The President, Dangote Group, Aliko Dangote, has urged local and foreign investors to invest more in the nation’s economy, because Nigeria offers good returns on investment.
Addressing a group of businessmen, who paid him a visit in his office, Dangote remarked that many investors whose businesses were thriving and doing well at present would have been discouraged if they had looked at the nation’s economic indices, which might not look good for investment.
He emphasised the need for the government and other investors to focus more on agriculture and manufacturing since oil, as the mainstay of the economy, was becoming unreliable.
A statement from the firm quoted Dangote as saying that following his unwavering faith in the economy, his company would invest more in Nigeria and create more jobs.
According to him, the economic development of the country rests more on the shoulders of the private sector operators, while the government’s strategic role is to provide a conducive environment by putting in place the right policies that will encourage the setting up of business outfits.
“It is only through the active involvement of the private sector that infrastructure deficit can be tracked and tackled by the government. Nigerians should also contribute their own quota by paying their taxes as part of their own respective contributions to the growth and development of the country,” he stated.
Dangote, who is a member of the committee recently set up by the government with the mandate to resettle Internally Displaced Persons as a result of insurgency in the North-East, stated that his foundation had been helping the vulnerable and disadvantaged women by disbursing money to help them start businesses that could impact positively on them and their immediate families.
Many states, according to him, have benefitted from the scheme, which costs the Dangote Foundation billions of naira annually.
SEC In plans To Embrace Crypto Investment, Set Up Fintech Unit For Regulations
The Securities and Exchange Commission (SEC) has set up a fintech division to study crypto investments and products in order to come up with regulations, the Director-General of the commission, Lamido Yuguda said on Thursday.
“We are looking at this market closely to see how we can bring out regulations that will help investors protect their investment in blockchain,” Yuguda was reported to have said by Reuters in a virtual interview in Abuja.
He did not provide a time frame for issuing regulations but said the SEC will step in with regulations once crypto is allowed within the Nigerian banking system.
The SEC has sought to regulate crypto on the grounds that they qualify as securities transactions.
Nigeria is one of the biggest markets for crypto trading, but in February the Central Bank of Nigeria (CBN) banned banks from transacting or facilitating deals in cryptocurrencies.
The use of bitcoin, the original and biggest cryptocurrency, has boomed in Nigeria in recent years, driven by payments from small businesses and a weakening naira currency, which makes it difficult to get the U.S. dollars needed to import goods or services.
Yuguda said the commission has been in talks with the CBN, part of which led to the plan by the regulatory bank to launch the country’s digital currency, e-naira.
The commission is seeking to work with fintech firms to boost the marketing of domestic securities to prevent capital flight.
The central bank this month blocked the accounts of six firms for allegedly sourcing funds from illegal foreign exchange operators to buy foreign securities and cryptocurrencies.
He said the SEC is looking to boost savings through investment schemes, which currently have over N4 trillion under management split between public and private fund managers.
Yuguda said the regulator has asked private managers to put in place custody arrangements to protect investors.
In 4 Years 92 Percent Of Investment Opportunities Lost in Nigeria
Within the period of 2017 and 2020, Africa’s largest economy, Nigeria has lost over 92 percent of investment available to the country. The loss in investment sums up about $188.29 billion.
According to the report of the Nigerian Investment Promotion Commission (NIPC) on “Investment announcements versus FDI (Foreign Direct Investments) Inflow in Nigeria, 2017 – 2020” the discrepancies between the FDI announcement and actual FDI inflow were revealed. The commission stated that the actual inflow of FDI into Nigeria was 7.65 percent of the total FDI announcements.
This is an affirmation that the FDI announced by the commission did not materialize or translate to actual investment inflow.
In the period 2017 to 2020, the NIPC FDI announcement stood at $203,89 billion, however, the actual FDI within the same period was $15.6 billion and unmaterialized FDI announced was $188.29 billion.
In 2017, statistics obtained from NIPC revealed a total of $66.35 billion FDI announcement but only $3.5 FDI inflow was recorded. For 2018, 2019 and 2020, $90.89 billion, $29.91 billion and $16.74 billion FDI were announced in each year respectively. However 2018 FDI inflow was $6.4 billion, 2019 inflow was $3.3 billion and 2020 FDI inflow was $2.4 billion.
With this report, the commission asserted that its report was based solely on Investment announcements which may not contain exhaustive information on all investment announcements in the country within the said period.
According to NIPC, the gaps between announcements and actual investments demonstrate investments potentials that were not fully actualised.
The Commission stated: “A more proactive all-of-government approach to investor support, across federal and state governments, is required to convert more announcements to actual investments.”
Reacting to the situation, Director General, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Ambassador Ayoola Olukanni, noted that the gap may not be unconnected to the economic recession and COVID-19 pandemic events within the period, aggravated by policy instability.
