Insecurity and foreign exchange crisis in Nigeria are major factors threatening the flow of investments from Canada into the West African country.
Teshome Nkrumah, the Canadian Deputy High Commissioner to Nigeria, said this at a business roundtable organised by the Nigerian-Canadian Business Association (NCBA), titled ‘Creating Opportunities for Fresh Foreign Direct Investment into the Nigerian Economy.’
“Nigeria is Canada’s largest trading partner in Africa, and our trade relations are about $2.7 billion every year, which is another paltry sum for the giant of Arica,” he said.
He said that Nigeria benefits from $2.6 billion in exports to Canada and $600 million in Canadian imports.
“Regardless of the returns, the risk of investing in Nigeria has become extremely high. No investor is willing to take that risk,” he said.
In his keynote speech, Nkrumah said Nigeria remains Canada’s largest trade partner in Africa, with approximately $1.6 billion invested in the mining sector alone.
He said places mines and minerals are located were deemed vulnerable to insecurity, discouraging investors.
Read also: Experts applaud FG’s change of varsities’ curriculum, unbundling courses, others
“Insecurity is one of the obvious risks that a foreign company would face in Nigeria and that is something the Canadian government cannot address,” he said.
According to him, another major impediment to investment in the country is the inability of foreign investors to repatriate their profits. “This had been a major complaint of various foreign investors in recent times.”
“Another important factor, as many of you are aware and I believe you mentioned, is that countries will want to repatriate their earnings. This is a structural issue, a macroeconomic issue, and it must be addressed.”
Nkrumah advised the country on the importance of de-risking transactions in order for foreign investments to flow.
The 2022 NCBA initiative was launched to foster economic growth, educational advancement, and advanced information technology innovations between Canada and Nigeria.
According to Ebi Obaro, president of NCBA, the objective of the association is to be able to contribute to national discourse as it affects the NCBA and communicates to Nigeria-Canada relations.
Meanwhile, Zubby Nwosu, managing director of Gizmotech Nigeria Limited, said the Central Bank of Nigeria (CBN) had neglected its primary roles while dabbling in matters it should not have.
“We have an official exchange rate and a parallel exchange rate,” he said, adding that investors are expected to bring their funds based on the official exchange rate.
“They will receive N420 for each dollar they bring in. They are putting it into a market where they believe the underlying rate is N720 per dollar,” he said. “This means that they will immediately receive a 40 percent discount on their investments.”
Nwosu said that the CBN had recently demonstrated that it lacked the capacity to provide these investors with enough dollars to repatriate their earnings.
