Renaissance Capital reports a 30% undervaluation of the Naira

The Renaissance Capital Africa report paints a promising picture for Nigeria in 2024, highlighting positive indicators such as a strengthening currency and a surge in oil prices. According to the report, the Nigerian naira remains significantly undervalued compared to its long-term average, presenting an opportune moment for investors.

Notably, the capital market is poised for a robust start following a remarkable 20 per cent gain in February. Renaissance Capital Africa’s latest insights, shared in its “Thoughts from Renaissance Capital Africa” report, project further gains for equities, with Nigerian stocks currently among the most attractively priced in two decades.

The report underscores a shift towards sensible monetary policies, instilling confidence among portfolio investors. With expectations of a gradual decline in inflation, investors can anticipate favorable returns, especially amidst Nigeria’s high-yield one-year bonds.

However, the report also identifies potential risks such as a worsening current account, elevated inflation rates, and security challenges. Despite these concerns, the strengthening currency and rising oil prices offer a glimmer of hope for Nigeria’s economic outlook.

Looking ahead, Renaissance Capital Africa anticipates a turnaround year for Nigeria and other key frontier markets. The country’s commitment to reforms and market-driven policies signals a positive shift in global perceptions, bolstering investor confidence and paving the way for sustainable growth in the region.