As of March 4th, 2021, Nigeria had received around $8.4 billion in investment announcements, with foreign investors pledging $5.46 billion. Domestic investors pledged the remaining $2.08 billion, according to figures received from the Nigerian Investment Promotion Commission.
The amount pledged by foreign investors in the first quarter of 2021 is $27.5 billion less than the $7.54 billion in foreign investment announcements recorded by the NIPC in the previous quarter.
The Q1 foreign investment profile, however, was 36.5 percent greater than the $4.02 billion reported in the same time in 2020, but 56.6 percent lower than the S12.6 billion reported in the same period in 2019.
The NIPC noted in its ‘report of investment announcements in Nigeria (January – March 2021)’ that Morocco, the United Kingdom, and the United States were the main sources of foreign investment announcements in Q1 2021.
Investors from the three countries invested $1.40 billion, $0.24 billion, and $0.08 billion, respectively, in Nigeria’s economy, while other investors from unidentified countries pledged $3.74 billion.
According to the research, the top investment destinations during the time were Bayelsa and Delta States, followed by Akwa Ibom and Lagos States.
According to data obtained from the NIPC, Bayelsa State received the largest share of total manufacturing announcements ($3.6 billion), Delta State had $2.94 billion in construction and power transmission announcements, Akwa Ibom State had $1.4 billion in mining and quarrying announcements, and Lagos State had $0.26 billion in electricity and manufacturing announcements.
Manufacturing had the most investment intentions, with $5.08 billion, followed by building ($2.9 billion), power ($0.26 billion), agricultural ($0.11 billion), and others ($0.07 billion).
In terms of volume, NIPC reported that Nigeria received 15 projects in eight states in Q1 2020, compared to 19 projects in 14 states, including the Federal Capital Territory, in the previous quarter.
Economists who spoke about the drop blamed it on the country’s unfriendly investment climate, which is exacerbated by repeated currency devaluation, volatile foreign exchange rates, and poor and inefficient infrastructure, among other things.
Sheriffdeen Tella, an economics professor at Olabisi Onabanjo University Ago-Iwoye, said that inefficient power supply, naira depreciation, and rising production costs are all contributing to the decline in foreign investor interest.
“Electricity and other infrastructure prices are rising, and because electricity is inefficient, many companies are forced to use other sources, such as power generation plants that use fuel, and the price of fuel has been rising,” he stated.
“As a result, their costs rise, and they become less willing to invest in the country.
“Another point to consider is that the naira has been depreciating even before the CBN devaluation.
“So they’re thinking that if they make money in naira, it won’t be worth much if they convert it to foreign currencies. As a result, the naira’s value fluctuation is also a factor.”
Dr. Chijioke Ekechukwu, a former Director-General of the Abuja Chamber of Commerce and Industry, said that insecurity, corruption, and uncertain government policies were driving the downturn, in addition to the aforementioned issues.
“At the top of the list is the level of insecurity that has bedeviled the country in recent years, and as you know, the insecurity has gotten worse every day,” he remarked.
“Another factor is the high level of inflation and the unfavorable exchange rates, followed by insecure government policies and finally corruption.
“Investors are fleeing to neighboring African countries as a result of these factors. Because the issues that exist here do not exist in nations like Ghana.”
The drop, according to Ekechukwu, has significant consequences for the Nigerian economy.
“The implications are that we don’t have enough foreign exchange to meet our demands; second, the jobs that these FDIs would have created are no longer there, and they’re going to other African countries,” he said.
“Third, these investments should have increased our GDP, but they haven’t done so. As a result, our GDP is only increasing modestly rather than significantly.”
The experts encouraged the federal government to address the militating concerns in order to create an appropriate and appealing environment for investment.
According to Ekechukwu, the government should ensure that the country is secure for citizens to live in and conduct business in.