Nigerian FDI plummets by 56 percent

By Rafiu Ajakaye

LAGOS, Nigeria (AA) – Nigeria’s leadership broke bad economic news on Thursday when Vice President Yemi Osinbajo revealed that foreign direct investment (FDI) had declined by at least 56 percent in the first quarter of 2016.

Osinbajo also said foreign portfolio investment fell to $90.3 million in the first quarter, down from $621m in the first quarter of 2015.

Speaking at a presidential policy dialogue in the capital, Lagos, Osinbajo said the government was taking steps to avoid a deep recession but detailed that the FDI dip was a fall from $395 million in Q1 2015 to $175 million in the same quarter of this year.

He blamed the problems confronting the economy – where inflation has hit an 11-year high of 16.5 percent – on the fall in the price of crude oil, dwindling resources and the activities of vandals in the delta region.

He said the government was reviving the economy with huge public spending, including committing at least 30 percent of the budget to capital projects.

His comments came on the day the South Africa surpassed Nigeria as the continent's biggest economy – barely two years after Abuja sped past Pretoria.

Atiku Samuel, head of research at the economic transparency advocacy group BudgIT, said the worrying indices of the Nigerian economy flew from the recently lifted “rigid foreign exchange environment”.

“We think the rigid foreign exchange environment, among other factors, was instrumental to the decline in the flow of investment into Nigeria,” he told Anadolu Agency.

“Nobody wants to invest in a country where the risk of repatriating back profit is huge,” he added.

Asked if the central bank recently ending arbitrary fixing of the value of the naira currency would help abate the crisis, the economist said it was too early to say:

“The independence of the Central Bank of Nigeria has been questioned,” he said. “The domestic economy and internal conditions are scary, including inflation and aggregate demand. A lot of improvement will be needed before we can turn the corner.”