term growth.
"Important reforms in this respect will include reductions to the domestic cost of doing business, a functional credit registry, and changes to property titling that allows the poor and vulnerable sectors of the economy extract value from their capital," Abiru, who represented the bank's Chief Executive Officer, Mr. Bisi Onasanya, explained.