Foreign direct investment into Nigeria sank nearly 50%, central bank data shows, despite headline-grabbing pledges from high-level trips.
Since assuming office in May 2023, President Bola Tinubu has travelled to over 30 countries in a bid to attract foreign direct investment (FDI) to Nigeria. His administration claims these diplomatic and economic missions have yielded investment pledges worth $50.8bn from foreign entities. However, latest statistics by the Central Bank of Nigeria show a decline in FDI.
President Tinubu travelled to India in September 2023, ahead of the G20 summit, with top Nigerian business leaders to court Indian investors. After the meeting, he said Indian companies pledged nearly $14bn in investments during the Nigeria-India Roundtable in New Delhi.
Tinubu also visited China, US, Brazil, Qatar, the Netherlands, Germany, United Arab Emirates and Saudi Arabia, where officials expressed interest in deepening economic ties.
“As of December [2024], Mr President’s over 30 international trips have generated $50.8bn in announcements. That is huge for our country,” Trade Minister Jumoke Oduwole said last month during a review of Tinubu’s midterm performance.
Yet, these headline-grabbing pledges are yet to translate into tangible inflows. According to the latest report from the Central Bank of Nigeria, FDI fell by 42.3% to just $1.08bn in 2024.
“What it shows is that Tinubu’s administration has been lying and just sexing up figures,” says Paul Ibe, a spokesman for opposition chieftain Atiku Abubakar. “These so-called investments are just propaganda. All they do is deceive the people in order to win re-election while people suffer [the] effects of inflation.”
Finance Minister Wale Edun did not respond to inquiries from The Africa Report.
Positive outlook
Economist Muda Yusuf offers a more nuanced view, attributing the FDI decline to currency market volatility and investor uncertainty.
President Tinubu urged the central bank to adopt a managed float of the naira, leading to a devaluation of the local currency by more than 70%. This caused many companies to incur losses despite an increase in revenue.
“The shocks in the foreign exchange market affected many of the multinationals, which led to some of them leaving the country and sen[ding] the wrong message to potential investors,” Yusuf, who heads the Center for the Promotion of Enterprise in Lagos, tells The Africa Report. “But companies are now gradually recovering from such losses which will send a positive signal.”
Nigeria’s central bank says balance of payments recorded a surplus of $6.83bn, a major turnaround from consecutive deficits in previous years. The World Bank, in its latest report, said Tinubu’s reforms have led to a stable exchange rate, rising foreign reserves, and improved fiscal conditions.
The Bretton Woods institution said economic growth in the last quarter of 2024 had surged to 4.6% on a year-on-year basis, bringing the full-year growth for that year to 3.4% the highest since 2014, excluding the 2021-2022 Covid-19 rebound.
However, the World Bank says Nigeria’s growth rate would need to be five times higher for Tinubu’s plan to transform the country into a $1trn economy by 2030 to materialise. It adds that this must be accompanied by reforms aimed at reducing poverty.
The economy needs to grow between 8% to 10% per annum, which we have not seen since 2013/2014
Stubborn inflation
Yet inflation continues to undermine economic progress. Despite a recent rebasing by the national statistics bureau, Nigeria’s inflation rate stands at 24.5%.
According to the World Bank, inflation will steady at 22.5% in 2025 on the back of the central bank’s initiatives. This is far above Tinubu’s projection for the year, which is 15%.
The president is hoping that prices of goods, especially food, will be brought down as election season kicks off in eight months.
“The economy needs to grow between 8% to 10% per annum, which we have not seen since 2013/2014 when inflation was 8% and the interest rate was about 11%,” says Adetilewa Adebajo of CFG Advisory, who adds that the current administration has succeeded in creating stability.
He says foreign portfolio investors remain active in chasing short-term gains, but attracting long-term FDI to build factories and stay committed to Nigeria will require a different strategy.
“Foreign investors will only show up when they see the seriousness. You can’t for instance treat [Aliko] Dangote this way after an $18bn investment and expect foreign investors to commit funds,” he says.
(The Africa Report)
