Boosting local industries could help reduce demand for dollars
Faced with bond yields coming off record lows and a hard-to-trade equity market, Nigeria’s biggest pension-fund manager wants the flexibility to invest directly in large local projects.
Financing the development of domestic industries with naira will also ease pressure on the nation’s currency by reducing demand for dollars, said Stanbic IBTC Pension Managers Ltd. Chief Executive Officer Eric Fajemisin. Once up and running, local plants can help cut imports, further benefiting the naira and easing pressure on inflation that’s been decimating returns, he said.
Domestic retirement funds overseeing the equivalent of $30 billion are looking for new places to invest. That’s after yields on government debt that account for the bulk of their investments plunged because too much cash flooded into the system. The lack of enough high quality stocks, few options by way of derivative products and small corporate debt issuance limit alternatives for investors trapped in a recession.