According to a survey by the Association of Chartered Certified Accountants (ACCA) and Institute of Management Accountants (IMA), investors’ confidence in Nigeria’s economy went down below its nine years average.
The update was disclosed yesterday by the organisation in its latest report on Global Economic Conditions Survey (GECS) for Q4 2019. The GECS provides valuable insight into the views of finance professionals on major variables, like investment, employment and costs.
The GECS report shows that the market index of investors investing in the Nigerian market went down to minus three (-3) index points in Q4 2019. This is far below the 0.8 index points average for nine years from 2011 to 2019.
The survey report shows that there was a decline on the investors confidence index in Nigeria from (20.1) index points in 2018 to (-7.6) index points in 2019.
On a global level, the index growth went up in 2020 mostly in South Asia and Middle East. A global poll check of 2,560 accountants shows that all major regions recorded a bounce in confidence.
Head of ACCA Nigeria, Thomas Isibor, notes that the inflation rate of Nigeria increased by 11.98 percent in December 2019. This is because of the recent border closure aimed at stoping smuggling.
Aside the border closure which has mostly affected mostly the food sector, the double digit inflation will also lead to a drop down in economic growth and Gross Domestic product (GDP) per capita.
“Double-digit inflation simply means that strong monetary policies will continue to act as a barrier on economic growth. And it will remain below the rate needed to increase GDP per capita.”
According to the report, 2020 might see an increase in venture capital funds in all major sectors of the economy with a possible 3.0 percent increase should the investors confidence increase.
However, some factors like high levels of emerging market debt, geopolitical risk and trade tensions across the borders if attended to, will help the economy to grow back and attract investors.
These and more are the reasons why the Nigeria Stock Market (NSE) has not faired well positively in 2019.
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