By SULAIMAN ADENEKAN

Sunday, 6 Feb 2011

Nigeria’s Foreign Direct Investment inflows fell from $6bn in 2009 to $2.3bn in 2010. SULAIMAN ADENEKAN reports how the trend can be reversed to improve the nation’s economy

The strategic importance of Foreign Direct Investment to the development of any nation cannot be underestimated.

Experts have attributed the current low level of FDI in the Nigerian economy to poor infrastructure, unstable macro-economic policy, among others.

The higher percentage of the existing foreign investment is concentrated in the nation’s extractive industry. This, experts say, is essentially concerned with the physical extraction of metals, minerals and aggregates from the earth.

They, however, note that FDI involves companies’ participation in management, joint-venture, transfer of technology and expertise from one country to another.

Nigeria, considering its huge natural resources, large market size and human capital, qualifies to be a major recipient of FDI in Africa. And indeed, it had been one of the top recipients of foreign investment.

According to the United Nations Conference on Trade and Development, Global Investment Trends Monitor report, Nigeria’s FDI inflows fell from $6bn in 2009 to $2.3bn in 2010, thereby making the Federal Government to take drastic steps to reinvigorate the flow of investment into the country.

President Goodluck Jonathan must be thinking about this on his recent visit to Turkey where he tried to woo Turkish investors to Nigeria. He assured them that Nigeria was a safe and productive business environment.

He told his audience at the Nigerian-Turkish Trade and Investment Forum in Istanbul that the government was already offering a number of incentives to foreign investors.

The President said the role of private sector investors to the development of any economy was crucial and urged the investors to take advantage of the opportunity.

“With regard to the situation in the Niger Delta, the Amnesty Programme being pursued by government has brought relative peace to the region, thus ensuring security of investment,” the President said.

He assured investors of political stability in Nigeria as his administration would be transparent in the conduct of the forthcoming elections to engender economic development.

He said that Nigeria’s over-subscribed Eurobond issue in the international market, which attracted an unprecedented diverse investor base from first class investors across the globe, was a clear indication of the growing confidence of international investors in the Nigerian economy.

According to him, government is committed to stepping up infrastructural development in the country, as moves for the establishment of the Nigerian Sovereign Wealth Fund have been concluded.

The proposed Fund, he said, would be established for stabilisation purposes; replace the existing Excess Crude Account savings, to cater for future generation of Nigerians and improve on infrastructure.

Jonathan urged the Turkish investors to explore the exciting investment prospects in Nigeria, adding that that major macroeconomic reforms carried out by government in the last 10 years had led to substantial growth of the national economy as well as improved credit rating of Nigeria over the last three years by reputable international agencies.

Jonathan added that the economic reforms were designed to ensure that the socio-economic climate for doing business in Nigeria was enhanced to make the country a haven for investors.

“I encourage Turkish investors to closely interact with policy makers from Nigeria and take advantage of this forum to explore the abundant opportunities for economic exchanges and mutually beneficial relations between our two countries. This is your best time,” the President said.

The Deputy Prime Minister of Turkey, Mr. Cemil Cicek, described Jonathan’s visit to Turkey for the signing of bilateral agreements as significant.

“It will go down the annals of history as a significant step in the relationship between our two countries. Africa is the most important destination for Turkish investors and there is no Africa without Nigeria. Nigeria remains the heart and key of Africa,” he said.

Also, the President, Conference of Businessmen and Industrialists in Turkey, Rizanur Meral, said Turkish construction firms were rated the second best in world, as the interest of Turkish investors in Nigeria cut across construction engineering, power, oil and gas, tourism and mining sectors.

The UNCTAD report stated that the inflow of investment into Africa, which was high in 2008, was on the decline, despite an increase in developing and transition economies, which rose by 10 per cent in 2010.

“Estimates show that FDI inflows in the continent fell by 14 per cent to $50bn in 2010, although there are significant regional variations,” the report stated.

It said cross-border mergers and acquisitions, an increasingly important mode of entry into developing countries, increased in Nigeria from 0.2 per cent in 2009 to 0.4 in 2010.

Nigeria’s communications sector, which attracted $15bn in the last nine years, is the second largest source for FDIs in the country, after the oil and gas sector.

The UNCTAD report, which also highlighted decline in FDIs in South Africa, noted that developing and transition economies, for the first time, accounted for more than half of the global FDI inflows in 2010. The report showed that global inflows of FDI rose marginally by one per cent from $1.1tn in 2009 to almost $1.112tn.

Experts urge the government to put in place infrastructure, fight against corruption, ensure that stable micro economic policies strengthen security and address the issue of multiple taxation to facilitate foreign direct investment into the country.

Source: Punch