By Charles Ndubuisi
In recent times, the economy of Nigeria has been epileptic. These ranged from the restructuring of banks, call for resignation of Ndy Onyiuke, the suspension and subsequent reinstatement of the Director General of Securities and Exchange Commission, Arunma Oteh, the Islamic banking and the introduction of the #5000 note which has recently been suspended.
There seems to be an answer to these problems. The inclusion on Nigeria in JP Morgan’s bond index!
Nigeria joined a key JP Morgan local currency government bond index last week, becoming the second African country after South Africa to be included in a widely followed index thanks to its improving liquidity levels.
According to Securities and Exchange Commission Director General Arunma Oteh
” Nigeria sought inclusion into emerging-market indexes to increase portfolio flows into its capital market.
Who is really this economic messiah, JP Morgan?
Financier and philanthropist John Pierpont Morgan, Jr., was born on September 7, 1867, in Irving town, New York. The son of a legendary financier, Morgan followed his father’s steps. Upon graduation from Harvard in 1889, he went to work in his father’s firm, J. P. Morgan & Company, and then moved to London to take a position at his grandfather’s company, J. S. Morgan & Company.
After his father died in 1913, Morgan inherited approximately $50 million and became the head of J. P. Morgan & Company.
Morgan did a lot of financing deals with foreign governments after the war. He helped several countries, such as Great Britain, France, and Germany, issue bonds. He also served on a committee about German reparations in Paris in 1922 and was a delegate for the United States to a reparations conference in 1929. At home, he tried, but failed, to stop the financial panic that led to the Great Depression that same year.
Would Nigeria’s inclusion help our ailing economy or will it cause another financial panic?
Reuters reports that it will raise the profile of Africa’s most liquid debt market after South Africa and is expected to lead to greater foreign participation, given that Nigerian yields offer a significant premium to established sovereign lenders.
Analysts have stated that ” Nigeria’s addition to the GBI-EM marks it out as one of the more accessible markets on the continent for foreign investors”.
“Nigeria has done a lot of work in recent years in developing its bond market to improve liquidity,” said Leon Myburgh, sub-Saharan Africa strategist at Citi.
“In most African markets, foreign participation is largely limited to the Treasury bill market, but Nigeria has been able to cross the threshold and see foreign investors enter its bond market as well.”
More so, the inclusion would see riskier assets become more appealing after the world’s largest central banks took action to spur growth in September, including a third round of quantitative easing in the U.S., known as QE3.
“The increase in interest in Nigeria’s local currency debt is due to QE3, which has boosted investors’ risk appetite, partly because are likely to remain low for longer and also because of the inclusion of Nigerian bonds in the JPMorgan government bond index,” said Johannesburg-based Mhango. “That signals Nigerian debt is liquid.”
As appealing as these may be. Are we ready for it? Will it be another wild-goose cheese? Is this the economic messiah we all sought?
We can’t but hope against hope! Praying to God that this may be the change we all sought for. An end to inflation, equitable redistribution of income, increase in standard of living.
We will continue to wait. Hoping not to wake up one morning and all this has been a nightmare! Till then, we all are onlookers.