Nigeria has become the top destination for foreign direct investment (FDI) in Africa. It has gone past South Africa, its competitor for many years. FDI has progressed with government’s soft cornered approach and congenial relationship with foreign investors. The total value of FDI in Nigeria as on 2012 was around $ 6.8 billion seeing an increase of more than 17.24 percent. According to the World Investment Report 2012 which is prepared by the Geneva based United Nations Conference on Trade and Development ( UNCTAD), Nigeria, has emerged as the most sought FDI destination in Africa. South Africa, Congo, Ghana and Algeria are ranked behind in this survey. However, the country is vulnerable to commodity price movements, insecurity and over-dependence on the oil and gas sector. The FDI investments in Nigeria could have been more but some companies and investors have backed out due to security problems in some parts of the country. As per the statistics obtained from African Development Bank (AfDB), Nigeria and South Africa accounted for 95 percent of the total portfolio investment of $ 20.15 billion of the total FDI in Africa in the year 2012. The favorable investment climate in Nigeria has helped to garner investment from Canada and U.S. and other countries. Nigeria’s current account posted a surplus, mainly due to the larger surplus in the goods account and lower out payments in the services account and lower non-import bills. General Electric (GE) has sealed a number of deals with local companies that would fast track infrastructural development in the country. GE has entered into Joint Development Agreement (JDA) with Geometric Power Limited to develop a 450 megawatts power plant in Aba, Abia State. It is the first indigenous privately owned company in Nigeria to build a power station. Transnational Corporation of Nigeria and GE have also signed a framework agreement to co-operate in the areas of infrastructure with a special focus on power and transportation. Both the companies will increase power generation to the extent of 650 mw at the Ughelli power plant in the oil rich state of Delta. Dangote Industries Limited (DIL) has also signed an agreement with GE to collaborate on projects in power, transportation and other sectors of the economy. These developments in the infrastructure in general and power sector in particular will accelerate the country’s quest to rank among the top twenty economies in the country. There have been FDI inflows in the areas of oil, gas, manufacturing, infrastructure development, services and consumer goods industry. Furthermore, there are emerging opportunities in FDI in the areas of hospitality, tourism, shopping, hotels etc. The pro-active attitude of the government and introduction of additional reforms in the agricultural sector were likely to attract significant foreign investments.
The government has taken initiative to attract more investments. The inauguration of the National Competitiveness Council of Nigeria, by President Jonathan it’s a positive step in this regard.
The Challenges ahead
A massive level of corruption exists in Nigeria across all government levels. This a dent to the country’s image and foreign investors. Though Nigerian laws provide criminal penalties for official corruption, the government has done nothing to implement the laws effectively. Government officials are engaged in corrupt practices and escape punishment due to ineffective laws. Despite a decade of rapid growth, official figures state that only 61 percent of Nigerians are above poverty level. Statistical survey has revealed that there is an increased level of human induced emergencies in Nigeria particularly in highly urbanized cities states in Nigeria particularly in Lagos. The need of the hour is sincere leaders, effective laws and technocrats to drive changes in the economy. There is a need to instill more security among the foreign investors and improve security network in the country.