2. The government has a (relatively) credible plan.
Nigeria's tendency to overspend when times are good has meant that the economy tends to suffer from comparatively short lived
economic cycles, relative, even to most other emerging markets. Being heavily reliant as it is, on the export of minerals (some 97% of total
exports), the economy outperforms heavily when the oil price is recovering, yet tends to crash badly when the cycle turns. This creates
a particularly challenging environment for real estate investors who have struggled to find liquidity or been forced to bring assets to the
market at the wrong stage of the cycle.
Encouragingly, therefore, not only is Nigeria coming out of recession it is doing so with a relatively coherent plan to build a credible
platform to break this cycle. The Economic Recovery and Growth Plan (ERGP) for 2017-2020 should go some way to break the historic
leanings towards heavily pro-cyclical fiscal policies and build fiscal buffers to mitigate the volatility the country imports form commodity
price swings and which are so detrimental to real estate investor sentiment.
As with many plans that have been introduced by previous administrations it is ambitious and there remains considerable uncertainty
about its efficacy. Unlike previous initiatives, however, the ERGP however, does appear clearer in its strategy, setting accountability, targets
and allocating resources
There is also evidence that debt and equity markets are also pricing growing confidence in the economy's long term prospects. Nigeria, has
been successful in accessing international debt markets through 2017. The over-subscription of the recent Eurobond issuance indicates
decent investor appetite for sovereign risk. Indeed Nigeria is currently planning a further issuance to replace naira debt by the end of 2017.
In addition, there is evidence of foreign capital being more involved in the equity market. The value of foreign transactions on the stock
exchange was roughly 60% higher in H1 2017 against last year. .
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