Yemi Cardoso, governor of the Central Bank of Nigeria has revealed that Foreign Portfolio Investors (FPI) are eager to return to the country.
Speaking in an exclusive interview with Arise TV on Monday, Cardoso said Foreign Portfolio Investors are still interested in coming back based on the reforms of the current administration
“A lot of FPI are still interested in coming back to the country. They have taken a lot of methodical interest in understanding the reforms that have taken place and seeing how it is taking the country to the right direction,” he said.
“They also see rating agencies coming out with their own conclusions, of how they see the economy of the country progressing, it validate what they are thinking, we do additional reforms, it continues to please them,” he added.
He added that the recent mover to have NNPC and some other MDA to move their funding to the CBN also senses a powerful signals., thereby boost the confidence.
Cardoso noted that the positive reforms that people are seeing from outside are boosting their confidence making their money to come in and volatility will begin to reduce.
Foreign investments in Africa’s Biggest economy dropped to $654.7 million in the third quarter of 2023, the lowest level since the National Bureau of Statistics (NBS) started collating the data in 2013.
The report by the National Bureau of Statistics (NBS), shows that total capital importation into Africa’s biggest economy declined by 36.5 percent to $654.7 million in Q3 from $1.03 billion in the previous quarter. It also declined on a year-on-year basis by 43.6 percent from $1.16 billion in Q3 2022.
“Other investment ranked top accounting for 77.6 percent ($507.6 million) of total capital importation in Q3, followed by Portfolio Investment with 13.3 ($87.1 million) and Foreign Direct Investment (FDI) with 9.13 percent ($59.8 million),” the report said.
In the second quarter of last year, the Federal Government implemented key economic reforms. They are the removal of petrol subsidy, merging all foreign exchange segments into a single market.
The FX reform has led to a large devaluation of the naira.
The governor noted that the naira has continued to depreciate against the dollar and other major foreign currencies since then.
He added that the naira is undervalued on the distortion impact of panic and not understanding how things take place and how things get determined and as a result irrational decisions are being taken.
“The time is past we are on the road where the right policies and decisions are being taken.”
He added interventions are necessary for the economy, as intervention helps to channel resources together.
“We do not have the luxury of failed interventions, there are concerns about the exchange,” Cardoso said.
“In a country like Nigeria, we must reach out and make sure everyone gets to reach and impact one another. The framework must be there, there is no point for intervention if the SMEs can’t access it to help achieve their objectives.
“Those are things we as CBN want to work on and use our power and agree with stakeholders to boost the economy.”
According to Cardoso, the apex bank would partner with those with the capacity to manage such interventions in a way that they will not mismanage the funds but also get the desired outcomes.
Commenting on the outstanding FX obligations, he said, “We contracted Deloitte Management Consultant to do a forensic of all these obligations and to actually tell us what was valid and what was not. Of course, we were committed to ensuring that we would pay all valid transactions.
“The result that came out of this was startling in a great respect; it was quite startling. We discovered that of the roughly $7 billion, about $2.4 had issues, which we believed had no business being there – and the infractions from that range from so many things,” he added.
He cited that not having valid import documents and in some cases, even entities that did not exist and in some cases, beneficiaries and account parties that asked for FX and got more than they asked for.
“And those who didn’t even ask for any and got. So, there were a whole load of infractions there, which I said amounted to about $2.4 billion out of the $7 billion headline figure.”
Reiterating the bank’s commitment to resolving outstanding liabilities, Cardoso said, “Yes, as I said, I think that would be what would be done very shortly. Now, you can imagine that having $2.2 billion outstanding and $7 billion outstanding are not the same figure.
“I think we are at the end of this, to be honest, I will put it that way – we will clear all that very shortly and will move on to the next line of action. I am not concerned that the backlog would continue to be on overhang and I think we’ve come to the end of that road.”