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Recession: Investment Inflow Shrinks by N642bn Under Buhari

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Muhammadu-Buhari

The Nigerian economy recorded a total decline of $2.1bn in investment inflow in the first 12 months of the administration of President Muhammadu Buhari.

The $2.1bn, when converted based on the N305.5 per dollar official exchange rate of the Central Bank of Nigeria, translates to about N642bn.

Investigations by our correspondent showed that since July 2015, the country had been experiencing persistent decline in the value of direct and portfolio investments.

An analysis of the capital importation report obtained by our correspondent from the National Bureau of Statistics revealed that the country attracted a total investment inflow of $2.75bn in the third quarter of 2015.

However, owing to the harsh operating environment coupled with exchange rate uncertainties, the inflow had declined by $2.1bn to $647.1m at the end of June this year.

The report stated that all the three major components of investment such as Foreign Direct Investment, portfolio investment and other investments recorded huge declines in the one-year period.

In terms of FDI inflow, an analysis of the report showed that the economy attracted the sum of $717.72m as of the third quarter of 2015.

The inflow, according to the report, dropped to $133.02m at the end of the second quarter of this year.

For portfolio investment, which is made up of equity, bonds and money market instruments, the report stated that the sum of $1.09bn was invested in the third quarter of last year.

The $1.09bn investment, it added, dropped by $673.68m to $245.32m at the end of June this year.

For other investments made up of trade credits, loans, currency deposits and other claims, the report stated that the sum of $1.02bn was invested in the economy as of the third quarter of last year as against $268.77m in June this year.

The NBS attributed the decline in investment to the harsh economic climate, stating that the investment attracted within the first six months of this year was the lowest in Nigeria’s history.

It said, “The continuing decline in the value of capital imported into the economy is symptomatic of the difficult period that the Nigerian economy is going through.

“The second quarter saw the economy enter into the first recession during the rebased period, according to the technical definition of two consecutive periods of decline.

“This may suggest less profitable opportunities for investment. In addition, in the second quarter, there was considerable uncertainty surrounding future exchange rate policy, which may have deterred investors.”

Commenting on the drop in investment inflows into the country, financial analysts said the current fiscal and monetary policies of the government were not friendly to investors.

The President, Abuja Chamber of Commerce and Industry, Mr. Tony Ejinkeonye, told our correspondent that a lot of investors were unwilling to bring in their funds due to the tough economic environment in the country.

He said the tough operating environment had led to the closure of so many companies in Nigeria, adding that there was a need for the government to address the structural challenges, which had made the operating environment hostile.

He listed some of the areas that were scaring away investors to include uncertainty in the foreign exchange market, hostile business climate, infrastructure deficit and the absence of adequate incentives to attract investors into key sectors of the economy.

Ejinkeonye told our correspondent that what the country needed currently was for the government to implement a well-articulated industrial plan.

This, according to him, is needed in order to begin a new era for industrial development in Nigeria.

He said, “The Abuja Chamber of Commerce and Industry has made it known to the government that the issue of power and energy must be urgently addressed in order to promote industry, boost productivity, and attract both foreign and local direct investments.

“Power and energy sufficiency is the fulcrum of any meaningful development of the economy. This is the time for us as a nation to start implementing consistent policies geared towards attracting investments that will revitalise our industries.”

The Registrar, Chartered Institute of Finance and Control of Nigeria, Mr. Godwin Eohoi, advised the government to look inwards by encouraging the patronage of locally-produced goods to boost investment activities.

He said, “We have to look inwards to reflate the economy by ensuring the encouragement of local content through patronage of locally-made goods. This will help stimulate production by local industries and thus boost investment.

“The government should come up with policies that will encourage investors to set up plants in Nigeria for production rather than spending money importing all these items that are depleting our foreign exchange reserves.

“The government should also reduce the interest rate to make funds available for investment in critical sectors of the economy such as agriculture, manufacturing and others.”

Eohoi added that since foreign investors were shying away from investing in the country, Nigeria should look inwards and encourage local industries by reducing interest rate and making foreign exchange available to them to continue production.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Investment

Nigeria’s Insecurity Issues Force Mexican Investors to Stall Investment Plans

The insecurity issues ravaging Nigeria have forced some Mexican investors to put a hold on their plans to invest in the country.

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The insecurity issues ravaging Nigeria have forced some Mexican investors to put a hold on their plans to invest in the country.

This was disclosed by the Nigerian Ambassador to Mexico Hon. Adejare Bello.

He said that the Nigerian embassy frequently receives inquiries from investors about their plans to invest in the country and for possible collaboration.

With the abundance of natural resources in Nigeria, these investors have been looking to invest in areas such as gold mining, oil and gas, and agriculture, as well as partnering with Africa’s richest man Aliko Dangote in the area of fertilizer procurement.

Unfortunately, these investors have stepped back on their plans due to the incessant attacks and insecurity challenges bedeviling the country.

In his words, “In the last decade, one of the critical challenges facing the Nigerian economy is the lack of adequate security of life and properties which has made the country lose so much in terms of foreign direct investment.

“The present situation in the country is very clear evidence of the impact of insecurity on the nation’s development in general and on the economy in particular.

