Nigeria – turmoil or turnaround?

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It’s been a dreadful start to the year for my country with regards to the financial markets. On the 20th of February Nigerias president Goodluck Johnathan suspended the Nigeria Central Bank Governor Lamido Sanusi 3 months before the end of his tenure, due to the findings of a report done by Financial Reporting Council of Nigeria and other investigating bodies, which indicated that Sanusi’s tenure has been fraught with various act of “financial recklessness, misconduct and far-reaching irregularities.” But what did Mr Sanusi ACTUALLY do? This has been seen as a very serious incident as no previous governor of the Central Bank of Nigeria has been fired or suspended.

So… Mr Sanusi who was seen as an outspoken and blunt individual accused the NNPC (Nigerian National Petroleum Corporation) of fraud.
This accusation stated that the State owned oil company NNPC failed to account $20bn in revenues to government accounts. Sanusi presented detailed evidence to a Senate committee, investigating alleged fraud and mismanagement at the NNPC.
The word back home is that the suspension was politically motivated. A leaked letter from Mr Sanusi to the president in which he accused the NNPC of breaking the law, prompted the senate’s investigation into the matter. This didn’t go down well and caused anger throughout the government with a publicised feud with Petroleum Minister Diezani Alison-Madueke, who has close ties with Goodluck Johnathan. It is not the first time the country has been embroiled in scandals of fraud and this has led to the United States Secretary of State, John Kerry classifying Nigeria as a ‘corrupt country’ in the well-advertised “Country Reports on Human Rights Practices” which he presented at the Press Briefing Room of the State Department in Washington last week.

All of these compounded factors have not sat well with investors – who saw the decision to suspend Mr Sanusi as a lack of effort to eradicate corruption from the country. Combined with the positive news coming out of America and Europe with regards to the recovery efforts which would be seen this year, it seems like confidence in the Nigerian financial market has decreased. More than 20% of the $9bn of foreign investors cash invested in Nigerian bonds have been moved out – this figure is expected to increase over the next few months. The NGN/USD foreign exchange rate rose to 169 on 20th Feb. The no nonsense approach of Mr Sanusi was widely received by investors who preferred the stability that came with his policies. With the national elections in 2015 fast approaching, the oil and gas reserves, combined with the huge potential in the country (whereby this lead to Former Goldman Sachs economist Jim o’Neill forecasting that Nigeria could be one country that could be amongst the ten largest economies in the next 30 years), shows that Nigeria still remains as an attractive investment opportunity long term. However such turmoil can and has been detrimental to the progress being made in Africa, with the following events being another example of the wasted potential the country has.

In my opinion the country will recover from this recent setback if they replace Mr Sanusi with a suitable replacement and if they eradicate these stories of corruption and fraud which seem to constantly hold it back. It’s not the first, but let’s hope it’s the last….

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