Foreign Direct Investment in Nigeria has crashed by 78 per cent in three months amid a worsening foreign exchange crisis in the country.
Figures obtained from the National Bureau of Statistics showed that the country’s FDI fell from $698.78m in the fourth quarter of last year to $154.97m in the first quarter of 2022, indicating a decrease of 78 per cent of $543.81.
According to the report, the nation recorded of an FDI of $154.97m in the first quarter which comprised only equity investment. The report noted that Nigeria recorded $698.78m FDI which comprised of equity capital of $692.58m and other capital of $6.2m in the fourth quarter of 2021.
The country recorded $107.81m, $77.97m and $154.76m FDI in the third, second and first quarters of 2021 respectivel
The Central Bank Governor, Godwin Emefiele, had said at the last Monetary Policy Committee meeting that a marginal interest rate hike signaled the need to curb inflation and could moderate foreign exchange pressures in the medium term by attracting foreign investors.He said “The net FDI has been very low while there was a substantial reversal of FPI flows from the country in the fourth quarter of 2021. This poor trend is apparently due to the unconducive domestic investment climate which appears to be worsening.”
According to him, there has been a slowdown in foreign portfolio inflows into emerging markets.
He said, “In February 2022, such inflows stood at $17.6bn compared with $66.4bn in February 2021, the highest since December 2020. The risk factors include increased uncertainty surrounding the inflation outlook in the advanced economies, uncertainty over tapering plans by the US Fed, the regulatory developments in China and its real estate market-related systemic risk, and uncertainty regarding the Russia-Ukraine war and the resulting sanctions imposed on Russia. These factors have weighed down investor sentiment.”
The President, Association of Bureaux de Change Operators of Nigeria, Alhaji Aminu Gwadabe, claimed that the multiple exchange rates practiced in the country was discouraging foreign investors from bringing their monies into the country. He said, “The foreign exchange market is like any other market determined by market forces, demand and supply. Investors’ inflow, both the direct and the portfolio investors are not coming. Why? Because of the existence of official and flexible exchange rates.”