The nation’s unemployment rate will rise as a result of the states’ declining ability to draw in foreign investment, and the subnational governments’ ability to generate internally generated income (IGR) would be diminished.
According to the National Bureau of Statistics (NBS), The News Chronicles reported last month that only four states received foreign investments in the fourth quarter of last year, which is the lowest number in nearly three years.
The states of Lagos, Abuja, Ekiti, and Rivers received $1.09 billion in Q4 as opposed to $654.6 million in Q3 for the six states. In Q1, the number increased to nine; in Q2, it fell to five.
“States with little investment will suffer a continuous decline in their IGR. They will begin to lose a lot of jobs because when investors invest in a state, they will consider employing locals, which will also effect them in that area,” said Femi Egbesola, national head of the Association of Small Business Owners of Nigeria (ASBON).
He claimed that a large number of Nigerian states lack security and that investors would not want to move to such a place.
“States that draw investment have high rankings for business ease of doing business. States that are struggling to draw in investment should consider how to make conducting business easier in order to draw in capital,” the speaker advised.
According to the most recent Nigeria Labour Force Survey, the country’s unemployment rate increased from 4.2 percent in Q2 to 5.0 percent. It was 5.3% in Q4 of 2022, but it was just 4.1 percent in Q1. Since the NBS implemented a new approach for the nation’s work force, the unemployment rate has risen for two quarters in a row.
A total of N1.93 trillion was created in 2022 by 36 states and the Federal Capital Territory, an increase of 1.57 percent over N1.89 trillion the year before.
Given their strategic significance to the nation, Temitope Omosuyi, an investment strategy manager at Afrinvest Limited, said it is not shocking that nearly all capital inflows went to just four states.
Before making a fresh investment in Nigeria, he stated, “investors are waiting to see how the broad reforms and policy changes will make the environment conducive to their resources.”
Omotayo continued, “the key determining factors are clearly improvements in the security of lives and properties across the nation and the stability of the foreign exchange rate.”
When President Bola Tinubu entered office in May of last year, he removed the petrol subsidy and initiated foreign exchange reforms, two measures that piqued the interest of international investors. Nigeria is the most populous country in Africa.
In an attempt to increase foreign investment in the nation, he welcomed a number of significant corporations a few weeks after assuming office, including Airtel, ExxonMobil, Shell Petroleum Development Company, and Bank of America.
However, his policies have made inflation worse, which is now double digits and at an all-time high. Consumers’ purchasing power has decreased due to growing inflationary pressures, even as firms struggle with increased operating costs.
Nigeria’s headline inflation rate increased in January for the thirteenth consecutive month, from 28.92 percent to 29.90 percent, according to the NBS.
The inflation rate for food, which makes up 50% of the total inflation rate, increased from 33.93 percent to 35.41 percent.
Foreign investments in states have decreased, according to Okafor Tochukwu, a lecturer at Global Banking School in Stratford, London, because of the growing inflation, foreign exchange problem, and insecurity. “Some investments have been lowered due to insecurity, even in Abuja.”
