Nigeria records worst FDI status, loses $2.34bn in 13 months

The Nigerian economy has been hit by dwindling fortunes losing not less than $2.24bn in foreign direct investment (FDI), the worst in its history, according to findings by economists.

According to them, between July 2015 and August 2016, the country witnessed unprecedented decline in the value of direct and portfolio investments, which was heightened by the economic recession that it gradually slipped into, following the fall in price of crude oil in the international market.

The situation was not helped by the slow approach to the early signs of the recession by the President Muhammadu Buhari-led administration, insisting the local currency would not be devalued even when IMF said devaluation was one of the ways out.

Said an investment expert, Mr. Niyi Kazim of Brooklyn Ventures:”The policy thrust that made Nigeria to divert its economy towards China, as evidenced by the loan the government sought from that country sent a lot of wrong signals to western investors.”

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He also claimed that the conclusion of plans to float naira through Chinese currency, the Yuan, was the last straw to discourage real investors into Nigeria.

Thus, the investment inflow of $3.75bn recorded in the third quarter of 2015 showed a sharp decline by 30 percent by April 2016 and took a further dive to $2.6 bn June, only to hit its worst status of another decline in August to $2.34bn.

Other reasons adduced by the experts for the persistent fall in FDI included the scarcity of foreign currency to support revenue repatriation by investors in addition to the spate of violence, particularly in the Niger Delta region, which was attracting more than 70 percent of the investments in the country.

The National Bureau of Statistics, in its Q2 report stated that all the three major components of investment such as Foreign Direct Investment, portfolio investment and other investments recorded huge declines in the one-year period.

In terms of FDI inflow, an analysis of the report showed that the economy attracted the sum of $717.72m as of the third quarter of 2015.

The inflow, according to the report, dropped to $133.02m at the end of the second quarter of this year.

By Emma Eke….

 

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