Bloomberg Writes Off Buhari: “He Has No Capacity To Run Nigeria”

International financial and business news giant, Bloomberg, has expressed serious doubts on the ability of President Muhammad Buhari of Nigeria to turn around Africa’s largest economy and oil producer. In a scathing analysis of the over six months of Buhari in office, the news outlet concluded that the country was on a dangerous slide with investments at an all-time low, the stock market rated as the third-worst performing globally within the period, and growth projected to slow to a 16-year low of 3.3 percent. In an article, Buhari Bounce Becomes Bust As Nigeria Policies Annoy Investors, the group noted that stocks that soared as investors looked to the former military ruler to reverse decades of economic mismanagement and policy inertia, have all nosed dived and “Now hopes have fizzled in his ability to turn around Africa’s largest economy and oil producer. “Money that flowed into stocks and bonds in the West African nation, which McKinsey & Co. says could become one of the world’s 20 biggest economies by 2030, is now fleeing as growth prospects diminish along with oil prices. While Buhari, 72, has prioritized stamping out the graft that has plagued Nigeria since independence from Britain in 1960, policy-making appears as uncertain and haphazard as ever.” Quoting Ayodele Salami, who oversees about $500 million of African equities as chief investment officer of London-based Duet Asset Management Ltd., he said the initial euphoria has turned to disillusionment. Salami said, “After the initial euphoria, people have become disillusioned. He (Buhari) would probably say that he’s being deliberative and cautious. But we expected more.” Duet’s Africa fund has cut its investments in the country to about 24 percent of the total from 38 percent in the last year. According to Bloomberg, Buhari the hefty $5.2 billion fine levied on mobile-phone operator MTN Group Ltd. Are desperate moves to shore up government revenue outside plunging oil prices, warning that it could have dire consequences on the country’s economy. “The penalty imposed on MTN’s Nigeria unit last month for failing to register about 5 million subscribers may be an attempt to plug the hole in government finances, according to Cobus de Hart, an economist at NKC Independent Economists. “You cannot deny there might be a fiscal element to the massive fine,” he said by phone from Paarl, near Cape Town. “It will make investors a little bit more wary of investing in Nigeria.” On the stock exchange, it noted that “Nigeria’s benchmark stock index has plunged 22 percent since reaching a year-high on April 2, the day after Buhari was declared the winner of the presidential race against incumbent Goodluck Jonathan. That’s the third-worst performance globally in the period, after the bourses in Ukraine and Egypt. The index advanced 12.5 percent in the two days after Jonathan conceded.” It further observed that an even bigger concern for many investors is the authorities’ naira policy. The Central Bank of Nigeria, with Buhari’s backing, has burned through $4.3 billion of reserves this year and choked off supply of foreign exchange to banks and their customers to defend the naira, even as major oil exporters such as Russia and Colombia have let their currencies slide. The restrictions prompted JPMorgan Chase & Co. to remove Nigeria from its local-currency emerging-market bond indexes, tracked by more than $200 billion of funds, in September, triggering a selloff in the nations’ assets. While the naira has been all but fixed at about 198 to 199 per dollar since March, forward prices suggest it will drop by almost one-fifth, to 243.5, in a year. “The number-one issue is the exchange rate,” Andrew Howell, a Citigroup Inc. frontier markets strategist, said from Lagos. ”Access to foreign exchange is becoming a widespread problem.” Nigerian Breweries Plc, the nation’s biggest brewer that’s controlled by Heineken NV, said it takes two weeks to obtain dollars to pay for its imports, twice as long as it required a few months ago. Nestle SA’s Nigerian unit has had to wait six weeks for dollars, according to Renaissance Capital Ltd. analysts. Jan Dehn, head of research at Ashmore Group Plc, which oversees almost $60 billion of emerging market assets, remains unconvinced that Buhari is up to the job. The fund manager sold all its Nigerian government debt in the past year. “So far the Buhari administration has done all the wrong things,” Dehn said by phone from London. “Not only has he been incredibly slow in taking any action, when he finally has taken action on the economic front it’s been diametrically opposed to sensible policy. That is a major disappointment given expectations prior to his election.”