Despite a global economic downturn, negative impact of the Russia-Ukraine war, high cost of living and insecurity in the country, Foreign Investors have continued to see good fortunes and positive return in their Investments by massively investing in the Nigerian economy. FDI in Nigeria contributes positively to economic growth
By implication, the astronomical rise in Foreign direct investments FDI into the Nigerian economy is a big pointer to the fact that government’s economic measures and policies are working and further opening up the space for more investments.
Just a couple of days ago, Nigera’s National Bureau of Statistics, NBS disclosed that foreign funds invested into the Nigerian economy in the second quarter, Q2 of 2022 have increased to $1.535 billion (N632.8bn) from the $875 million in the second quarter of 2021.
This increase of 75.34 per cent sounds very positive for the country and her citizens as it further opens up the space for employment and job creation opportunities.
Worthy of note in the NBS document is the fact that the largest amount of capital received was through portfolio investment, which accounted for 49.33% ($757.32m) and was followed by Other Investments with 41.09% ($630.87m) and Foreign Direct Investment (FDI) accounted for 9.58% ($147.16m) of total capital imported in Q2 2022.
According to the sector performance, capital importation into banking had the highest inflow of $646.36m, amounting to 42.10% of the total capital import.
Capital imported into the production sector was next at $233.99m (15.24%), and the financing sector followed with $197.31m (12.85%).
The report also said by country of origin, funds from the United Kingdom ranked top at $781.05m, accounting for 50.87%, followed by Singapore and the Republic of South Africa at $138.58m (9.03%) and $122.26m (7.96%) respectively.
By Destination of Investment, Lagos state remained the top destination in Q2 2022 with $1,054.18m, accounting for 68.66% of total capital investment into Nigeria. This was followed by investment into Abuja, FCT valued at $453.95m (29.57%).
Investigation results suggest that the determinants of FDI investments that make our country tick include market size, infrastructure development and stable macroeconomic policy of the PMB administration. Others include openness to trade and available human capital.
It must highlighted that some major attraction points for foreign investors to Nigeria are but not limited to its significantly privatized economy, beneficial tax system, abundance of human resources and low labour costs among others.
Some of the main investing countries in Nigeria include the USA, China, the United Kingdom, the Netherlands and France.
Some of the advantages of FDI include but not limited to contributing positively to the country’s economic growth and development, increased employment opportunities, development of human resources, expansion of human capital by subsistence of workforce and enhancing the country’s finance and technology sectors.
However, FDI brings with it some disadvantages which include interference in domestic investments.
MUSA ILALLAH
EMEKA ANYAOKU STREET ABUJA
musahk123@yahoo.com
