• Tuesday, July 16, 2024
businessday logo


Nigeria and dwindling investment inflows

Investment migration offers Nigeria opportunities to boost FX inflows

Most discerning Nigerians were not surprised when the 2021 capital importation report of the National Bureau of Statistics (NBS) was released recently. The report indicated that up to 24 Nigerian states did not attract foreign investments in 2021. It should be noted that it was not only in 2021 that some states failed to attract investments. The fast disappearance of investments correlate with the rising poverty and insecurity in the land.

In 2019, Nigeria attracted $23.99 billion worth of investments. 99.5 percent of the investments which translated into $23.88 billion went into Lagos, Nigeria’s commercial centre, and Abuja, the Federal Capital Territory (FCT). Fifteen states attracted just $108.91 million while 13 states did not attract a dime as investment. This is something of a perverse wonder.

In 2020, capital importation nosedived by 59.7 percent to $9.66 billion, partly due to the effect of COVID-19 lockdowns across the world. Out of the total capital importation, $9.55 billion, representing 98.9 percent were domiciled in Lagos and Abuja. Investors did not find 26 states interesting as they did not attract any amount in the form of capital importation.

In all, attracting investments into the various states in Nigeria requires more serious attention to the business environment in Nigeria. On this note, it is not surprising that a serving minister lamented that ECOWAS countries now lobby businesses domiciled in Nigeria to relocate to their countries

In 2021, capital importation further declined by 30.6 percent to $6.7 billion. The bulk of the investments which amounted to 86.9 percent, or $5.82 billion came to Lagos State. Abuja only attracted $833.4 million or 12.5 percent of the total capital importation in 2021.

The case of eight states is striking in that from 2019 to 2021, they did not attract a penny as an investment. These states are Bayelsa, Ebonyi, Jigawa, Kebbi, Kogi, Taraba, Yobe and Zamfara.

Yet, it is important to appreciate here that Bayelsa State is Nigeria’s fourth-largest crude oil-producing state where the nation gets 18 percent of its crude production from. The state is also blessed with many aquatic resources that are enough to be a source of attraction to domestic and international investors. Surprisingly, these natural endowments have not attracted the desired level of investments.

Ebonyi State has witnessed significant infrastructure upgrade in the last eight years, owing to the commitment of the current governor, David Umahi to leave a lasting legacy for his people. New projects such as the international shopping mall, industrial clusters, international airport, 17 completed flyovers, building materials market, among others, now dot the state’s landscape.

But why have investors not taken notice of these? Possibly the relevant authorities have not done enough through advocacy and orchestration to attract investors to the state.

Indisputably, some of those aforementioned states are the hotbeds of insurgency. However, the case of Jigawa State is different. It has been relatively peaceful in the face of insurgency in Northern Nigeria, especially in the north-western states of Kaduna, Katsina, Zamfara, Sokoto and Kebbi.

Interestingly in recent times, rice farmers have recorded a very high yields per acre above the national average yield per acre. Why should a state with this attribute not attract investments? The problem could well be one of media image in which there is an undiffrentiated disposition towards all the states in the North.

That 24 states in Nigeria did not attract investments in 2021 is a clear sign that whatever projects state governors have executed towards attracting investments are partly not yet noticed by investors and possibly not the kinds of programmes desired by prospective investors.

As the voice of business, we are of the view that, it is time to implement programmes that have been tested and proved. States should learn from Ogun State. Based on the NBS data, the state attracted $30.46 million through capital importation between 2019 and 2021.

Prior to 2019, Ogun State organised investors’ fora, which served as avenues for foreign investors to explore the state. The state has since metamorphosed into the industrial hub of Nigeria, as it attracted investments in agro-allied, manufacturing and service sectors.

In other states, it is important to note that insecurity has dealt a serious blow to the concerted efforts being made to attract investors to the south-east, north-west, north-east and some states in the north-central part of Nigeria.

Without addressing this scourge, foreign and domestic investors are not likely to take the governors in those states seriously. Now that the current security system has abated somewhat, no time than now is ripe for the creation of state police.

Moreover, the volatile exchange rate is another challenge. An average investor looks for a day he or she will repatriate his/her dividends and other earnings. But with the deteriorating and fluctuating exchange rate, most investors are worse off at the time of repatriating their investments. This needs to be looked into.

Another point for state governments is to organise tailored-investment promotions targeting specific investors. For instance, if some investors are aware that Jigawa and some states in the north-west have higher yields per acre in rice farming than the national average, they could have been attracted to the state.

In all, attracting investments into the various states in Nigeria requires more serious attention to the business environment in Nigeria. On this note, it is not surprising that a serving minister lamented that ECOWAS countries now lobby businesses domiciled in Nigeria to relocate to their countries. Such a lamentation is a pointer to the fact that, on the external platform, there is competition for foreign investment.

And to this extent, we must get our acts together. The federal and state governments must put their houses in order, so as to reverse an inclement trend that has the capacity to ensure a southward shift for the Nigerian economy.