Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21
Stock Maket Trading Lesson - How to REALLY Trade Markets - 26th Nov 21
SILVER Price Trend Analysis - 26th Nov 21
Federal Reserve Asks Americans to Eat Soy “Meat” for Thanksgiving - 26th Nov 21
Is the S&P 500 Topping or Just Consolidating? - 26th Nov 21
Is a Bigger Drop in Gold Price Just Around the Corner? - 26th Nov 21
Financial Stocks ETF Sector XLF Pullback Sets Up A New $43.60 Upside Target - 26th Nov 21
A Couple of Things to Think About Before Buying Shares - 25th Nov 21
UK Best Fixed Rate Tariff Deal is to NOT FIX Gas and Electric Energy Tariffs During Winter 2021-22 - 25th Nov 21
Stock Market Begins it's Year End Seasonal Santa Rally - 24th Nov 21
How Silver Can Conquer $50+ in 2022 - 24th Nov 21
Stock Market Betting on Hawkish Fed - 24th Nov 21
Stock Market Elliott Wave Trend Forecast - 24th Nov 21
Your once-a-year All-Access Financial Markets Analysis Pass - 24th Nov 21
Did Zillow’s $300 million flop prove me wrong? - 24th Nov 21
Now Malaysian Drivers Renew Their Kurnia Car Insurance Online With Fincrew.my - 24th Nov 21
Gold / Silver Ratio - 23rd Nov 21
Stock Market Sentiment Speaks: Can We Get To 5500SPX In 2022? But 4440SPX Comes First - 23rd Nov 21
A Month-to-month breakdown of how Much Money Individuals are Spending on Stocks - 23rd Nov 21
S&P 500: Rallying Tech Stocks vs. Plummeting Oil Stocks - 23rd Nov 21
Like the Latest Bond Flick, the US Dollar Has No Time to Die - 23rd Nov 21
Why BITCOIN NEW ALL TIME HIGH Changes EVERYTHING! - 22nd Nov 21
Cannabis ETF MJ Basing & Volatility Patterns - 22nd Nov 21
The Most Important Lesson Learned from this COVID Pandemic - 22nd Nov 21
Dow Stock Market Trend Analysis - 22nd Nov 21
UK Covid-19 Booster Jabs Moderna, Pfizer Are They Worth the Risk of Side effects, Illness? - 22nd Nov 21
US Dollar vs Yields vs Stock Market Trends - 20th Nov 21
Inflation Risk: Milton Friedman Would Buy Gold Right Now - 20th Nov 21
How to Determine if It’s Time for You to Outsource Your Packaging Requirements to a Contract Packer - 20th Nov 21
2 easy ways to play Facebook’s Metaverse Spending Spree - 20th Nov 21
Stock Market Margin Debt WARNING! - 19th Nov 21
Gold Mid-Tier Stocks Q3’21 Fundamentals - 19th Nov 21
Protect Your Wealth From PERMANENT Transitory Inflation - 19th Nov 21
Investors Expect High Inflation. Golden Inquisition Ahead? - 19th Nov 21
Will the Senate Confirm a Marxist to Oversee the U.S. Currency System? - 19th Nov 21
When Even Stock Market Bears Act Bullishly (What It May Mean) - 19th Nov 21
Chinese People do NOT Eat Dogs Newspeak - 18th Nov 21
CHINOBLE! Evergrande Reality Exposes China Fiction! - 18th Nov 21
Kondratieff Full-Season Stock Market Sector Rotation - 18th Nov 21
What Stock Market Trends Will Drive Through To 2022? - 18th Nov 21
How to Jump Start Your Motherboard Without a Power Button With Just a Screwdriver - 18th Nov 21
Bitcoin & Ethereum 2021 Trend - 18th Nov 21
FREE TRADE How to Get 2 FREE SHARES Fractional Investing Platform and ISA Specs - 18th Nov 21
Inflation Ain’t Transitory – But the Fed’s Credibility Is - 18th Nov 21
The real reason Facebook just went “all in” on the metaverse - 18th Nov 21
Biden Signs a Bill to Revive Infrastructure… and Gold! - 18th Nov 21
Silver vs US Dollar - 17th Nov 21
Silver Supply and Demand Balance - 17th Nov 21
Sentiment Speaks: This Stock Market Makes Absolutely No Sense - 17th Nov 21
Biden Spending to Build Back Stagflation - 17th Nov 21
Meshing Cryptocurrency Wealth Generation With Global Fiat Money Demise - 17th Nov 21
Dow Stock Market Trend Forecast Into Mid 2022 - 16th Nov 21
Stock Market Minor Cycle Correcting - 16th Nov 21
The INFLATION MEGA-TREND - Ripples of Deflation on an Ocean of Inflation! - 16th Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Investing in Nigeria, potential opportunity for strong growth due to high oil revenues

Economics / Investing Nov 30, 2006 - 02:41 AM GMT

By: Nadeem_Walayat

Economics

The Nigerian economy is expected to grow by 7.5% during 2006. With prospects of growth exceeding 7.5% for 2007 and 2008, as Nigeria continues to enjoy dividends from the high oil price and inward investment into the oil and support industries. The Nigerian government also makes strides towards ensuring power generation to feed the growing economic activity.

