Nigeria-Specific Risk Factors
01
Naira devaluation risk. All dividends are naira-denominated, but Nigeria's exchange rate has moved from ₦460 to ₦1,614/USD in two years. Real value of dividend income for dollar-benchmarked investors erodes rapidly.
02
High risk-free rate compresses all valuations. With FGN bonds yielding 14.85%, the Ke−g spread is narrow. A 100 bps CBN rate rise cascades through Ke and sharply reduces intrinsic values.
03
Inflation distorts growth assumptions. Nigeria's inflation recently exceeded 34%. A 9% perpetual growth rate may represent negative real dividend growth. Always compare to current CPI.
04
NGX liquidity and data quality. Many NGX stocks have thin volumes, wide bid-ask spreads, and delayed financial reporting. Companies frequently defer dividends based on CBN regulations or recapitalisation requirements.
Owo provides financial modelling for informational purposes only. Not investment advice.