BlackRock's iShares ETF, worth $400 million, announced plans to liquidate its investments in Nigeria and Kenya due to challenges with currency repatriation and the naira devaluation, dealing a blow to Nigeria's economic prospects.
BlackRock, one of the world's largest asset managers, has announced its decision to liquidate its iShares exchange-traded funds (ETFs) worth $400 million, citing unprofitable business environments in Nigeria and Kenya, particularly the challenge of currency repatriation exacerbated by the naira devaluation.
The iShares Frontiers ETF, which has invested millions of dollars in emerging market equities in Nigeria and Kenya over the years, has set March 31, 2025, as the last trading day for an extended liquidation process.
In a statement, BlackRock's iShares cited "persistent liquidity challenges in certain frontier markets, including among other things, delays or limits on repatriation of local currency" as the reason behind the board's determination to liquidate the fund, considering it to be in the best interest of the fund and its shareholders.
The company acknowledged the significance of the naira conversion on the liquidation process, stating that "currency conversions, including conversion of Nigeria's currency, the naira, will impact the timing of the fund's liquidation." As a result, the fund will enter an "extended liquidation period" after ceasing trading and the creation and redemption of creation units no earlier than August 12, 2024.
BlackRock's iShares has already liquidated $5.2 million of its shares in Kenyan companies like Safaricom, Equity Group, and KCB Group, which are listed on the Nairobi Securities Exchange (NSE).
The planned exit of BlackRock's iShares is another setback for Nigeria's economic prospects as the new administration of President Bola Tinubu grapples with the country's dwindling economic fortunes. Companies like Diageo, GlaxoSmithKline, and Microsoft have also recently scaled back or shut down their operations in Nigeria.
