By Saad Yushau Shuaib
There is anxiety of the dwindling foreign direct investment in Nigeria
going by the recent statistics by the Nigeria Bureau of Statistics
While a foreign direct investment (FDI) is an investment in the form of
a controlling ownership in a business in one country by an entity based
in another country but it is distinguished from a foreign portfolio
investment by a notion of direct control. For a clarity, a foreign
investment is when a company invest in another country while Foreign
Direct Investment (FDI) is when a country owns 10 percent or more of a
foreign company, making it a wholly or partly foreign-owned.
Over the years, FDI has become the most important source of external
resource inflows to developing countries. This investment pattern has
also become a significant part of capital formation in these countries.
Nigeria is one of the economies with great demand for goods and services
and has attracted some FDI over the years.
FDI is assumed to benefit a developing country like Nigeria, not only by
supplementing domestic investment but also in transfer of technology,
increase in employment, development of human capital, access to
management expertise, economic stimulation, skills, technology and other
The recent data released by NBS reveals how the investment inflows into
the country have dropped significantly from $5.82bn to $5.36bn in the
second quarter of this year. This negative drawback represents about
7.78% in declination.
It is sad to note that Nigeria now attracts less foreign investment than
Ghana, a country with less population than Nigeria. By implication,
Nigeria’s economy can comfortably be said to be heading south as it is
clearly underperforming, despite a lot of resources spent by the
government on foreign trips and tours to attract foreign capital
However, in spite of the economic advantages, Nigeria is seemed to
attract little or no FDI inflows into the country. Nigeria is blessed
with enormous human and natural resources to make FDI comfortable, but
foreign investors are not coming in. Some of the reasons attributable to
the negative economic trend include corruption, insecurity, multiple
taxation, disobedient to the rule of law, and high-risk market for
Concerns have also been raised by the head of investment research at
Sigma Pensions Ltd, Mr Wale Okunrinboye, who said “weak FDI inflows
suggest the economy’s low growth cycle will continue because there is
no other assured path to robust growth without attracting investment.”
Nigeria government can be advised to adapt to Rwanda foreign investment
strategy used in 2017. The Rwanda FDI skyrocketed from 800 million
dollars in 2007 to 1.675 billion dollars in 2017 when the government
provided conducive environment for foreign investors.
According to Rwanda Development Board, three sectors that attracted the
most investments were construction and real estate (638 million
dollars), followed by mining (267.3 million dollars) and lastly
infrastructure (203 million dollars). All this comes to the case of
industrial management in the nation.
I strongly believe industrial management is the surest answer to our
economic woes. Nigeria must look into other ICT industry and
diversification into agriculture and mining rather than relying on crude
oil for revenue. These sectors have high potentials to attract
significant foreign private investment inflow in the FDI.
Governments can play an important role in promoting and developing its
natural resources to encourage more investments in the country. Nigeria
needs to juxtapose foreign investment with domestic investment in order
to maintain high levels of income and employment generation.
For Nigeria to generate more foreign direct investment, efforts should
be made at solving problems of government involvement in business,
relatively closed economy, fight corruption, reform weak public
institutions and boost global reputation.
Saad Yushau Shuaib
Wuye District Abuja