The Chief Executive Officer of Renaissance Capital Nigeria, Mr Temi Popoola, yesterday stated the country’s capital market will perform better again once the heightened political tension in the country subsides following the 2019 polls.
Mr Popoola was speaking in relation to the declining volume of shares traded, as well as the reduction in mergers and acquisitions experienced recently. According to Bloomberg, Popoola also believes that the market would witness some Initial Public Offerings once the elections are done with next year.
“Once some of these risks are off and the political situation is clearer, activity should pick up dramatically. Once we get past the election, we see no reason why you SHOULDN’T see a couple of IPOs.” – Popoola
Meanwhile, the market continues to under-perform
The market has recently been witnessing its lowest level of in terms of bonds issuance, equity sales and Initial Public Offerings; the worst since 2009. This situation contradicts an earlier prediction by the Securities and Exchange Commission (SEC) which forecasted an increase in bonds issuance.
Recall that MTN Nigeria’s highly anticipated Initial Public Offering is now shrouded in uncertain due to a dispute between the telco’s parent company, MTN Group Limited, and the Nigerian Government. The dispute stemmed from the accusation that MTN illegally remitted billions of dollars to South Africa whilst owing back taxes to the tune of $2 billion.
Following this development, there has been widespread speculation many foreign investors would become reluctant to do business in Nigeria. To this end, the Federal Government has resorted to damage control, with the Minister of Finance, Zainab Ahmed recently reassuring that there are no plans to ‘persecute’ any more companies after MTN.
The Nigerian elections are expected to take place in early 2019, and already the major contenders have made known their intentions to run. It is expected that issues about the economy will take centre stage as voters try to decide who is best fit to administer the affairs of one of Africa’s largest economies.