Foreign direct investments into Nigeria have decreased by $470.8 million over the last five years.
This followed analysis of various National Bureau of Statistics Capital Importation reports.
According to Investopedia, FDI is an investment in a foreign firm or project made by a foreign investor, company, or government.
The NBS reported on Friday in its third quarter 2023 Capital Importation report that total foreign investments entering the country fell to $654.6 million from $1.1 billion in Q2.
Other Investment accounted for 77.56 percent ($507.77m) of total capital inflow in Q3, 2023, out of the $654.6m, followed by Portfolio Investment with 13.31 percent ($87.11m).
Foreign Direct Investment, on the other hand, accounted for only 9.13 per cent of total capital importation ($59.77 million) during the quarter.
Year on year, FDI fell by 26.8 per cent, from $81.72 million in the third quarter of 2022 to $59.77 million in the third quarter of 2023.
On a five-year basis, it fell by 89%, from $530 million in the third quarter of 2018 to $59.77 million in the comparable quarter of 2023.
According to the NBS data, FDI into Nigeria has been steadily declining between 2018 and 2023. For example, Nigeria received $1.1 billion in FDI in 2018. By 2019, it had dropped to $934.3m.
It increased marginally to $1 billion in 2020 before falling considerably to $698.78 million in 2021 before declining significantly to $468 million in 2022. Nigeria barely received 193.4 million in FDI in the first three quarters of 2023.
According to Bloomberg, the drop in Nigeria’s FDI influx was ascribed to issues such as various exchange rates and the central bank’s dollar rationing.
The International Monetary Fund cited Nigeria’s complicated exchange rate regime and numerous currency rates as factors influencing FDI inflows to the country in its Country Report for Nigeria.
In addition, a former NBS Statistician-General, Yemi Kale, stressed the importance of clarity in foreign exchange policy in order to attract international capital inflows.
In 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 prioritize intra-Africa trade as a means of increasing foreign direct investment.
“The government must avoid creating an investment regime that is more favourable to foreign investors by imposing more onerous obligations than those that currently exist under the existing bilateral investment treaties,” Aremu said.
“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.”
