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The absence of a fully-constituted federal cabinet in the administration of President Muhammadu Buhari has become a major source of concern as foreign investors and market participants bemoan the lack of policy direction. Nigeria’s debt profile recently increased by N1 trillion with the restructuring of the state government bank loans into treasury bonds, which Central Bank of Nigeria (CBN) took charge of.

According to the Debt Management Office, total debt stock as at June 30th was $63.8 billion, with $52.9 billion being domestic debt and $10.8 as external debt stock. Nigeria is currently committing 23% of fiscal revenue to debt servicing. This is set to exceed the 25% benchmark by year end.

Market analysts say that the misalignment of fiscal and monetary policy has had considerable negative impact on macroeconomic indicators. Nigeria's inflation was at a six-month high of 9.2% in June. Unemployment rate climbed to a high of 7.5% in the first quarter of 2015, according to data from the National Bureau of Statistics (NBS).

As the Nigerian currency continues to be under pressure, non-oil taxes collected by the federal government were equivalent to only 3.9 percent of GDP or N3.5 trillion in the 12 months to April 2015, according to data from FBN Capital. This figure is worse than Nigeria’s emerging market peers.  

Bismarck Rewane, CEO, Financial Derivatives, said in a recent presentation, that “The market performance will remain subdued in the absence of a firm policy direction. Key appointments will serve as the much desired catalyst for a market rally.”  

There are also concerns that Africa's largest economy might be ejected from the JP Morgan Emerging Markets bond index by year end. The global financial services firm had put Nigeria on its negative index watch in January and threatened to exclude Nigeria from its index. It later extended the deadline to end of year given consideration to the inauguration of a new government but threated it would go ahead with the exclusion if Nigeria does not restore liquidity to its currency markets by year end.