Economists believe that Foreign Direct Investment (FDI) into Nigeria will increase under President-elect Bola Ahmed Tinubu’s administration.
The Independent National Electoral Commission (INEC) declared Tinubu the winner of the presidential election on February 25.
Taiwo Olatunji, Group Head of Investment Banking at Coronation Merchant Bank, stated during a webinar that the new President-elect’s manifesto is a slight departure from what the current regime has been doing, adding that it touched on how to address the economy and shrink or reorganize government structures.
Now most of the investors are trying to look into Nigeria directly, and that means that we are going to see more inflows of FPI coming into the system because if you create enabling environment to attract some of this investment they are definitely going to come and from the policy regime on the manifestos that we see from the president-elect, it shows that we are moving on that direction.
It is expected that FDI will improve because as a market-focused government, it will allow the private sector to thrive.
In respect of FPI, I think that will take a bit of time because we still have the forex issues in Nigeria whereby we have multiple rate regimes. I think a lot of things need to be done here in a bid to bring about currency stability. FPI doesn’t want uncertainty around capital control issues and stability, he said.
According to Steve Osho, Co. Managing Partner of Comercio Partners Limited, the fiscal policy of President Muhammadu Buhari’s outgoing administration has been a major challenge in slowing the inflow of investment into the country.
“Nigeria’s foreign portfolio equity recorded a $2.08bn shortfall between 2010 and 2021 amid an unfavorable economic environment characterized by forex challenges and loss of investors’ confidence.
He stated that this was due to the unattractiveness of the country’s business environment and the inability of investors to repatriate dividends.
“In 2021, Nigeria recorded foreign portfolio investments of $3.39 billion, a 34% decrease from the previous year’s total of $5.16 billion, the lowest amount of FP!” Nigeria has drawn me in over the last five years.
He said;
As a foreign investor, investing in a country when you are unsure of taking your money out whenever you want, becomes very difficult.
There is this repatriation risk that comes with investing in Nigeria by foreigners. The depleting FX reserves have been a huge factor for this decline.”
With the new government, what is expected is that exports will increase, and FDI will increase. What does that mean? The dollar will increase in the economy and if the dollar increases in the economy, the naira can be strengthened and it will improve our reserves. When we have a strong reserve we can use it to safeguard our economy and invest in medium to long-term projects, he said.
