Nigeria’s Foreign Direct Investment has dropped to $875 million in the second quarter of this year–the lowest since 2016.
This is not unconnected to the consistent insecurity threat, tough policies and other important factors that the country faced within the quarter.
This was contained in a presentation by the Chairman, Presidential Advisory Committee on the Economy, Prof. Doyin Salami, for the Nigeria Economy Summit Group (NESG).
The report said total foreign investment inflows into Nigeria remain low as “investment inflows were $875 million in 2021 Q2 (second quarter) – the lowest quarterly inflow since 2016 Q1.
“FDI inflow into Nigeria has revolved around $1.0 billion in the last five years. FDI inflow in 2021 Q2 was $78m, even lower than 2020 Q2,” Salami said.
The report highlighted the hurdles facing the country’s investment climate to include macroeconomic instability, policy inconsistency, inadequate infrastructure, insecurity, and a tough business climate.
Analysis of the report showed that total investments inflow dropped from $1.99bn to $0.88bn in Q1 and Q2 of this year.
The FDI also began a steep drop from the third quarter of last year after it rose $414.8m; it dropped to $251.3m in Q4 2020, further to $154.8m in Q1 2021, and was at an all-time low of $78m in Q2 2021.
The presidential committee report noted that Nigeria is also facing issues of a deficit balance of trade.
“There was a significant improvement in Nigeria’s trade deficit position in 2021 Q2. The deficit narrowed to N1.87 trillion. While the value of imports declined by 1.5% year on year, exports value increased by 75% with crude oil dominating export items at 80%.
On the current foreign exchange rate crisis, it said the market is witnessing a supply shortage to meet its demand with the gap expanding.
“From N92 in June to N99 in July, as CBN stopped the sale of forex to BDC operators; as of July 2021, interbank and parallel forex rates had depreciated by 6.27% and 6.67% year to date,” it noted.
Salami’s report said the forex pressure may continue till year-end “owing to limited inflows from both crude and non-oil sources, rising imports and a backlog of foreign currency demand.”