Nigerian Stock Market Soars to New Heights Amidst Mass Migration: A Tale of Contrasting Fortunes
In a surprising turn of events, the Nigerian Stock Market has reached unprecedented heights, setting a new record amidst a period of mass migration. Last Tuesday, the Nigerian Exchange Limited (NGX) witnessed a historic moment as its All-Share Index (ASI) soared to a new all-time high of 66,490.34 points. This surpasses the previous record of 66,371.20 points set back in March 2008.
The remarkable feat achieved by the ASI, which measures the performance of all listed equities on the NGX, reflects the bullish sentiment that has dominated the market in recent months. The index rose by 0.51% from 66,151.38 points on the previous day, indicating a favorable environment for the capital market.
However, amidst this stock market boom, the country is witnessing a significant exodus of its population. Nigerians, particularly young people, are leaving the country in search of better opportunities abroad. The number of visas granted by the United Kingdom to Nigerians in the first half of this year alone reached approximately 132,000. Comparatively, the UK issued a total of three million visas, with Nigerians accounting for around 10% of that number.
This presents an ironic contrast between the fortunes of Nigerian investors and the mass migration occurring simultaneously. While the stock market is experiencing unprecedented growth, many young Nigerians feel a sense of hopelessness within their own country. This dichotomy raises questions about how such a season of economic prosperity can coexist with the prevailing struggles faced by the country’s youth.
During the Investment Course discussions, the impact of the Naira float on banks’ profitability was emphasized. Banks are expected to break all known profit records as they book gains from the difference in exchange rates. What was previously bought at N415 to Naira 750 per USD is now resulting in significant profits. However, it is important to note that much of these profits are due to currency exchange gains, with minimal growth seen in lending to manufacturers.
This situation mirrors the recurring pattern in Nigeria, where a few individuals continue to amass wealth while many others struggle. For example, power generation companies (GENCOs) are declaring enormous profits even as distribution companies (DISCOs), responsible for supplying electricity to customers, are collapsing or requiring bailouts in some cases (such as KD and Abuja).
How does this imbalance persist? It can be attributed to the fact that GENCOs are paid for generating electricity, regardless of whether DISCOs can distribute it efficiently. Thus, record-breaking profits are being made by power generation companies in cities that are plagued by electricity shortages. This paradox is indeed intriguing.
In conclusion, the Nigerian Stock Market has defied expectations by reaching new heights, even as the country faces a significant wave of migration. The booming market reflects a favorable investment climate and has led to immense profits, primarily driven by currency exchange gains. However, this economic prosperity exists alongside the harsh realities experienced by many Nigerians, especially the younger generation. The contrasting fortunes of the stock market and mass migration highlight the complex nature of Nigeria’s economic landscape and the challenges faced by its people.
