Nigeria is poised to lose its frontier market status because of persistent foreign-exchange shortages in Africa’s largest economy.
MSCI Inc. is considering downgrading the MSCI Nigeria indexes to standalone markets status from the frontier market, the New York-based company said in a statement
“There has been a continual and severe deterioration in the ability to repatriate funds from the West African Country. Given the prolonged nature of the issues affecting the market’s accessibility, we have put forth the consultation to reclassify the MSCI Nigeria Indexes.” Craig Feldman, global head of Index Management Research.
Africa’s biggest crude producer has been rationing dollars because of lower oil income that accounts for about 90% of foreign exchange earnings. The nation’s foreign-exchange reserves have dropped 4% this year to $38.8 billion, despite the government tapping the overseas bond market twice.
The West African country has devalued the currency three times in the last two years and has a backlog of unmet dollar demand from investors, according to the International Monetary Fund.
The country’s NGX All Share Index has gained 21% in local currency terms this year.
Read also; Nigeria Cancels Plan to Issue $950 Million Eurobond.
