Nigeria as Africa’s top FDI destination




According to the National Bureau of Statistics (NBS’) publication on Nigeria’s capital importation report for the first and second quarters of 2021, the nation received a sum of $875.62 million foreign inflows in Q2 2021, representing a year-on-year decline. Despite this, the Absa Africa Financial Markets Index 2021 (AAFMI) produced by the Official Monetary and Financial Institutions Forum (OMFIF) and sponsored by Absa Group Limited; a South African-based financial services group, ranked Nigeria as the third most attractive country in Africa for foreign investment. 

According to the National Bureau of Statistics (NBS’) publication on Nigeria’s capital importation report for the first and second quarters of 2021, the nation received a sum of $875.62 million foreign inflows in Q2 2021, representing a year-on-year decline. Despite this, the Absa Africa Financial Markets Index 2021 (AAFMI) produced by the Official Monetary and Financial Institutions Forum (OMFIF) and sponsored by Absa Group Limited; a South African-based financial services group, ranked Nigeria as the third most attractive country in Africa for foreign investment. 
According to the AAFMI evaluation of financial market development in 23 African countries, Nigeria was highlighted as one of the top economies with the most supportive environment for effective markets. 
To rank the countries’ openness and attractiveness to foreign investment, AAFMI used six pillars and Nigeria’s performance across the six pillars were: market depth, 62; access to foreign exchange, 20; market transparency, tax and regulatory environment, 86; capacity of local investors, 44; macroeconomic opportunities, 69 and enforceability of standard master agreement, 100. Overall, Nigeria scored 63 points to occupy the third position while the first and second positions went to South Africa and Mauritius, which scored 86 and 70 points respectively.
The report further stated that nine countries in the index, including Nigeria, have introduced products that could be classified as green or sustainable and emphasised that, “green bonds are the most popular instrument, being at investors’ disposal in seven countries”. Nigeria is also among countries that are using technology in their stock exchanges to boost retail participation. Nigeria’s Securities and Exchange Commission (SEC) launched FinPort, a fintech and innovation portal to assist fintech businesses to understand the regulatory requirements for the Nigerian capital market.
Taking a look at the country’s debt profile, the report noted that Nigeria had kept its official borrowing relatively low; “At 8.4 per cent of GDP, it has the best debt profile, boosting its ranking by five places to fifth”. 
This is a confirmation that the Buhari government has not borrowed beyond its limit as against naysayers criticism that the loans under President Muhammadu Buhari were humongous and hence worrisome.
AAFMI also acknowledged the fact that

This is a confirmation that the Buhari government has not borrowed beyond its limit as against naysayers criticism that the loans under President Muhammadu Buhari were humongous and hence worrisome.
AAFMI also acknowledged the fact that Nigeria has continued to make strides in creating an enabling investment environment for foreign investors, with the necessary regulatory developments and policy initiatives. 
To commend the AAFMI’s ranking, the Buhari Media Organisation (BMO) noted that, “this is one piece of good news from the international stage at a time some economists have been hogging the headlines in local media with doomsday scenarios and predictions on the viability of FDIs in the country without a recourse to facts and figure. 

“But the Africa Financial Markets Index 2021 (AAFMI) posted on the website of one of Africa’s foremost financial service companies has shown clearly that the Buhari administration has not been sleeping on the wheel as far as opening up the economy to foreign investors is concerned.
“So we acknowledge that Nigeria still has a lot to do to be Africa’s top foreign investors destination especially in the areas of access to foreign exchange and capacity of local investors, but what is not in doubt from the report is that Nigeria now has an attractive regulatory and market environment.
“It is also interesting to note that Nigeria has consistently risen on the AAFMI since inception in 2017 when it was ranked 6th.”

It is worthy to note that despite the challenges we are facing as a nation, Nigeria has been able to successfully turn the economy compass in the right direction not just in terms of domestic growth but more importantly in the aspect of FDI. The implications of this is that it is going to drive economic growth. More money will flow into the country, more jobs will be created which in turn will lead to increased income and more purchasing power. It will also ignite economic activities which will boost the country’s economy in the long run.

The federal government has been up and doing in a bid to create a viable business environment capable of attracting and retaining investors as well as boosting their confidence in our system. This ranking has proved that it’s efforts have not been put to waste, but rather yielding positive results.

It is believed that beyond rhetorics, government will not relent until the country becomes the ultimate destination for foreign investment in Africa.Ijanada writes fromAbuja

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