Nigeria’s failure to encourage investors hampering economic growth- NESG

The Nigerian Economic Summit Group (NESG) has warned that Nigeria’s inability to give the right signal to investors will reduce the inflow of investments needed for the country’s economic recovery.

Asue Ighodalo, chairman of, NESG said in a statement made available to BusinessDay that in recent times, Nigeria has experienced low foreign investors’ confidence due to issues ranging from insecurity, foreign exchange scarcity, entrenched capital controls and an unfriendly business environment.

“Our inability as a nation to give the right signalling to investors will lead to subdued investment flows and capital flight which has a number of consequences furthermore. The lack of investor confidence also implies that the cost of borrowing for both the government and corporates will increase,” he said.

He highlighted the current dispute between Kogi State & Dangote Cement plc, noting that the action taken by the state government gives the impression that such a commercial dispute cannot be amicably settled using the existing dispute resolution mechanisms.

“Such action sends inappropriate signals to investors, both domestic and foreign, and could result in an increase in our country’s risk rating,” he said.

Read also: Nigeria’s debt restructuring plan amidst overspending raises fiscal policy questions

Highlighting some impacts of subdued investment inflow, Ighodalo said Nigeria’s ability to sustain the growth and development of the non-oil sector which is expected to bring in revenues to finance the 2023 budget and beyond, will be hampered while wrong signal will lead to the underdevelopment of the financial and capital market with very limited financial instruments and investable assets.

“The expected investment into the oil sector of which the full implementation of the newly passed Petroleum Industry Act is expected to attract may be jeopardised while dwindling foreign exchange earnings through limited capital inflows will lead to continued devaluation of the naira,” he added.

He also said that the recently submitted 2023 appropriation bill shows a huge deficit that relies on the country’s ability to attract and mobilise both foreign and domestic capital, adding that the Nigerian delegation to the ongoing annual meetings of the World Bank/International Monetary Fund would be expected to seek some support and attract the much-needed foreign investments into the country.

The NESG chairman noted that the Nigerian government will be under pressure to service its debt and this could either constrain future budget non-debt expenditures or result in more borrowing, both of which will heighten the risk of a depressed economy with rising unemployment and poverty rates.

“Following the constrained fiscal space faced by the Nigerian government, investment in critical sectors is what will drive economic recovery and sustain the growth momentum in the medium term as both local and foreign direct investment is often associated with job creation, technical knowhow, technology, economic growth and the strive towards efficiency,” he said.

He, however, acknowledged the effort of the government towards improving the business environment and urged all tiers of government to ensure that the right signalling and conducive business environment are provided to attract both foreign and domestic investment.