Tinubu’s ‘Heavy Baggage’ Weighing on Investor Risk Appetite – FDC

President Bola Tinubu’s heavy baggage is weighing on business confidence and investor risk appetite, analysts at the Financial Derivatives Company Limited have said.

The Tinubu administration has embarked on an array of policy reforms including petrol subsidy removal and foreign exchange reforms aimed at revitalising the Nigerian economy. 

“However, the swift implementation of these policies has inadvertently squeezed the economy, as evident in the heightened inflationary pressures and reduced disposable income of consumers,” the analysts, led by economic expert Bismarck Rewane, said in a new report.

The sharp increase in petrol prices had a pass-through effect on transport fares, food prices, and business production costs, with inflation surging to an 18-year high of 25.8 percent in August. 

They pointed out the fact that the adoption of a unified exchange rate came with a 42 percent devaluation of the naira, leading to a jump in the prices of import-related commodities and massive FX translation losses for companies including fast-moving consumer goods firms, banks, and telecommunications companies.

“The hardships caused by these policies forced the president to slightly pull back from certain key market reforms. First, the NNPC issued a statement reaffirming its commitment to maintaining unchanged petrol prices in August, 2023,” they said.

The Lagos-based FDC said it would take time for the new administration to gain public support and trust. 

“The President’s heavy baggage including election petition and certificate forgery allegations will continue to weigh on business confidence and investor risk appetite,” it said.

The firm said to instill business and investor confidence that will bring in the much-needed dollar inflows and capital, the administration must follow through with the recent reforms by obliterating lingering capital control measures and addressing deep-rooted issues like oil theft.