Experts have stated that Nigeria has chances to boost foreign investment inflows to lessen its difficulties with foreign exchange liquidity as a result of the growing interest in investment migration in Africa and around the world.
The method of obtaining citizenship or residency rights in exchange for financial contributions to their host nations is known as investment migration or immigration by investment.
The National Bureau of Statistics (NBS) reports that capital inflows into the largest economy in Africa fell to $3.89 billion last year from $5.42 billion in 2022, the lowest level in 14 years. Nigeria’s GDP is expected to grow to $1 trillion by 2030 under the Tinubu administration, up from $472.6 billion in 2022.
Experts claim that investment migration can revolutionize societies by bringing in vital foreign money and promoting long-term, sustainable economic growth. It also acts as a creative financing instrument.
“The industry is worth $58 billion, so Nigeria should get into it. Because of corruption, they are not benefiting from it. If not for that, the country’s expatriate revenue would be around $2.5 billion,” said Idowu Olumide, managing director/CEO of Global Citizenship Services.
According to him, a lot of foreigners are interested in obtaining a Nigerian passport. “Investment-based immigration has a knock-on effect; it generates wealth and foreign investments, which in turn generate jobs.”
In an interview, Stuart Wakeling, managing partner at Henley & Partners, stated that the demand for investment migration products has increased recently as more nations are realizing how advantageous it is to have a reliable source of income without piling up debt that could burden future generations.
“Investment migration, supported by major players like the US and the UK, is now an established and rapidly expanding feature of the global economic landscape,” he continued.
Over the past eight years, Nigeria has experienced two economic recessions that have reduced foreign inflows and created a liquidity problem in the FX market.
By March 1, 2024, the naira has depreciated from 463.38/$ to 1,548.3/$ due to the FX regime’s liberalization in June. The value of the naira dropped to 1,544/$ from 762/$ on the black market.
According to NBS data, the high cost of sourcing foreign exchange had a part in the country’s headline inflation rate rising from 28.92 percent in December to 29.90 percent in January.
Before making investments in a country, foreign investors would take into account factors like security, ease of doing business, stability, and the degree of infrastructure development, according to Gbolahan Ologunro, portfolio manager at FBNQuest.
He stated, “Therefore, it would not be inappropriate to say that Nigeria’s immigrant investor programs may not achieve the same level of success as those in other countries that have adopted them.”
But considering that the government is attempting to bring in dollar inflows into the nation at this crucial juncture, he suggested that it might be a project that they might also undertake.
“We find ourselves in a dire circumstance. The quantity of short-term strategies or actions to increase interest rates and draw in foreign portfolio investment has been the main focus of efforts. So, in the long run, the investment migration scheme can be undertaken to attract investments to the country.”
Senior economist Omobola Adu of BancTrust & Co. stated that the scheme offers an additional means of obtaining foreign exchange to bolster the value of the naira.
“The government should investigate attracting international tourists before adopting or executing it. In Nigeria, tourism contributes very little to foreign exchange gains when compared to other sources,” he stated.
Top nations for obtaining citizenship and residency by investment include the US, Canada, Portugal, Spain, Malta, and Cyprus. In addition to these Western nations, investment migration schemes are being used by certain African nations, such as Namibia and Mauritius, to draw in wealthy individuals.
The most recent African wealth report states that between 2012 to 2022, there were 69% more resident millionaires in Mauritius. The nation was formally designated as a high-income country by the World Bank in 2020.
Henley and Partners analysts noted that while Mauritius is well-known for its beautiful tropical climate, multiculturalism, and breathtaking living environments, the country’s competitive business landscape, dynamic economy, and favorable tax regimes have also contributed to its increased stature internationally and drawn in high-net-worth individuals and families.
They added that the Mauritius Residence by Investment Program is the most effective option for people who want to live in the island nation to obtain such status. “Those who invest in the country’s real estate market can become Mauritian residents within six to eight months under this program.”
In Namibia, there were 20% more dollar millionaires, and in the ensuing ten years, that number is expected to increase by 60%.
According to Henley and Partners, the program’s primary goal is to draw in foreign investors from neighboring South Africa, which has one of the largest economies on the continent, at least during its pilot version, which began in February of last year.
