Nigeria has expressed its intentions to let the market determine the value of the Naira starting Monday June 20th after 15 months of a central bank kept rate at 197 Naira per USD. As a result of the Central Bank of Nigeria (CBN) controlling the rate, the access to USD has gotten worse leading to large parts of the economy struggling. The economy has deteriorated fast in 2016 and Nigeria recorded negative GDP growth in the first quarter. The devaluation is long overdue, and a key factor in restoring investor confidence in the Nigerian economy. We are now more positive on the long term outlook for Nigeria and still believe it offers the biggest opportunity in Sub-Sahara Africa, but near term will be volatile, especially in the first week with the new currency structure. The value (in USD) of our Nigerian holdings will take a hit on Monday June 20th, but market reaction should continue to be positive and it is possible the devaluation effect is neutralized by higher share prices within a couple of weeks.
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