Economic crisis: Nigeria records huge foreign direct investment fall

Foreign direct investment into Nigeria decreased by a third in 2022 and fell massively from its peak in 2008.

– Key points to note

The National Bureau of Statistics said Tuesday the FDI fell from $698 million to $468 million between 2021 and 2022.

It slumped by approximately 90% from its peak of $4.7 billion in 2008.

The figures reflect Nigeria’s economic problems and severe dollar scarcity that has plagued the country for years.

The Central Bank of Nigeria’s multiple exchange rates and rationing of dollars deter foreign investment since investors may be unable to repatriate their returns.

– Why this matters

Foreign direct investment is vital as it brings in much-needed capital and resources to the economy.

This injection of foreign funds can help create jobs, promote economic growth, and improve infrastructure. FDI also encourages local businesses to expand and compete globally by increasing productivity, efficiency, and competitiveness.

– Learn more

Nigeria’s economic growth has slowed since the 2014 oil price crash and has struggled to gain momentum in the face of various challenges such as weak infrastructure, rising inflation, and a lack of foreign investment.

The naira has depreciated by 57% against the US dollar since President Buhari took office in 2015. As a result, companies have been exiting the country due to the dollar shortage and restrictions on repatriating funds.

Last month, global airline industry association IATA said Nigeria was withholding $743 million in revenue earned by international carriers operating in the country, the highest amount owed by any nation.

Emirates Airline said it had “substantial” amount of ticket sale revenue trapped in Nigeria and has made only slow progress in repatriating blocked funds out of Africa’s biggest economy.

The International Monetary Fund (IMF) has also cited the CBN’s intervention in Nigeria’s foreign exchange market as a hindrance to capital inflows.

Bola Tinubu, expected to be sworn in as new president on May 29, has pledged to review the foreign exchange policy and accelerate economic growth to create jobs.