What’s the investment play for Nigeria in 2023?

Sankore Investment has released its 2023 outlook, suggesting that investors should increase risk by extending the duration of their investments to boost returns. Victor Aluyi, Senior Vice President and Head of Investment at Sankore Investment, joined CNBC Africa to delve into the report and provide insights into the investment landscape for the year ahead. Aluyi emphasized the importance of seizing opportunities in the market despite anticipated volatility, as global central banks navigate inflationary pressures. He highlighted the Federal Reserve's aggressive response to inflation tightening, leading to significant market risks in 2022. While 2022 saw a bear market for the S&P, Aluyi anticipates a potential reversal of tightening policies by the end of 2023, injecting positive momentum but with continued market fluctuations. In Nigeria, Aluyi outlined key investment themes, focusing on policy challenges such as FX management and subsidy reform. He underscored the impact of these factors on Nigeria's fiscal stability and emphasized the need for a strategic approach to address them gradually. Aluyi also identified investment opportunities in fixed income yields due to the fiscal deficit, potential growth in real assets, and dividend-generating equities. Beyond domestic considerations, Aluyi highlighted global shocks, including China's reopening and inflation risks. He emphasized the need for vigilance in assessing these factors' impact on markets and the economy. Looking at the commodity markets, Aluyi emphasized the importance of increasing production in Nigeria to capitalize on growing commodity prices. With China's reopening potentially bolstering commodity demand, a focus on enhancing production capacity is critical for Nigeria's economic outlook. Overall, Sankore Investment's outlook for 2023 balances optimism for market growth with the need for caution amidst global uncertainties and local policy challenges.