“Lives are lost in the bombings, properties destroyed and businesses collapse as some businessmen who are not indigenes of the affected states leave and migrate to other states. Even the indigenes are taken to refugee camps leading to an increase in government expenditure”

Hon. Bello stated that the insecurity issues in the country have led to a slowdown of Foreign Direct Investment (FDI) which is worrisome, noting that it would be beneficial to the country due to its recent economic challenges.

He, therefore, called on the Federal Government to summon the political will necessary to ensure adequate internal security on a sustainable basis and create a friendly investment climate for inflows of foreign capital into the country.

Investors King understands that Nigeria’s insecurity challenges have not only slowed down investment inflow in the country, but it has also led to the exit of several multinational firms.

The country continues to miss out on so many opportunities of attracting Foreign Direct Investments (FDI) due to escalating insecurity crisis.

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Ogun State Government Inaugurates Ogun Invest, Facilitates Agency

Ogun State Government on Friday inaugurated the Ogun State Investment and facilitation Agency, commonly referred to as the OGUNINVEST.

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Governor Abiodun of Ogun State

Ogun State Government on Friday inaugurated the Ogun State Investment and facilitation Agency, commonly referred to as the OGUNINVEST.

The inaugural ceremony was held at the Governor’s Office in Oke Mosan, Abeokuta.

The Ogun State Governor, Dapo Abiodun who led the inauguration said the newly inaugurated OGUNINVEST would promote the state and give access to both local and international investors.

The Governor, during the ceremony, said his administration had so far attracted nothing less than 36 investment portfolios that are worth over $1 billion.

He said that the investments altogether were able to generate over 40,000 jobs for the citizens of the state, and the facilitation agency would strengthen governance and diversification in Ogun state.

Abiodun disclosed that the primary focus of the agency is positioned on making the state an investment of choice, generating wealth for all in Ogun State citizens, and helping the private sectors grow.

He said, ” The facilitation agency is committed to attracting, facilitating, and nurturing investments into Ogun State.

“Our administration through Oguninvest Will continue to play the role of the enabler and facilitator to help the private sector grow, create jobs, and generate wealth for all in Ogun State.

“We have continued to reap a bountiful harvest from our commitment as existing investments are thriving and new investments are being attracted. As of today, we’ve been able to attract 36 new investments into Ogun State worth over a billion United States dollars and generated an estimation of over 40,000 jobs since the inception of OGUNINVEST.”

He disclosed that his administration has always been committed to the growth of the industrial sector in the state and that his administration would soon commence the construction of the Special Agro Processing Zone by November 2022.

The Governor included that a lot of tax reforms had been introduced under his administration, ensuring that multiple taxes were removed and his administration has also successfully made its payment process digital.

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Nigerian Investors Petitions Kenya Courts to Release Funds Held in Several Bank Accounts

2,000 Nigerian investors demanding the release of Ksh 1.44 billion ($1.8million) held by Safaricom and four other banks in Kenya.

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A petition has been made by more than 2,000 Nigerian investors demanding the release of Ksh 1.44 billion ($1.8million) held by Safaricom and four other banks in Kenya.

These investors claim that they were duped billions of shillings by a sports betting platform (86FB) that used Nigerian and African Fintech company Flutterwave to process payments.

Citing Kenya’s anti-money laundering laws, these investors are demanding that the sum of $12 million is split from the Ksh 6.6 B ($55 M) that was frozen in July in 62 bank accounts at Guaranty Trust Bank (GTB), Equity Bank, Ecobank, and UBA Bank, as well as in 19 Safaricom paybill numbers.

The Assets Recovery Agency (ARA) was granted permission to freeze Ksh 5.17 B (USD 49 M) in 29 GTB accounts, with the remaining funds held in accounts at Equity and Ecobank in Kenyan Shillings, US Dollars, Euros, and British Pounds.

The large sums are alleged to be the proceeds of theft, credit card fraud, and money laundering that were wired under the guise of payments for goods and services.

One of the investors who identified himself as Morris Ebitimi Joseph claimed that he and other investors had filed a new lawsuit in Nigeria to seek the return of their funds.

They argued that a portion of the money belonged to them and have opposed the attempt to forfeit it to the Kenyan government which they claimed were fraudulent proceeds.

In his words, “I believe that the issuance of an order compelling Guaranty Trust Bank, Equity Bank, and Ecobank to deposit the sums excluded in the bank account of our advocates, justice shall be served to the 2,468 interested parties who were swindled of their hard-earned money through the scheme”.

Morris claimed that the investors put money into the investment scheme on the promise of better returns from the betting business, but however, never materialized.

Before the payments stopped, according to them, everything was fine for about six months. He also shared that after conducting research, he came to the conclusion that the operation was questionable, and now wants to join the case and help the court resolve the issue.

The Nigerian contingent is requesting the Central Bank of Kenya (CBK), which declared in July that Flutterwave is not licensed in Kenya, to ask that the court issue an order directing Access Bank, Safaricom, and United Bank of Africa to deposit the excluded amount in the account of his attorneys.

“The claim made by the applicant/intended interested party represents the interest of 2,468 persons, thus occasioning monumental public interest.

Failure to expeditiously determine whether the application is in like fashion constitutes substantive and irreparable injustice,” Joseph says. He contends that there may be more people with an interest in the funds in addition to the 2,468 people who are requesting an injunction.

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