The night of the long knives is finally here
As Nigeria goes into election season, the long knives are out and the cloak and dagger business has gone into overdrive.
This time around the lag between post-convention politics and election is dangerously long. The average cycle since 1999 was approximately 90 days. This time around it is likely to be 250 days. The time lag is long enough for meaningful debates, dredging up scandals, fake news and misinformation. As they say “All is fair in war & love”
On the other hand there will be multiple debates and interrogation of economic and ideological issues before the Nigerian public.
Investors are jittery
For investors, the most important observation, is that no matter what the election outcome the policy trajectory will change fundamentally. The Nigerian economic philosophy of an investment led strategy as its path to economic takeoff will be reinforced. The protectionist policies of the last decade are likely to be discarded. They will be replaced with a more proactive package of economic policies.
CBN changes gear
The CBN finally turned the corner and embraced a more orthodox monetary policy. It increased rates (150 basis points) after 70 months and may be considered no longer an economic maverick. Investors are feeling more comfortable with the apex bank using its open market operations mainly for liquidity management. In the forex market, we expect slight convergence if only the CBN allows the I&E rate to depreciate over a period in the adoption of a crawling peg on the path towards fair value. Whilst simultaneously increasing supply to the market.
All told, inflation is likely to bite harder in the next few months before subsiding. Businesses should brace themselves for a period of uncertainty and imponderables.
In this edition of the LBS Breakfast Session, Bismarck Rewane and the FDC Think Tank analyze the current developments in the market, the economy and its impact on your business and strategy.
Enjoy your read…