Economists have argued that Foreign Direct Investment (FDI) into Nigeria is likely to improve under the incoming administration of President elect Bola Ahmed Tinubu.
Tinubu was declared winner of the February 25 presidential polls by the Independent National Electoral Commission (INEC).
Speaking at a webinar, Group Head of Investment Banking at Coronation Merchant Bank, Taiwo Olatunji, noted that the manifesto of the new President-elect have a slight shift from what the present regime has been doing, adding that it touched on how to tackle the economy, and shrink or reorganise the structures of government.
“Now most of the investors are trying to look into Nigeria directly, and that means that we are going to see more inflows of FPI coming into the system because if you create enabling environment to attract some of this investment they are definitely going to come and from the policy regime on the manifestos that we see from the president-elect, it shows that we are moving on that direction.
“It is expected that FDI will improve because as a market-focused government, it will allow the private sector to thrive.”
“In respect of FPI, I think that will take a bit of time because we still have the forex issues in Nigeria whereby we have multiple rate regimes. I think a lot of things need to be done here in a bid to bring about currency stability. FPI doesn’t want uncertainty around capital control issues and stability,” he said.
According to the Co. Managing Partner of Comercio Partners Limited, Steve Osho, the major challenge that contributed to slowing down the inflow of investment into the country is the fiscal policy of the outgoing administration of President Muhammadu Buhari.
“Nigeria’s foreign portfolio equity recorded a $2.08bn shortfall between 2010 and 2021 amid an unfavourable economic environment characterized by forex challenges and loss of investors’ confidence.
He said this was because the nation’s business environment was unattractive and the inability of investors to repatriate dividends.
“Nigeria recorded foreign portfolio investments of 3.39 billion in 2021, dropping by 34 per cent compared to $5.16 billion recorded in the previous year, the worst amount of FP! Attracted by Nigeria in the past five years
He said, “As a foreign investor, investing in a country when you are unsure of taking your money out whenever you want, becomes very difficult.
“There is this repatriation risk that comes with investing in Nigeria by foreigners. The depleting FX reserves have been a huge factor for this decline.”
“With the new government, what is expected is that exports will increase, and FDI will increase. What does that mean? The dollar will increase in the economy and if the dollar increases in the economy, the naira can be strengthened and it will improve our reserves. When we have a strong reserve we can use it to safeguard our economy and invest in medium to long-term projects,” he said.
