The founder of the Research Alpha fund and a veteran investor in the Asia-Pacific region, Michael McGaughy, has commended Nigeria’s recent economic reforms, including the unification of the foreign exchange market and the removal of fuel subsidies.

He said these measures are strengthening Nigeria’s position as an attractive destination for global investment.

His comments follow the conclusion of the International Monetary Fund’s Article IV Consultation with Nigeria, during which the IMF acknowledged that major reforms implemented over the past two years have enhanced macroeconomic stability and improved the country’s economic resilience.

The Research Alpha fund, which has delivered a return of over 130% since its inception, has maintained exposure to Nigerian equities since 2017.

In an interview with Asian Century Stocks, founder Michael McGaughy attributed Nigeria’s recent economic transformation to the inauguration of President Bola Tinubu nearly two years ago. He highlighted a wave of sweeping reforms initiated under Tinubu’s administration, including the liberalisation of the currency, removal of petrol subsidies, and the deregulation of electricity generation and distribution.

McGaughy described the reform measures as “a developmental economist’s dream,” noting that they have tackled deep-rooted structural challenges.

 

He pointed to the commissioning of the Dangote refinery as a key milestone, helping reduce Nigeria’s reliance on foreign exchange for importing refined petroleum products.

Aligning with a recent Fitch commentary that links Nigeria’s economic recovery to the Central Bank of Nigeria, McGaughy emphasized that the appointment of CBN Governor Olayemi Cardoso has been pivotal.

He credited Cardoso with driving monetary and regulatory reforms that have restored stability and renewed investor confidence in Nigeria’s financial system.

The IMF hailed the outcomes of Nigeria’s recent economic reforms as transformative, highlighting significant gains in external reserves and foreign exchange stability. According to the IMF, both gross and net international reserves rose in 2024, supported by a strong current account surplus and increased portfolio inflows.

The foreign exchange premium—the gap between official and parallel market rates—shrunk sharply from over 60% to below 3%. FX inflows reached $6.9 billion in the first quarter of 2025, while external reserves climbed to $40.9 billion by the end of 2024, providing more than eight months of import cover—well above international adequacy benchmarks.

“Reforms to the FX market and foreign exchange interventions have brought stability to the naira,” the IMF noted.

Meanwhile, McGaughy noted that Nigeria’s equity market has been reacting positively to the reform agenda, with the All Share Index recording gains despite the drag from weak global oil prices affecting the country’s main export.

He observed that corporate fundamentals are on the mend, stating that “firms are regaining pricing power, and income statements are starting to reflect this” after several years of subdued earnings performance.