The Federal Government’s monetary reforms through the Central Bank of Nigeria (CBN) have been met with optimism from investors, who believe that the economy will regain its balance given adequate time, says SBG Securities, a member of Standard Bank Group.
SBG Securities allayed the fears of investors when it said that it had met with key stakeholders in the Nigerian economy and learned that interactions with corporates pointed to positive sentiment within the private sector regarding government reforms.
“Overall, our interactions with corporates pointed to a positive direction in government reforms, particularly in addressing currency liquidity concerns and clearing the FX backlog,” the firm said.
SBG Securities explained that investor confidence stems not only from the CBN’s aggressive attempts to arrest the slump in the Nigerian naira but also from the federal government’s drive to consolidate taxes at state and federal levels.
The asset management company added that the private sector was encouraged by the government’s deliberate and dedicated effort to stop leakages in the oil sector. They maintained that this action could help buffer much-needed FX inflow into the system.
“The committee on tax reforms aims to consolidate taxes at state and federal levels, and overall oil production is expected to improve as the government addresses the issue of theft at the terminals,” the company noted.
SBG Securities also highlighted the resilience of Nigerian companies in the face of heightened production costs due to FX scarcity and shifts in diesel prices. These companies have strategically implemented cost-cutting measures while also supporting their staff during challenging times.
“Companies indicated that they expect inflationary pressure to impact consumption next year and for the currency to depreciate further, which creates margin pressure,” the company said.
Despite these challenges, SBG Securities remains optimistic about Nigeria’s long-term economic prospects, citing the country’s young and growing population, abundant natural resources, and entrepreneurial spirit as key drivers of future growth.
