Crashed Markets, Crashed Dreams in NigeriaJun 29, 2009
Like many Nigerians, Chika, a trader in spare car parts, invested in the Lagos stock market a few years ago.
The country’s 85 banks had consolidated into 25, and when the new firms floated their initial public offers on the stock market, it seemed like a gold mine. Some shares gained over 400 percent in value within a few months.
“Investing in shares was more profitable than buying and selling spare parts, so I put most of my capital into buying shares,” said Chika, who supports a wife and three children. “I even borrowed money from friends to buy shares.”
But after the global financial crisis began, capital inflows plunged, investment capital evaporated and the stock market crashed. The stock market lost over 70 percent of its value in 12 months, making the Nigeria market one of the world’s hardest-hit.
Chika, like many Nigerians, lost most of his funds. “I lost so heavily in the stock market crash that up till now, I’m still reeling from the effect and yet to find my feet,” he said.
To make matters worse, the global collapse of commodity prices, especially oil, has also reduced export earnings and government revenue.
The government and the Central Bank are focusing on creating jobs, and diversifying the economy away from oil. UNDP is working closely with the government in this regard, especially to provide technical input to government economic revival plans, in such areas as providing social infrastructure; natural resource management and protection; and jobs generation.