Major obstacles to the growth of foreign direct investment (FDI) in Nigeria have been recognized as low cash availability, insecurity, and other structural difficulties.
The World Bank noted this in its most recent report, “Nigeria Development Update (December 2022): Nigeria’s Choice,” according to reports.
The international financial institution claims that these difficulties have also had an impact on foreign investors’ net equity withdrawals.
The international bank also pointed out that FDI and Foreign Portfolio Investment (FPI) have only contributed 1% to the GDP of the nation and are not particularly competitive with other similar countries around the world.
In the statement, it was said that “Net foreign direct investment and foreign portfolio investment flows into the Nigerian economy remain modest, totaling only approximately 1% of GDP.
“Net FDI outflows are negative as a result of net stock withdrawals by foreign investors. With respect to similar economies throughout the world, Nigeria does not compare favorably in terms of FDI and FPI flow. This is due to current issues with FX availability, security worries, and other structural hurdles.
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“This outcome has been influenced by low growth and slow structural change; the rate of structural transformation of the domestic economy in the 2000s has not been sustained over a significant length of time.”
In the meantime, a previous analysis noted that FDI entry into the nation declined by 58.98% in 11 years.
This information was provided by the Washington-based lender in its yearly report titled, “International Debt Report.” According to the report, FDI decreased from $5.97 billion in 2010 to $2.45 billion in 2021.
Sharing his expertise with the news platform earlier, a Professor of Economics and former Vice-Chancellor at Greenfield University, Seth Akutson, said that Nigeria’s monetary and fiscal policies do not encourage foreign investors.
He declared, “The country’s security environment does not promote FDI. Money cannot be invested in a nation when there is so much unrest.
Additionally, the federal government’s policy structure discourages investors. There are numerous exits in overseas portfolios, as may be seen on the stock market. Investors have not been enticed to invest here by the tax and fiscal policy environment. Numerous taxes imposed from all angles have not boosted investor confidence.
“The showman’s approach to seeking out investors is ineffective. The true variable needs to be considered.