Investing in Nigeria, potential opportunity for strong growth due to high oil revenues


The Nigerian foreign currency reserves now exceed $41 billion, with the oil revenues resulting in an budget surplus of over $10 billion. Enabling the government to invest in infrastructure projects such as $40 billions for the modernisation of Nigeria's railway track system. The inflation rate has also fallen from 12% in 2005 to 6.5% this year, (the lowest rate in over a decade), which brings greater stability to the currency .Nigeria is Africa's most populous country of some 132 million people with GDP per capita of $1,085.

Nigerian Politics
Nigeria's political history is littered with military coups, presently Nigeria has an elected leadership. But faces serious challenges of breaking apart along ethnic and religious lines. The country has been led by Olusegun Obasanjo since 1999, for a maximum of 2 terms, but in the run up to the 2007 elections the ruling party "The Peoples Democratic Party" is seeking to amend the Nigerian constitution to allow Olusegun Obasanjo to seek a third term in office, which is illegal under the current constitution. This is further destablising Nigeria politically, with politically motivated killings on the rise.

Risks
Unrest in many areas of Nigeria present a potential risk to the oil revenues, including the very poor Niger delta oil region. Attacks by militants claiming the region does not get a fair share of Nigeria's oil wealth have cut more than a quarter of Nigeria's oil production this year. Nigeria is the fifth-largest source of U.S. imported oil, and should the unrest continue, it is not inconceivable that US may intervene militarily during 2007.

The Nigerian government needs to continue to build both economic and social infrastructure. Where healthcare is concerned Nigeria ranks 187th in the world of 190 countries, and only spends 5% of GDP on health, this contributes to an aids epidemic and an overall life expectancy of 45 years. Much more needs to be invested in social projects to improve living conditions of nigerians as well as to more evenly distribute the oil profits to prevent further unrest.

Nigeria also needs to invest in Education, where adult literacy lags many developing countries at just 67%. Recent developments include the creation of 500,000 admission spaces for people seeking degree qualifications to provide the economy with professionals and skilled manpower.

The power sector needs major and significant investment to boost electricity output.

Growth Prospects
As long as a high oil price sustained and the unrest is contained then then the economic prospects for Nigeria is good, as companies and governments look to invest billions of dollars into developing Nigeria's resources. Nigeria also benefits from the continuing debt relief of $18 billions as a result of last years declaration by the Paris Club of creditor nations. Like india, Nigeria has a large pool of english speaking labour. Nigeria could potentially earn over $200 billions from oil revenues over the coming decade as oil output is expected to increase by 70% over the next 3 years, which if utilised will lead to an sustained economic boom on par with that experienced by other oil rich states, with target year on year growth of 10% per annum, far higher than the 2 to 3% target growth rates in the western developed economies.

How to invest in Nigeria
The best route into Nigeria is probably via managed funds such as unit trusts or investment trusts, run by recognised fund managers.

Direct investments into Nigerian companies are also possible with more information at the http://www.nigerianstockexchange.com/index.jsp which is home to about 260 Nigerian companies, and see Nigeria Business Info - http://www.nigeriabusinessinfo.com/index.htm

Alternatively investing in oil companies that have a large stake in the Nigerian oil industry such as Royal Dutch Shell is an option. Presently Shell trades on a low P/E of 10 . Other oil companies with major stakes in Nigeria include Chevron Texaco and Exxon Mobil.

Nadeem Walayat

http://www.marketoracle.co.uk

Disclaimer - This Analysis is provided for general information purposes only and not a solicitation or recommendation to enter into any market position, and you are reminded to seek independent professional advice before entering into any investments or trading positions.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

glo
02 Jan 08, 13:07
capital market forecast in 2008(analysis of various stock.)

Hello,

This is is quite informative and impactful.pls i will apreciate if u can furnish me with relevant information on the nigeria capital market outlook for 2008 i.e investable stocks that should yeild return 4 medium term investment.this is to enable me make investment decision thruogh the nigeria capital market.

thanks

glo.


S.N.Ernest.
03 Feb 09, 04:39
Nigeria - its intresting

Its most intresting to know that our fatherland is do well in terms economical growth as this will encourage us to start thinking of investing at home.

proper location and constitutional backing is all the encouragement that is needed now. We wholehearted look forwad to that moment where the dresms of our heros will come to pass.

thinking of investing in the manufacturing industy can u kindly help me with the right channels,

its to our great home.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in