Nigeria’s inability to quell the rate of deprecation of its currency against the greenback is causing many investors to rethink on buying Naira assets.
Though, finance minister, Kemi Adeosun said Tuesday, that the Central Bank will eliminate the black market where the naira trades about 40 percent below the official rate against the dollar, the dilemma becomes pronounced, as most businesses are reversing their earlier expansion plans, as the economic outlook dims further into 2017.
The latest is Interswitch Limited, which has suspended plans to raise as much as $1billion in an initial public offering (IPO) due to investors concerns over further potential weakness in the naira and a shortage of foreign currency.
The naira has traded around N305.5 to the dollar on the official interbank market since August, while it exchanged at $490 to the dollar on the parallel market on Tuesday.
Interswitch Limited, which processes payments for banks and owns a brand of debit cards in Nigeria, operates in five African countries. The company said last year, that it met with banks, including Bank of America Corp., Barclays Plc and Standard Bank Group Ltd, about a potential 2016 share sale in Lagos and London.
The IPO would have enabled London-based private equity group, Helios Investment Partners LLP, a shareholder, to return some money to investors, Interswitch Chief Executive Officer, Mitchell Elegbe said recently.
“The macroeconomic situation in Nigeria is the determining factor’’ in delaying the plans, Elegbe, 45, said at the company’s offices in Lagos, the commercial hub. Potential investors are “jittery’’ about the naira exchange rate and whether they will be able to buy foreign-exchange to get their money out of the West African country, he said.
Iheanyi Nwachukwu with agency report
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