In the same week Vice President Yemi Osinbajo lamented that foreign investors are fleeing the country, it looks like they are beginning to look the way of Nigeria again.
Speaking during his first policy dialogue with the private sector in Lagos on 11 August, Osinbajo disclosed that Foreign Direct Investment (FDI) into Nigeria has dropped by 56% from US$395 million in the first quarter of 2015 to a low of just US$ 175 million in the first quarter of 2016.
Similarly, Osinbajo also disclosed that Foreign Portfolio Investment (FPI), that is investment made mainly in bonds, treasury bills and other financial assets by non-resident Nigerians, also dropped from US$621 million to US$90.3 million within the same period.
But no sooner has Osinbajo disclosed the dire state of investment inflows into the country than South African Insurance giant, Old Mutual announced on 12 August that it is going into partnership with Nigeria’s Sovereign Investment Authority (NSIA) to set up two funs that will invest in agriculture and real estate.
Both institutions said that through the funds, they will jointly raise and invest US$500 million to invest in real estate and another US$200 million to invest in agriculture projects in Nigeria.
Chief executive of NSIA, Uche Orji, disclosed that both the NSIA and Old Mutual will each commit $100 million initially for the real estate fund and $50 million for the agriculture fund.
“We are looking at office towers, commercial real estate. We are investing equity in agriculture. We are looking at farming with emphasis on export.” Orji said.
Also on 15 August, a group of private equity investors led by rock star Bob Geldof announced that they have acquired a minority stake in Nigerian biscuit maker Beloxxi Industries Limited for $80 million to help the company expand.
Investing alongside Geldof is Nigerian-based African Capital Alliance and German Development Finance Institution DEG.
The news of both investments have raised hopes that foreign investors may be looking the way of Nigeria again following the decision by the Central Bank of Nigeria (CBN) to float the naira. The decision has resulted in the value of the naira falling by about 60% from N197 to an official value of about N315 currently.
The steep fall in the value of the naira has made it cheaper for foreign investors to buy into Nigerian assets. This could encourage foreign investors to start investing in Nigeria again and help boost the country’s external reserves, which have come under pressure due to the dwindling inflow of foreign investments. The return of foreign investments will also help create jobs and reduce the rising unemployment in the country.
The announcement of both investments is seen as good news for the Nigerian economy, which has suffered recently from lack of good news that could stimulate economic activity. More of such news is needed to help lift business confidence in the economy.