Foreign investors in the Nigerian capital market withdrew some $4 billion from the Nigeria Stock Exchange and precipitated its steep decline, the Exchange's Director General, Professor Ndidi Okereke-Onyiuke has said.
Appearing before the joint Senate Committees on Finance, Capital Market, Banking, Insurance and other financial institutions investigating the economic crisis facing the country, Mrs Okereke-Onyiuke said in 2008, foreign hedge fund managers went out and withdrew their investment of N556 billion due to the financial crisis in their countries.
Okereke, who was responding to questions posed to her by Senators as to the reasons why share prices in the stock market kept crashing despite assurances by financial managers that the fundamentals of the nation's economy are strong, said hedge fund managers were shocked by the global financial crisis and quickly withdrew their investments from Nigeria and took it back to their countries.
She said in 2007, N280 billion equivalent in US dollars was brought into the country and invested in the capital market by Nigerians in Diaspora through wire services but the country did not capture the monies sent through Western Union or cash transfers by relatives, since they were not captured by banks.
Okereke said it is now time for Nigerians to buy shares since the prices are very low.
She said, “It is time to buy shares as prices are below their book value. They are at their lowest ebb; even the foreigners have started coming back to the market.”
Central Bank of Nigeria Governor, Professor Soludo said the challenges that the global financial meltdown posed to Nigeria were enormous and denied ever saying that the nation's economy was immune from the meltdown.
Minister of State for Finance Remi Babalola told the panel that the financial crisis was not peculiar to the Nigerian economy, adding that, “what is needed is to restore confidence and restructure the institutions for the economy to move forward”.