A presentation by Wale Edun, the Minister of Finance to top business leaders at the Lagos Business School Breakfast Club showed a decline in Foreign Direct Investments into Nigeria by $19 billion in 10 years, from $22.7 billion in 2014 to $3.7 billion in 2023.

The Lagos Business School Breakfast Club provides an avenue for C-suite executives to gain access to high-quality intelligence about the operating business environment with the primary objective of showing the nature of available opportunities or affording a better understanding of current issues. The minister spoke about the key issues confronting the economy and what the government was doing about it. He further mentioned that foreign investors were not interested in improving the nation’s foreign direct investment due to rising inflation in Western countries and the need to keep interest rates high by tightening the money supply.

According to Edun, the basis of the Federal Government’s economic reforms is to boost Forex supply through increased Foreign Direct Investments and Foreign Portfolio Investments.

The Foreign Direct Investments in Nigeria in 2014 stood at $22.7bn, reduced to $14.4bn the following year and to $10.4 in 2016. In the succeeding years, FDI continued to take a downward trend, reducing to $9.8bn in 2017, slightly increasing to $11.9bn in 2018, but declined once more to $9.2bn in 2019. In 2020, there was a marginal increase to $10.2bn, dropped significantly to $6.9bn in 2021, $4.6bn in 2022, and before recording another drop to $3.7 in 2023.

At the meeting, Edun also announced plans by the Federal Government to issue domestic bonds denominated in foreign currency in the second quarter of this year to attract additional foreign exchange inflows to stabilize its currency. He said, “Because of lack of faith in the currency, we have decided to try to hold and save in dollars. “All the funds in the diaspora, we are targeting them. There are all these funds that you have brought into your (local foreign currency) accounts, we are targeting them”

In February, the Minister of Trade, Industry and Investment, Doris Uuzoka-Anite, said that Nigeria attracted $30bn worth of investments during President Bola Tinubu’s first eight months in office. Anite claimed that $30bn in investment commitments were attracted across various sectors of the economy. She clarified that these represent promises from investors, not immediate cash injections, and that the actual financial inflow would be spread between five and eight years.

Additionally, she listed the investments arriving in various forms, including in equipment and direct investments in manufacturing facilities. Anite said, “The Federal Government has secured an investment commitment of $30bn since we came into power eight months ago. It means the investors are going to bring in the money or a promise to bring in the investment. So the money, investment proposal, and every other thing is done.

“Some have already started building and the investments will come in over five to eight years. Some of the monies will come in the form of equipment, and direct investments into manufacturing and the facilities. So that fund is here already.”

Speaking at the 40th annual Conference of the Chartered Institute of Directors in Abuja, Edun noted that the lack of investor appetite to invest in Nigeria means the government might turn to the corporate world for solutions and investments, and this will force the government to depend on domestic resource mobilization. Edun said the essence of attracting investment into the economy is to increase productivity, grow the economy, create jobs, and reduce poverty, noting that this is the overall aim of President Bola Ahmed Tinubu and his economic policies.

He claims the government lacks funds and that funding is not available internationally as the Western countries have issues of inflation they are battling and have to keep interest high, tighten the money supply, and cannot provide any kind of development financing presently required.

“When we talk about investment and attracting investment into the economy, we are not only talking about domestic investors but about foreign direct investments, private investment, and much more than what the multilateral organizations may have to offer. The big prize is to make our economy, institutions, and corporate governance such that it attracts, from around the world, those interested and have surplus savings to invest in for profitable ventures.”

Source: Punch