Ecob Capital on Nigeria’s investment outlook for 2021

As the year comes to a close, investors are busy strategizing and planning for the opportunities and challenges that lie ahead in the investment landscape for Nigeria in 2021. Emmanuel Odiaka, the Managing Director and CEO of Ecob Capital, recently sat down with CNBC Africa to discuss the dynamics at play in Nigeria's investment space. Reflecting on the tumultuous year of 2020, Odiaka highlighted the unprecedented events that took center stage, pushing market fundamentals aside. The COVID-19 pandemic dominated market expectations and led to a year where the usual market trends were upended. Odiaka noted that the Nigerian financial sector, which typically sees high yields, faced a stark contrast in 2020, with market returns plummeting significantly. The economy also faced challenges, with GDP numbers dipping into negative territory. It was indeed a challenging year for investors in Nigeria. Looking ahead to 2021, Odiaka discussed the investment playbook for Pension Fund Administrators (PFAs) in Nigeria. He pointed out that PFAs are likely to focus on developments in the fixed income market, considering the low yields in that space. As a result, many investors have shifted their focus to equities, particularly stocks offering attractive dividend yields. The government's plans to borrow from pension funds and the central bank's infrastructure development fund also add complexity to the investment landscape. Odiaka highlighted the need for diversification in the Nigerian economy, especially in light of the challenges posed by the ongoing COVID-19 crisis and the volatility in global oil markets. With the budget for the upcoming year set at a significant amount, there are concerns about how the government will finance its operations without over-reliance on oil revenues. Odiaka suggested that yields are likely to remain low in the first quarter of 2021, with equities continuing to be an attractive option until the market gains clarity on the direction of the yield curve. In sum, the outlook for Nigeria's investment landscape in 2021 is a mix of challenges and opportunities. Investors will need to navigate the shifting market dynamics and make strategic decisions to maximize returns on their portfolios.