Afrinvest Group Managing Director, Ike Chioke, has said the Federal Government needs to remove the subsidy on electricity to complete its cost-cutting moves. He said this at the Half year investment parley of the investment firm in Lagos on Tuesday.
According to him, a new report by the Nigerian Electricity Regulatory Commission showed that government spending on electricity subsidy had risen to N2.8tn as of December 2022.
He said, “There is still one more subsidy element that the government needs to tackle and that is electricity subsidy. We see that will likely push inflation from 23 per cent up to 24 per cent towards the end of the third quarter of the year before we can then see inflation being reined in. But most of this would depend on the policy direction of the new government.
“In the fixed-income market, you see a lot of volatility but volatility is good if you are an active trader. In the equity market, we have seen a significant correction in the market.
“It is up by over 20 per cent from when President Tinubu came in but you have to be selective because there have been windows of profit-taking that put pressure on the market.
“Generally speaking, Nigerian stocks are undervalued relative to their comparative emerging market peers in South Africa, Morocco and Egypt.”
“There is still a bit of upside but that upside momentum is still with some investors sitting on the sidelines, waiting for the government to settle down, waiting for the FX policy. People don’t want to bring dollars into the market when they are not sure of the way out.”