Nigeria must convince the rest of the world that it is desirous of attracting foreign direct capital into its economy. That conviction will best be conveyed through acts, not mere words or proclamations. Without concrete actions to improve on the country’s rating among the international community, Nigeria risks being consigned to the fringes of the booming investment flows into Africa
The statement by the Chairman of Nigeria Economic Summit Group, Niyi Yusuf, that the country’s FDI drive has remained weak could not have been put in a better form. We may have received some trickles of investments into some areas of the economy, but that is not the kind of inflow that will make an impact on the status of the economy.
Recent developments in Africa should challenge the Nigerian authorities to the urgency of the matter. Nigeria surely is receiving some level of direct investments. There have also been recent expressions of interest, but potential investors. Yet, the truth is that what the country is currently receiving is not proportionate to its status and minimum capital requirements to pull the economy out of the depth to which it has fallen.
Follow us on WhatsApp | LinkedIn for the latest headlines
FDI flowing into Africa rose by 75 percent in 2024, hitting $97 billion, the highest ever in a single year, according to World Investment Report 2025, published by the UN Conference on Trade and Development. This performance becomes quite significant when seen against the background that FDI inflows into the continent remained stagnant at $55 billion in both 2022 and 2023. How much of this quantum leap in funds flowing into the continent came into Nigeria? How much of it entered into the country’s strategic sectors such as energy, oil and gas, among other sectors compared with other African countries? Obviously very little.
We need a better perspective on the drivers of investment flows across borders. Our policymakers should pay attention to such forces. So, they should take a look at the comment in the UNCTAD report by the Secretary-General of the agency, Rebeca Grynspan. “Investment is more than just capital flows and project pipelines. It is a signal of where we are placing our bets as a society: on what we value, where we see potential and who we believe should be part of the future. As such, investment trends do more than track economic performance – they offer a mirror to our priorities, our systems and the choices we make collectively.”
This is the difference between FDI and FPI. One comes to stay and therefore wants to be assured that its safety is guaranteed. Foreign direct investors come into a country for the long haul, that is why they “do more than track economic performance,” in the words of Grynspan above.
The other comes in but has its eyes on the exit door and will dash out at the least signs of trouble. Once our leaders recognise this signalling power of foreign direct investments, Nigeria would be on its way to receiving enhanced levels of foreign capital.
A significant inflow of FDI will make an impact on the economy. It will lead to boots on the ground, at greenfield or brownfield projects sites across the country. Nigeria needs both., and to the extent that both types of projects receive funding, to that extent will the economy experience meaningful strength to perform well. Nigeria needs fresh projects to inject additional capacity to the productive capacity of the economy. It also needs a revival of existing projects that have been weakened by years of neglect, lack of maintenance and equipment obsolesce.
The inflow of foreign capital will show in big gas and petroleum pipelines crisscrossing the nation’s landscape. It will lead to the construction of huge factories, roads, thermal plants and other projects that will in turn raise the productive capacity of the economy, create jobs and stimulate the growth we so much need now. Investments of the size that come from FDIs will help to stimulate the various sectors that are currently struggling to deliver benefits to Nigerians.
Sign up for free AllAfrica Newsletters
Get the latest in African news delivered straight to your inbox
Last year’s surge in capital inflow into Africa is part of indications that foreign investors are turning to Africa as a choice investment destination. In other words, Africa’s time has come to be a recipient of funds from outside the continent. But that cannot be taken for granted by any country. The investors know the countries that are prepared for them and will obviously gravitate towards such destinations.
Nigeria has been tormented by terrorism since the turn of the century, from about 2010 till now. What began as a skirmish has since blossomed into full-scale insecurity in the country. Its impact has been unrivalled. It has destabilised the economy in different ways. While this did not appear as a threat at first, its impact is now real on the level of economic activities. Insecurity is beginning to show in Nigeria’s FDI record because some potential investors are not seeing the future that they want to relate to as investors in the country. By many standards today, Nigeria should be one of the least attractive investment destinations in Africa. This has to change.
