Foreign investments

Decline in foreign investment in Nigeria


The Director General of the World Trade Organization (WTO) and former Minister of Finance, Dr Ngozi Okonjo-Iweala, recently expressed his concern over the drastic drop in foreign investment in Nigeria. She said the cost of doing business in the country remains “too high” to attract foreign and domestic investment into the economy. His concern expressed practically during the recent two-day mid-term ministerial retreat at the Presidential Villa, Abuja, came amid the report that inflows of foreign portfolio investment to Nigeria fell to N262 billion in year-on-year change in August 2021, compared to Naira 470. 2 billion in the corresponding period of 2020.

Total transactions for the domestic and foreign components of portfolio investment in the Nigerian Stock Exchange equity market in August 2021 increased only slightly by 0.9% to 1.213 trillion naira from 1.207 trillion naira during of the corresponding period in 2020. Direct investment fell 42% from $ 1.5 trillion in 2020 due to the COVID-19 pandemic and other factors, according to the Conference’s Investment Trade Monitor of the United Nations on Trade and Development (UNCTAD), Nigeria’s was higher. In order for Nigeria to attract much-needed foreign direct investment, the government must deal with worsening security concerns. As the head of the WTO and other experts have said, the Nigerian government must reduce not only trade costs, but also the costs of infrastructure and other factors that hamper the flow of goods across the country. to complement investment facilitation.

Currently, Nigeria’s stifling business environment is a major factor in the decline in foreign investment. Indeed, the current business environment is hostile. Ease of Doing Business (EoDB) is still scary despite a slight improvement recorded last year. Rising insecurity is a major concern for potential investors. The situation is further exacerbated by the infrastructure deficit, high production costs caused by epileptic power supply, political tumbles, multiple taxation and political uncertainty. All are obstacles to investment.

Therefore, the government should assume its responsibilities by providing an environment conducive to the prosperity of businesses. No investor goes where the prospect of making a return on investment is not bright. The government should create incentives that will encourage both local and foreign investors. The economy needs investment to stimulate growth and generate more income. Every geopolitical area has experienced a massive drop in investment. For example, a recent report on Foreign Direct Investment (FDI) in Nigeria, estimated at $ 93.3 billion between 2013 and the first quarter of 2020, showed that the Southeast region received the least $ 203.898 million. dollars. The amount, which represents a paltry 0.22 percent of total FDI during the period, is largely insufficient considering the region stimulates a significant portion of the country’s top entrepreneurs.

A breakdown of investment figures from the National Bureau of Statistics (NBS) shows that the Southeast has not performed well over the seven-year period. With $ 152 million in investments in 2013 and $ 151 million in 2014, Enugu State was deemed to have garnered the most investments during the period. Abia totaled $ 9.7 billion in investments between 2013 and 2014 and Anambra $ 38 billion. Imo had less than $ 10 billion while Ebonyi had none. But experts attributed this low return on investment to factors such as hostile tax regimes and poor infrastructure.

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Comparative figures from the NBS report indicate that the Southeast surpassed the Northeast and the Northwest only during the same period (2013-2020), with capital imports of 39.4 billion euros. dollars (0.04%) and $ 29.9 billion (0.03%), respectively. The South-West received the largest amount, 81.8 billion dollars, representing 87.70% of total FDI, the South-South 470.6 million dollars (0.50%) and the Center-North, 10 , $ 7 billion (11.51%).

A World Bank report last year on the Ease of Doing Business (EoDB) while rating Nigeria 15 places in the index, region by region, the South East was ranked low, citing lack of coordination between the political leaders of the area, poor infrastructure, several taxation, among others. A recent survey by the Manufacturers Association of Nigeria (MAN) indicated that most of the industrial settlements that should have served as industrial clusters in the southeast have been converted into personal properties and hotels. Current security loopholes in the area have worsened investment flows. Overall, Nigeria needs a new model of industrialization and mobilization of investment flows in the country.