The World Bank has said that foreign direct investment in Nigeria remains low due to limited availability of foreign exchange, security concerns and other structural challenges.
According to the bank, these challenges have also affected the net withdrawal of capital by foreign investors. The global bank revealed this in its ‘Nigeria Development Update (December 2022): Nigeria’s Choice’ report.
He stated that FDI and foreign portfolio investment contributed only 1 percent to the country’s GDP and did not compare favorably with similar economies around the world.
He said: “Net foreign direct investment and foreign portfolio investment flows into the Nigerian economy remain low, totaling only around 1 per cent of GDP.
“Net FDI inflows are negative, reflecting net capital withdrawals by foreign investors. The flow of FDI and FPI into Nigeria does not compare favorably with similar economies around the world, reflecting difficulties with the availability of foreign exchange, security concerns and other structural challenges in recent years.
“Low growth and slow structural transformation have contributed to this result: the pace of structural transformation of the national economy of the 2000s has not been sustained for a long enough period.”
Earlier this month, the punch reported that the entry of FDI into the country fell by 58.98 percent in 11 years. The Washington-based lender revealed this in its annual report labeled ‘International Debt Report’. He said the country’s FDI depreciated from $5.97 billion in 2010 to $2.45 billion in 2021.
In a previous interview with the puncheconomics professor and former vice-chancellor of Greenfield University Seth Akutson explained that Nigeria’s monetary and fiscal policies do not encourage foreign investors.
He said: “The security situation in the country does not encourage FDI. People cannot put their money in a country riddled with insecurity.
“In addition, the Federal Government’s policy framework does not encourage investors. If you look at the capital market, you will see that there are many exits in foreign portfolios. The fiscal policy environment and the tax regime have not encouraged investors to invest their money here. Multiple taxes left, right and center have not encouraged investors.
“The showman process of going to attract investors does not hold up. You have to look at the real variable”.