BlackRock’s iShares ETFs Worth $400m To Leave Nigeria, Kenya Amid Unfavourable Market Conditions

BlackRock, one of the world’s largest asset managers, has announced plans to liquidate its iShares exchange-traded funds (ETFs) in Nigeria and Kenya, a decision impacting $400 million in assets.

This move is attributed to unprofitable business environments in both countries.

In a statement issued by iShares Inc., the company revealed, “The Board of Directors of iShares, Inc. voted to close and liquidate the Fund. Currency conversions, including conversion of Nigeria’s currency, the naira, will impact the timing of the Fund’s liquidation.”

The decision marks a significant step as iShares Inc., which has been investing in emerging market equities in Nigeria and Kenya for years, aims to wind down its operations. The final trading day has been set for 31st March  2025, after which the extended liquidation process will take place.

“After market close no earlier than August 12, 2024, but on a date as soon as practicable, the Fund will cease trading and the creation and redemption of Creation Units. Currently, the Fund expects the last trading date to be on or around March 31, 2025, and the liquidation date to be three days after the last trading date,” the statement further explained.

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During the liquidation period, iShares will systematically sell its assets in all markets and hold the proceeds in cash and cash equivalents. “During the extended liquidation period, the Fund will not be managed in accordance with its investment objective and policies, as the Fund will sell down its assets, as determined by BlackRock Fund Advisors, where possible, and hold the proceeds of such sales in cash and cash equivalents,” the statement added.

This decision follows a trend of foreign investors exiting Nigeria, primarily due to a challenging macroeconomic environment and the naira’s devaluation. The impact on currency conversions, especially the naira, has been a critical factor influencing the timing of the fund’s liquidation.

BlackRock’s iShares has already liquidated its holdings in companies listed on the Nairobi Securities Exchange (NSE). These investments included $5.2 million in Kenya, with significant stakes in Safaricom ($2.8 million), Equity Group ($1.5 million), and KCB Group ($885,000).

“Currency conversions, including conversion of Nigeria’s currency, the naira, will impact the timing of the fund’s liquidation,” reiterated the statement from iShares Inc.

For years, the fund has provided exposure to equities in various African stock exchange markets, including Egypt, Kenya, Morocco, and Nigeria. Additionally, it has invested in markets like Bahrain, Bangladesh, Colombia, Estonia, Jordan, Kazakhstan, Pakistan, Philippines, Romania, Sri Lanka, and Vietnam.

This strategic withdrawal highlights the challenges faced by foreign investors in certain emerging markets. It underscores the importance of stable economic and regulatory environments for sustaining foreign investment. As BlackRock navigates this transition, it remains to be seen how other asset managers will respond to similar market conditions in the region.