In a development signaling positive momentum for Nigeria’s economic landscape, the Governor of the Central Bank of Nigeria (CBN), Yemi Cardoso, announced that foreign portfolio investors (FPIs) are showing renewed interest in the Nigerian market.
This revelation came during an exclusive interview with Arisee TV on Monday, marking a potential turning point in the country’s financial market attractiveness.
Addressing the critical issues surrounding foreign exchange and investment, Cardoso emphasised the importance of leveraging existing resources to attract more foreign direct investment and portfolio inflows. Contrary to the perception of FPIs as “hot money”, the governor views these investments as essential components of a diversified foreign exchange portfolio, whether sovereign or corporate.
He said: “This is a problem I sometimes have when many blame the central bank for the foreign exchange situation. It is a problem I have because we rely on what comes in. We don’t produce foreign exchange… All we can try and do is use that to leverage for more to start coming in, and that also includes foreign direct investment, and foreign portfolio investors.
“Sometimes, some people look at FPIs and say it is hot money. I don’t believe that is the case. I take it that in any portfolio that you have of foreign exchange, whether it be sovereign or corporate, you will have a diversified mix of portfolio investors.
“Today, I will say that we have a situation where a lot of foreign portfolio investors are very interested in coming back to the Nigerian market. It is incredible.”
Boosting investors’ confidence
The governor highlighted the recent strategic financial decisions made by the country, such as the Nigerian National Petroleum Corporation (NNPC) and other major MDAs moving their funding directly to the central bank. These moves are seen as strong confidence boosters, indicating that Nigeria aligns with the directions favoured by global investors.
Cardoso said: “The recent move to have NNPC and some of the other MDAs move their funding straight to the central bank also sends a powerful signal. It boosts confidence that Nigeria is finally going in the direction that many investors want to see it go.”
He added: “As the confidence comes back and their money starts coming in, which I see happening, volatility begins to reduce.”
Cardoso’s outlook on the Nigerian economy is optimistic, particularly regarding the inflow of foreign investments. This confidence is expected to stabilise the Naira, which the governor believes is undervalued due to panic-induced distortions.
Not time for panic
Cardoso highlighted the importance of maintaining a positive and proactive stance in a reassuring message to the market.
“The time for panic and cynicism is not now. We are on the road now where the right policy decisions are being taken,” he affirmed.
This sentiment underscores the CBN’s commitment to steering the Nigerian economy towards a trajectory of growth and stability, buoyed by the rekindled interest of foreign investors.
The CBN governor also stressed the apex bank’s commitment to clearing the balance of the FX backlog in a very short time.
