In a new COVID-19 world where access to private capital is keenly contested, numbers sourced from the National Bureau of Statistics (NBS) suggest Nigeria is losing its strong romance with foreign investors.
Unlike in 2014, Nigeria is finding out that attracting Foreign Direct Investment (FDI) into a country that has a larger population than Egypt (102 million), Ghana (31 million), Morocco (36 million) and Canada (38 million), combined won’t be a soap opera despite boasting of a flourishing tech scene thanks to its largely youthful population.
Industry players believe the country’s perpetual lack of structural reforms means deep-pocket foreign investors are pressing pause on Nigeria’s huge potential and abundant natural resources.
They noted that the decline in the past five years can be traced to the dwindling state of Nigeria’s oil fortunes as active oil explorations bring about a billion investments in the country’s economy as well as the development of related sectors of the economy and infrastructure.
Here are six charts that show the Nigerian economy’s struggles;
Nigeria’s foreign portfolio investment (FPI) popularly referred to as ‘hot money’ showed a decline of 77.3 percent from 2014 to $3.3 million in 2021.
Foreign portfolio investment (FPI) refers to the purchase of securities and other financial assets by investors from another country. These securities or assets could be held directly by the investor or managed by financial professionals.
Data from NBS also showed FDI fell to the lowest level since the statistical agency started collating the data last year with a total of $698.78 million. Even Ghana now comfortably attracts three times that amount.
A lack of reforms which has culminated in weak economic growth, foreign exchange volatility and a harsh business environment, are some of the reasons Nigeria has struggled to attract sufficient foreign investments since 2014.
Concerning sectors, the latest NBS also showed Nigerians are paying the ultimate price of the country becoming less of an investment destination, particularly in the form of jobs.
Thus far, from 2014, NBS’s data showed the sectors with the most notable declines are; Shares, Production, Financing and oil and gas with -92.1 percent, -1.04 percent, -71.04 percent, -51.5 percent respectively.
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Further findings showed investors from the United Kingdom, the United States, and Mauritius had the most investments in Nigeria from 2014 to 2021.
However, the tides are turning.
Within the last seven years, NBS’s data also showed investors in the United Kingdom and the United States have decreased their Nigerian investment by 78.08 percent and 81.87 percent respectively although investors in Singapore increased theirs by 272.59 percent.
Various states in the federation enjoyed the inflow of capital importation from other countries, such as each state was mainly Lagos, the commercial hub of the nation and the nation’s capital, Abuja.
And by 2021, Abuja had an increase of 241.5 percent and Lagos had a decline of -70.67 percent.
Financial institutions also had a play in the inflow of foreign investment into the economy. The inflow of foreign investment can be linked to the exposure of the financial institutions to the outside world, compared to others. By 2021, Ecobank had the highest inflow of $922.9 million and First City Monument bank with the least inflow of $ 129.4 million.
