Mr. Adeniyi Adebayo, Nigeria’s Minister of Industry, Trade and Investment, recently stated that the country’s economy received investment commitments totalling USD10 billion over the last six months. This information was disclosed by the minister at the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) diplomatic luncheon in Abuja.
According to him, the data implies that “Nigeria is open for business and our investment climate is continually improving. The year 2020 was challenging for all economies but Nigeria is coming back strong.
The statement noted that, “In the first half of this year investment announcements were at USD10.1billion; an increase of 100% in 2020. Investors from Europe, China, Morocco and the UK are making strong commitments and this administration is working tirelessly to ensure that these commitments turn into projects that positively affect our nation”.
He added that the Federal Government recognised the importance of attracting and retaining patient investment into the economy, saying this accounted for his Ministry’s commitment to the strategic relationship that exists with the Chamber and to continue working with the leadership “towards our collective objectives of attracting more investments to the nation’s economy”.
While the information on investment commitments into Nigeria is good news, historical trend shows that actual investments account for less than 20% of committed amounts.
At the end of 2020, data from the National Bureau of Statistics (NBS) shows that the foreign direct investment (FDI into Nigeria was at a measly USD1.03billion (largely unchanged from 2019). This shows the weak amount of FDI into Nigeria.
A report by the UNCTAD in July 2021 noted that COVID-19 pandemic had a significant impact on foreign direct investment (FDI) in Africa as flows to the continent which declined by 16% in 2020 to USD40 billion, from USD47 billion in 2019.
Across SSA, FDI inflows decreased by 12% to USD30 billion, with investment growing in only a few countries. FDI to Southern Africa decreased by 16% to USD4.3 billion despite repatriation of capital by multinational enterprises (MNEs). Mozambique and South Africa accounted for most inflows in Southern Africa.
In West Africa, Nigeria’s inflows (based on UNCTAD data) had a slight increase to USD2.4 billion (from USD2.3 billion in 2019), compared to total FDI in the region which amounted USD9.8 billion in 2020. This means that Nigeria accounted for 25% of inflows in West Africa but only 6% of African FDI flows in 2020.
The statement by the Minster also added that the trade ministry would sustain its strategic relationship with the Chamber of Commerce, work towards achieving collective objectives. According to the minister, this is even more important considering the impact of the implementation of the Africa Continental Free Trade Agreement (AfCFTA).
“AfCFTA will enhance Africa’s capacity to unlock growth and create jobs by building our industrial capacity, enlarging our productivity, and making us more competitive globally. NACCIMA is pivotal in ensuring Nigerian businesses remain competitive in this new environment,” he said.
The Minister listed efforts being made by the Federal Government to create an enabling environment for foreign direct investment to include improving Nigeria’s World Bank Ease of Doing Business ranking from 170 to 131; promogulated Executive Order 001; revision of Nigeria’s Bilateral Investment Treaty (BIT) model to include specific provisions for investment facilitation and to support investors in actualizing their investments.
Others include the launch of an online investment guide called “iGuide Nigeria ”, which provides investors with real-time information on the processes and basic costs of setting up and doing business in Nigeria and the development of a Compendium of the Investment Incentives in Nigeria, and also launched the Book of States, a document that showcases the comparative advantages and key investment opportunities in each of Nigeria’s States.