FDI declined by $470.8m in past five years — NBS
Nigeria has experienced a decline of $470.8 million in foreign direct investments over the past five years, according to analyses of Capital Importation reports by the National Bureau of Statistics.
Foreign direct investment is defined as an ownership stake in a foreign company or project made by an investor, company or government from another country.
The bureau’s third quarter 2023 Capital Importation report showed that total foreign investments into the country had dropped to $654.6m from $1.1bn in Q2. Other Investment accounted for 77.56 percent ($507.77 million) of total capital importation in Q3, followed by Portfolio Investment with 13.31 percent ($87.11 million).
Foreign Direct Investment accounted for only 9.13 percent of the total capital importation during the quarter ($59.77 million).
On a year-on-year basis, FDI decreased by 26.8 percent from $81.72 million recorded in the third quarter of 2022 to $59.77 million in the third quarter of 2023.
If further declined by 89 percent on a five-year basis, from $530 million recorded in the third quarter of 2018 to the $59.77 million recorded in the corresponding quarter of 2023.
The NBS data also showed that between 2018 and 2023, FDI into Nigeria had been on a consistent decline. For example, in 2018, Nigeria recorded FDI of $1.1 billion. By 2019, it declined to $934.3 million.
It grew slightly to $1 billion in 2020 and fell sharply to $698.78 million in 2021 before dropping significantly to $468 million in 2022. In the first three quarters of 2023, Nigeria has only attracted FDI of $193.4 million.
According to a Bloomberg report, the decline in Nigeria’s FDI inflow was attributed to factors such as multiple exchange rates and the central bank’s rationing of dollars.
The International Monetary Fund, in its Country Report for Nigeria, also highlighted Nigeria’s complex exchange rate policy and multiple exchange rates as some factors affecting the inflow of FDI to the country.
Also, a former Statistician-General of the NBS, Yemi Kale, emphasised the need for clarity on the foreign exchange policy to attract foreign capital inflow.
While presenting a paper titled ‘Strengthening the technical capacity of stakeholders towards domesticating quality and sustainable investment into Africa,’ a professor of International Economic Relations at Covenant University, Jonathan Aremu, urged the Federal Government to prioritise intra-Africa trade as a means to boost foreign direct inflow.
Aremu said, “The government must guard against creating an investment regime that is more favourable to foreign investors by creating more onerous obligations than those that currently exist under the already existing bilateral investment treaties.
“It must provide a suitable, acceptable and effective method for the settlement of investment disputes; and ensure that the provisions which govern intra-Africa investment will lead to an increase in sustainable, intra-African and foreign direct investment flows.”
