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In 4 Years 92 Percent Of Investment Opportunities Lost in Nigeria

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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.”

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Investment

Egypt Becomes first North African Shareholder in Africa Finance Corporation

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Egypt has joined Africa Finance Corporation, the continent’s leading infrastructure solutions provider, as the first North African sovereign shareholder, further diversifying AFC’s expanding equity investor base.

An AFC Member State, Egypt’s equity commitment and its imminent representation on the AFC Board of Directors enhances the Corporation’s pan-African spread of shareholders and diversified Board and management, which now includes governments, development finance institutions and institutional investors.

In 2022 alone, AFC onboarded Sierra Leone, Democratic Republic of Congo, Cote d’Ivoire, South Africa’s Public Investment Corporation, and the pension funds of Mauritius and Seychelles as shareholders. Other sovereign shareholders include Ghana, Gabon, Togo and Guinea.

As the largest North African economy, Egypt’s investment leads the way for other countries and investors from the region to join AFC’s shareholders and use its platform to boost regional trade and co-investment opportunities.

Egypt’s Minister of Finance, H.E. Dr Mohamed Maait, said: “This equity investment is a testament to our confidence in AFC’s role as a trusted partner in delivering transformational impact in Egypt and overall in Africa. We look forward to boosting our partnership with the Corporation as we work together to develop the key infrastructure projects in the pipeline.”

A growing and diversified shareholder base alongside profitable returns and consistent dividends are behind AFC’s A3 investment-grade credit rating, which the Corporation leverages to fulfil its mandate to close Africa’s infrastructure and industrial financing gap. With a membership of 39 countries now and total investments of US$11.5 billion over 16 years, the Corporation continues to deliver on its promise to support sustained robust growth and development in Africa.

AFC focuses on developing and financing sustainable investments in the core sectors of power, natural resources, heavy industry, transport and telecommunications, with a strategy of adding value to exports and creating jobs through the development of industrial ecosystems. The Corporation is committed to making Africa pivotal in the global race to net zero by reducing global shipping through localised production—including in minerals critical to battery production—while preserving Africa’s carbon sinks through optimal utilization of transition fuels and simultaneously developing its formidable renewable energy resources.

AFC has already identified an immediate project pipeline worth over US$1 billion in critical infrastructure across key sectors in Egypt, including renewable energy, natural gas, heavy industries, technology, telecoms, banking and finance. That is in addition to US$265 million of existing investments by AFC in Egypt.

“We welcome Egypt as a highly valued member of our core shareholders, helping us to maximise the impact of investments in systemic solutions within Egypt and across the continent,” AFC President & CEO Samaila Zubairu said. “We look forward to expanding our collaboration to elevate Egypt’s economy through delivering resilient infrastructure, in line with our mandate of catalysing economic growth, value accretion, and industrial development for all African countries.”

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NUPRC Sets to Attract More Investors, Begins 2022 Mini-bid Round

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As part of its efforts at wooing more foreign investors into the country’s oil industry, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has announced the commencement of its 2022 mini-bid round.
A press statement signed by NUPRC Chief Executive Officer, Gbenga Komolafe and dated January 10, a copy of which was published on the agency’s site, described the Mini-bid Round as a way of ensuring new exploration and drilling activities in the deep waters of the country.
The CEO said that the exercise would present seven blocks on offer.
According to the provisions of the Petroleum Industry Act, the 2022 Petroleum Licensing Round Regulations, and other relevant laws, the agency is expected to manage the mini-bid round process to facilitate more investment in the industry.
Komolafe assured that the mini-bid round would be transparent and competitive, stressing that the agency would organise a market-driven programme that would follow a  procurement process acceptable and designed to attract competent third-party investors from across the globe.
The statement further showed that the seven blocks on offer are located within the Gulf of Guinea, offshore Nigeria at approximately 150km South-East of Lagos Port ranging from 1000 meters to 2000 meters in water depth.
Blocks PPL-300-DO, PPL-301-DO, and PPL-302-DO are located in the Nigerian Transform Margin area. Blocks PPL-303-DO, PPL-304-DO, PPL-305-DO, and PPL-306-DO are within the deep-water Niger Delta Basin.

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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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