European Union (EU) has expressed concern over mixed response from foreign investors into Nigeria due to consistent drop in the country’s Foreign Direct Investment (FDI) from $8.9 billion in 2011to $4.9bn in 2014.
The EU Ambassador and Head of delegation to Nigeria and ECOWAS, Michel Arrion paid a courtesy visit to the Nigerian Investment Promotion Commission (NIPC) yesterday, to chart a way forward and how the Union can help improve Nigeria’s FDI.
The fall in FDI, The EU Ambassador said, is more worrisome to the Union because of the drop in the country’s oil earnings, which according to him, “is something that decreases the government’s capacity to make up shortfalls in private investment in infrastructure or other important capital projects.”
Nonetheless he said, “Europe remains Nigeria’s important partner with regard to Foreign Direct Investment (FDI). In 2013, for instance, Netherlands, France, UK and Italy made up 49 per cent of Nigeria’s FDI stock (OECD Investment Policy Review on Nigeria 2013).”
“FDI into Nigeria has dropped from a peak of $8.9bn in 2011 to $7billion in 2012 and further down to $5.6billion in 2013 and to N4.9billion last year. As a result, Nigeria has been overtaken by South Africa and Mozambique which accounted for 14.3 per cent and 10.3 per cent respectively. The main message we are sending to Nigeria is that the country is in competition with other countries. So, investors in Europe, Strafford, Brussels, or France have to decide where to invest; am I going to Brazil, Indonesia, India or Nigeria.”
He said the drop is due to a combination of factors while admitting that Nigeria has a lot of comparative advantage and many opportunities for any European investor, having come a long way together in terms of tradition, history and geography. He said that Nigeria will have to work on its waning image so as to assure in investors of the safety of their investment.
“The difficulties in Nigeria are certainly linked to the tradition and image of Nigeria. It has to work on its image. Also the question of enabling environment, corruption and rule of law we all know that. The worst thing Nigeria can have is the negative result of the doing business ranking of the World Bank. If Nigeria could put in place an action plan to improve its ranking in doing business, I think it will help a lot. Investors are looking for that kind of ranking to choose among the different options they have for investments.”
Devaluation of Naira
Arrion who did not clearly state whether the country should devalue its currency or not, confessed that Nigeria is severely affected by the fall in oil prices stating that if the country did not want to devalue its currency, it will be forced to do so sooner or later.
According to him, “It is better sometimes to manage a proper and broad way of devaluation rather than to broke for six months to try to resist some things that is inevitable rather than the question of yes or no, if we are going to devalue, the question should rather be when or how much.
“It is not the end of the road to devalue. There are a lot of countries who are just using a relatively rich currency or relative weak money just to be a bit more competitive. There is nothing wrong in devaluation, the question is how much and how long.”
“The real problem behind devaluation issue is the problem of competitiveness, so if you are very competitive you will win throughout the devaluation process.”
While welcoming the EU delegation, the Executive Secretary, Mrs Aishat Uju Hassan-Baba assured the delegation that the country’s FDI will sure pick up as the current administration is gradually settling down. Now that Nigeria has settled down and the government is in place, things are only going to get better by next year all the issues mentioned by the EU Ambassador will be addressed.”
She added that the NIPC has repositioned itself to ensure that it works closer with ministries and agencies to ensure that the policies and regulations do not impact negatively on the business climate in Nigeria. On the image of the country, Hassan-Baba said there has been tremendous improvement on the country’s image since May 29, 2015.
“Nigeria’s perception abroad has greatly changed there has been a shift and this has been because of the enormous goodwill that President Buhari is enjoying from the international community. NIPC has been charged to live up to its responsibility to ensure that in its promotion of investments in to the country the business climate is closely monitored and that is what we do.” She further assured that investors around the world will begin to see significant change in country’s image and other factors from 2016.