Olukanni stated: “Numerous studies have established that Foreign Direct Investment is dependent on the market size of the host country, deregulation, level of political stability, investment incentives, openness to international trade, economic policy coherence, exchange rate depreciation, availability of skilled labour, the endowment of natural resources and inflation.
“You will agree with me that the four years spanning 2017 and 2020 are characterized by the struggle to exit from economic recession, a period of slight recovery, the COVID-19 pandemic, and another period of recession. These circumstances may or may not be responsible for the political and economic reaction that can be witnessed in the uncertainty in the foreign exchange market, increased inflation, increased unemployment, increased political unrest and insecurity and so on.
“What can be established is that Foreign Direct Investment is averse to risk and uncertainty, especially the kind of uncertainty brought about by policy instability and economic policy. An obvious example is the closure of the land borders in 2019, while justifiable through the lens of national security is certain to have a negative impact on Foreign Direct Investment which has a long-term planning horizon.
“In summary, to seek to increase actual FDI is to promote the factors that have been shown, empirically, to positively impact FDI. While the Nigerian economy checks the boxes of most of these factors, economic policy coherence, foreign exchange market stability and insecurity are issues that are currently the bane of FDI inflows.”
Also commenting, an economist and private sector advocate, Dr. Muda Yusuf, who is also the immediate past Director-General of Lagos Chamber of Commerce of Industry (LCCI), said the development reflects the low level of investors’ confidence occasioned by structural problems of infrastructure and worsening security situation.
His words: “It is investors’ confidence that drives investment, whether domestic or foreign. Investors are generally very cautious and painstaking in taking decisions with respect to Foreign Direct Investment (FDI). This is because FDIs are often long-term and invariably riskier, especially in volatile economic and business environments. Uncertainties aggravate investment risk.
“Investors in the real sector space are grappling with structural problems, especially around infrastructure. There are also worries around liquidity in the forex market; there are concerns about the accelerated weakening of the currency. There are issues of heightened regulatory and policy risks in many sectors.
“Investors’ confidence has also been adversely affected by the worsening security situation in the country. Meanwhile, the economy is still struggling to recover from the shocks of the COVID-19 pandemic. These are the likely factors impacting investment decisions.
“Our ability to attract FDI will depend on how well we position ourselves. The critical question will be around expected returns on investment. Overall, it is the investment climate quality that will make the difference. We need to ensure an acceleration of necessary reforms to make Nigeria a much better investment destination. We need policy reforms, regulatory reforms and institutional reforms, among others.
“We should accelerate the ongoing foreign exchange reforms; we need to undertake trade policy reforms to liberalise trade in sectors of weak comparative advantage; we need regulatory reforms to make regulations more investment-friendly. We need to create new opportunities in the public-private partnership (PPP) space, especially in infrastructure. We need to see more privatization of public enterprises.
“It is important as well to quickly fix the ravaging insecurity in the country. All of these are crucial to boost investors’ confidence.”
Afghanistan Turmoil Adds to Investors’ Worry List
The fast-evolving situation in Afghanistan must be added to investors’ growing list of global issues to track as stock markets digest that the Taliban are back in power, warns the CEO of one of the world’s largest independent financial advisory, asset management and fintech organisations.
The warning from Nigel Green, chief executive and founder of deVere Group, follows the Taliban quickly seizing the capital Kabul where thousands of civilians desperate to flee thronged the airport.
It came after U.S. President Joe Biden’s controversial decision to remove troops from Afghanistan after Donald Trump’s concessions to withdraw U.S. forces as part of a conditional agreement between the U.S. and Taliban leaders.
Mr Green says: “Despite the news coming out of Afghanistan, there is not likely to be an immediate shockwave rippling through global stock markets.
“Investors are currently more focused on other key factors that could impact returns.
“These include the fallout from the delta variant of Covid, concerns about peak earnings, disappointing Chinese economic data, slowing growth, and this week’s publication of the minutes of the Federal Reserve’s latest meeting which could hint at a shift in policy.”
He continues: “However, the major geopolitical turbulence triggered by the Taliban’s effective power grab will certainly be added to investors’ growing list of global issues to track as it could have longer-term implications for markets.
“There will be questions regarding stability in the Middle East, the global influence of the U.S. and the mounting pressure on Biden, the prospect of increasing international terror threats, and the growing dominance of China’s renminbi.”
Early in trading in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.4%. European markets are set to open lower on Tuesday as investors monitor the Afghanistan crisis. On Wall Street, U.S. stock index futures were slightly lower after the Dow and S&P 500 on Monday closed at record highs.
The deVere CEO concludes: “Investors will be monitoring the Afghanistan situation carefully as it could very likely have implications down the road.
“As ever, investors’ best tool to avoid risk and seize opportunities is to remain invested and ensure proper diversification across asset class, sectors, currencies and regions.”
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