Foreign investors bought fewer Nigerian stocks in 2019 than the previous year, Stock Exchange data showed, after hopes for reforms that could lift Africa’s biggest economy faded.

Nigeria has grappled with low growth since recovery from a recession four years ago. President Muhammadu Buhari, who began a second four-year term in May, has pledged to revive the economy. But investors have been waiting for policy signals that could lift growth.

Foreign investors traded a total of 942.55 billion naira worth of stocks last year, with more than half of the transactions to sell shares, according to the stock exchange, compared with 1.22 trillion naira at the end of 2018.

Investors increased the pace of outflows last year after Buhari took office for the second term but failed to appoint a cabinet until months later. Funds sold out of the banking, consumer and oil sectors as capital flight worsened, piling pressure on the naira.

The International Monetary Fund (IMF) has projected that Nigeria’s economy would growth at 2.5% this year and next.

Similar to stocks, investors also cut their participation in Nigerian government bond auctions last year. Instead, they piled into treasury bills supported by central bank’s policies.

Buhari has pursued protectionist policies since first taking office in 2015. He has backed a currency intervention that has seen the central bank pump billions of dollars into the foreign exchange market and policies aimed at curbing imports to boost local production.

The stock index has risen 10.2% so far this year, to rank as one of the world’s best performing, thanks to higher oil prices and as domestic funds pile into stocks after last year’s ban from central bank’s high-yielding bills market. The index shed 14.6% in 2019.

Stock Exchange chief Oscar Onyema has said he expects a new law which grants tax incentives to capital market investment and the implementation of the country’s 2020 spending plan to boost corporate earnings and consumer spending. (Reuters)