Foreign investment into Nigeria slumped to the lowest level in four years in the first six months of 2021, according to data published Wednesday by state data agency, the National Bureau of Statistics (NBS).
The total amount of foreign investment in Africa’s largest economy came to $2.78 billion in the period under review, a 61 percent decline compared to the $7.15 billion invested in the first six months of 2020.
In the second quarter of 2021, Nigeria managed foreign investment worth $875 million, the lowest amount recorded in a single quarter since the first quarter of 2016 when Nigeria slipped into its first recession in a quarter of a century.
According to the NBS report (https://www.nigerianstat.gov.ng/download/1241052), foreign direct investments fell 36 percent to $232.74 million as against $362.84 million recorded in the corresponding period of the previous year.
Foreign portfolio investment (FPI) declined 67 percent to $1.53 billion, from $4.69 billion recorded in H1 2020, while other investments halved to $1.02 billion from $2.09 billion in the review period.
A lack of reforms which has culminated in weak economic growth, foreign exchange volatility and a harsh business environment are some of the reasons why Nigeria has struggled to attract sufficient foreign investments since 2015.
Policy inconsistency also ranks tops as a major deterrent to foreign investment, according to multiple interviews with investors.
The trend of declining foreign investment, particularly FDI, is a worry for Nigeria which is in dire need of private capital to boost economic growth and create jobs.
Nigeria’s net FDI inflows as a percentage of GDP was 0.5 percent in 2019, according to World Bank data. That compares with South Africa’s 1.5 percent and Ghana’s 5.8 percent, a sign Nigeria is attracting very little FDI for its economic size.
President Muhammadu Buhari’s plan to lift 100 million Nigerians out of poverty in 10 years is likely to fall short of expectations without adequate investment in human capital and infrastructure, most of which must come from the private sector- local and foreign.