Nigeria’s $10bn FDI target achievable despite election risks
By Nigeria’s positive outlook for foreign investments flows into its economy is on course but there are risks, as the general elections approach, which will make investors cautious.
Foreign investments during the previous elections reduced by 53.5 per cent from $20.7 billion to $9.6 billion in 2014 and 2015 respectively, according to the National Bureau of Statistics report (NBS).
The outlook on both domestic and foreign investments is seen to be positive due to the 119 per cent rise from $5.1 billion recorded in 2016 and $12.2 billion in 2017, according to the NBS report, total capital inflow in 2017 nearly doubled the same period in 2016.
During the World Economic Forum held in January, Udoma Udo Udoma, the Budget and National Planning Minister, said that the government is targeting to achieve $10 billion in Foreign Direct investments (FDI) and be among the top 100 in the ease of doing business by 2020
“It is a forecast that is doable but conditioned on how quickly we are able to complete the process of reforms and infrastructures in the country. So, yes, it is possible, especially in the area of ease of doing business which is looking good”, Yemi Kale, Statistician General, National Bureau of Statistics (NBS) said.
As the 2019 elections approach, investors might be cautious about making investments into the country despite a positive outlook on crude oil prices and production.
“Nigeria has election in 2019 which therefore reduces her attraction in the international economic scene. It is not because it happens in Nigeria but that is how it is in any part of the world”, Doyin Salami of Lagos Business School, said.
People familiar with the matter say during general elections, FDI has a wait and see approach. “I expect it to slow down in the second, third, and the rest of the year. We will see a slight decline in foreign inflows because people will want to see if there will be crisis or chaos” Kale said
The trend observed during the 2015 general elections might reoccur in the coming elections and when there is an unstable political environment it reduces investor confidence in a country.
“Nigeria clearly lacks understanding about articulating a foreign exchange policy and as we head into an election period, we will definitely experiencing reduction of capital inflows”, Salami said.
“People want to invest in Nigeria. The country is very marketable and profitable. If the pace of the current polices are sustained, infrastructures fully implemented and making the environment conductive for businesses, more inflows will come in”, Kale said.
“We can even do more than that, once the government gets its act together. Government policies and reforms will attract foreign direct investments.” Dolapo Ashiru, a stockbroker, said.
Some of the policies that have capacity to change the business environment and improve the ease of doing business in Africa’s most populous country include, better regulatory oversight, “sale of government parastatals like NNPC, deregulating downstream oil and gas sector, unbundling government stake in Gencos, sale or concessioning of national theatre, stadiums, and oil pipelines” Ashiru added.
Bunmi Bailey
The post Nigeria’s $10bn FDI target achievable despite election risks appeared first on BusinessDay : News you can trust.