Foreign investors are increasingly getting less interested in bring money to invest in Nigeria, the latest figures released by the National Bureau of Statistics has shown.
According to the data released by the NBS on 4 May, foreign investors brought into the country just $710.97 million in the first three months of 2016, the lowest foreign investment attracted by the country in a quarter, since the NBS started taking records from 2007.
The foreign investment in the first quarter was 54.34% lower than the foreign investment made in the last quarter of 2016 and 73.79% lower than the foreign investment made in the comparable period of 2015.
The drop in foreign investment into the country is of concern because it will impact negatively on the number of jobs that can be created in the economy and worsen the level of poverty.
There are several reasons for the sharp decline in foreign investment. Nigeria’s removal from both the JP Morgan and Barclays index is just one of the reasons. The removal from both indexes means that billions that foreign investors were bringing into the Nigerian capital market is no longer coming.
But the biggest issue for many foreign investors is the foreign currency decisions of the CBN. The rationing of foreign exchange means that many foreign investors are not certain they will be able to take out their money if they bring it into the country. For example, airlines have over $700 million trapped in the country because they have not been able to get dollars from the CBN.
There are also investors in the Nigerian capital market that have sold down their investments or received dividends on their investments in the country that cannot take it out of the country because they cannot get foreign exchange from the CBN.
In March, Unilever’s Africa President Bruno Witvoet, was quoted by Bloomberg as describing Nigerian foreign exchange policy as “insane.” Other investors say the policy has made Nigeria “uninvestible.”
The IMF has called on the Nigerian government to change direction. But the CBN, backed President Buhari, has continued to insist on the policy despite the obvious damage to the Nigerian economy.
