By Adedapo Adesanya
Nigeria could benefit from the experience of countries that have been successful in attracting foreign direct investments (FDIs) into their manufacturing sectors as long as it follows some tested and proven strategies, says the African Development Bank (AfDB).
This is cogent as Nigeria witnessed Foreign Direct Investments (FDIs) into the country turned negative by $187 million, according to the United Nations. The first time in 33 years.
According to the National Bureau of Statistics, in the first three months of this year, FDIs contributed just $47.60 million or 4.2 per cent of the capital inflows into the country, from $81.72 million in the last quarter of 2022.
However, speaking at a recent event, the bank’s president, Mr Akinwumi Adesina, said Nigeria could become a manufacturing hub in Africa if the federal government implements a bold strategy to take advantage of investment and market access opportunities.
“Rising labour costs and technological upgrading in countries such as China, India, and Brazil offer an excellent opportunity to developing economies, including Nigeria, to attract FDI and diversify their exports.
“Promoting trade and regional integration trade offers a great opportunity to further diversify the Nigerian economy.
“With the coming into force of the African Continental Free Trade Area, Africa is becoming more integrated, with a larger market for exports from Nigeria”, he said.
Mr Adesina said Nigeria faced major infrastructure deficits that inhibit its ability to diversify production in the non-oil sectors.
Citing the World Bank’s 2022 Public Expenditure Review report, Mr Adesina, who once served as a minister of agriculture in Nigeria, said that meeting the country’s huge infrastructure needs required $3 trillion by 2050.
He said at the current rate, it would take Nigeria 300 years to provide a minimum level of infrastructure needed for development.
Mr Adesina, however, said to change this narrative, Nigeria should mobilise the private sector for infrastructure development and service delivery.
He said this would also reduce the fiscal burden on the federal and state governments.
According to the AfDB president, energy sector investments remain one of the most critical and urgent needs in Nigeria. He said providing reliable and affordable energy services would make Nigeria’s industries more competitive and accelerate the country’s integration into regional and global supply chains.
“To remove the barriers to non-oil trade and exports, Nigeria must decisively fix its power sector, once and for all.
“While tapping its abundant gas resources as a transition fuel, Nigeria should invest massively in renewable energy generation, especially solar.
“Nigeria should start leveraging the platform of the $25 billion Desert-to-Power initiative aimed at providing electricity for 250 million people across the Sahel, including the northern parts of Nigeria.”
The AfDB boss said developing regional infrastructure and putting in place the requisite trade policies were necessary conditions for tapping into opportunities in regional and international markets.
