Nigeria

An agreement to invest in coal-fired power generation could be a positive move for broadening Nigeria’s energy mix and strengthening formal grid supply, which lags well behind demand.

While Nigeria has some way to go when it comes to developing local content and fostering start-ups in the information and communications technology (ICT) industry, the government has shown a commitment to the sector through its far-reaching National Broadband Plan (NBP).

Capital markets in Nigeria have been growing at a rapid clip over the past year, with the country’s advantages as an investment destination attracting foreign cash, and reforms improving the bourse’s competitiveness. However, the exchange remains vulnerable to exogenous changes, and boosting liquidity would help this promising market mature.

The latest international bond sale from Nigeria, which was heavily oversubscribed, underscored the bullishness of overseas investors in the country’s sustained if uneven growth. However, the yield level on the offering also highlights the looming challenges that Nigeria, along with other emerging markets, could face when seeking to raise capital in the future as the US economy begins to pick up.

With the country in the middle of a population boom, planned reforms to Nigeria’s pension system are timely. The legislative overhaul is expected to boost coverage, inject new capital into productive investments and increase accountability. However, implementation may be tricky, both in terms of ensuring compliance with the scheme and finding trained personnel to staff asset management funds.

Long-awaited reforms to Nigeria’s oil industry may be gaining momentum again. Investors are seeking clarity about the new structures to be introduced by the passage of the Petroleum Industry Bill (PIB), now in its fifth year of deliberations. The legislation is expected to increase efficiency and transparency, although some aspects of the code are proving tricky to resolve.