Economy

Nigeria’s FDIs Shrink Amid Drop in Investment Flows to Africa

Published

2 years ago

05/07/2023

By Adedapo Adesanya

Foreign direct investments (FDIs) into Nigeria turned negative by $187 million, according to the latest report, which showed that foreign flows to Africa slumped to $45 billion in 2022 from the record $80 billion set in 2021.

According to United Nations Conference on Trade and Development (UNCTAD) World Investment Report 2023, FDI flows accounted for 3.5 per cent of global FDI.

Meanwhile, the number of greenfield project announcements rose by 39 per cent to 766. Six of the top 15 greenfield investment megaprojects (those worth more than $10 billion) announced in 2022 were in Africa.

Giving a breakdown of the investments, UNCTAD noted that in North Africa, Egypt saw FDI more than double to $11 billion as a result of increased cross-border merger and acquisition (M&A) sales.

Announced greenfield projects more than doubled in number to 161. International project finance deals rose in value by two-thirds, to $24 billion. Flows to Morocco decreased slightly, by 6 per cent, to $2.1 billion.

In West Africa, Nigeria’s FDI flows which turned negative to -$187 million, happened as a result of equity divestments.

The report showed that announced greenfield projects, however, rose by 24 per cent to $2 billion.

Flows to Senegal remained flat at $2.6 billion, while foreign flows to Ghana fell by 39 per cent to $1.5 billion.

In East Africa, flows to Ethiopia decreased by 14 per cent to $3.7 billion; the country remained the second-largest FDI recipient on the continent. FDI to Uganda grew by 39 per cent to $1.5 billion on investment in extractive industries and FDI to Tanzania increased by 8 per cent to $1.1 billion.

In Central Africa, FDI in the Democratic Republic of the Congo remained flat at $1.8 billion, with investment sustained by flows to offshore oil fields and mining.

In Southern Africa, flows returned to prior levels after the anomalous peak in 2021 caused by a large corporate reconfiguration in South Africa. FDI in South Africa was $9 billion – well below the 2021 level but double the average of the last decade. Cross-border M&A sales in the country reached $4.8 billion from $280 million in 2021 and in Zambia, after two years of negative values, FDI rose to $116 million.

The UN agency noted that in the past five years, FDI inflows have risen in four of the regional economic groupings on the African continent.

FDI in the Common Market for Eastern and Southern Africa (CMESA) grew by 14 per cent to $22 billion. Flows also rose in the Southern African Development Community (SADC) quadrupled to $10 billion, and the West African Economic and Monetary Union (WAEMU) doubled to $5.2 billion) and the East African Community (ECA) saw its inflows up 9 per cent to $3.8 billion).

The report showed that intraregional investment remained relatively small, despite an increase over the past five years. In 2022, intraregional greenfield project announcements represented 15 per cent of all projects in Africa (2 per cent in terms of value), as compared with 13 per cent (2 per cent in value) in 2017.

However, looking at announced projects invested in by only African multinational enterprises, three-quarters of their value remained on the continent.

In 2022, the biggest increase in announced greenfield projects was in energy and gas supply (to $120 billion from $24 billion in 2021). Project values in construction and extractive industries also rose, to $24 billion and $21 billion, respectively. The information and communication (ICT) sector registered the highest number of projects.

International project finance deals targeting Africa showed a decline of 47 per cent in value ($74 billion, down from $140 billion in 2021) but a 15 per cent increase in project numbers to 157.

European investors remain, by far, the largest holders of FDI stock in Africa, led by the United Kingdom ($60 billion), France ($54 billion) and the Netherlands ($54 billion).

Economy

NGX All-Share Index Jumps 0.17%

Published

14 hours ago

18/01/2025

Dipo Olowookere

By Dipo Olowookere

A 0.17 per cent growth was recorded by the Nigerian Exchange (NGX) Limited on Friday, extending the stay of the local bourse in the positive territory.

This uptrend was maintained despite profit-taking in the banking sector, which left its index down by 0.23 per cent at the close of trading activities.

Business Post reports that the insurance industry expanded by 4.04 per cent during the session, the energy counter improved by 1.05 per cent, and the consumer goods space gained 0.58 per cent, while the industrial goods sector closed flat.

Consequently, the All-Share Index (ASI) went up by 170.62 points to 102,353.68 points from 102,183.06 points and the market capitalisation grew by N541 billion to N62.851 trillion from N62.310 trillion.

There were 34 price gainers and 22 price losers yesterday, indicating a positive market breadth index and strong investor sentiment.

The trio of Caverton, Livestock Feeds and Sovereign Trust Insurance appreciated by 10.00 per cent each during the session to quote at N2.20, N5.94, and N1.10, respectively, as Neimeth jumped by 994 per cent to N3.43, and Royal Exchange increased by 9.88 per cent to 89 Kobo.

On its part, Academy Press lost 9.74 per cent to close at N3.15, PZ Cussons declined by 9.09 per cent to N25.00, DAAR Communications weakened by 8.64 per cent to 74 Kobo, Transcorp Power shed 5.91 per cent to settle at N46.95, and Dangote Sugar fell by 4.94 per cent to N38.50.

A total of 327.8 million shares valued at N11.8 billion were traded in 11,905 deals on Friday versus the 472.2 million shares worth N16.7 billion transacted in 12,336 deals on Thursday, representing a decline in the trading volume, value, and number of deals by 30.58 per cent, 29.34 per cent and 3.49 per cent apiece.

Access Holdings recorded the highest sales with 49.1 million stocks sold for N1.2 billion, Fidelity Bank exchanged 20.4 million shares valued at N359.0 million, UBA traded 20.1 million equities worth N681.0 million, Oando transacted 14.8 million shares for N998.1 million, and Universal Insurance traded 13.8 million stocks worth N8.7 million.

Economy

NASD OTC Exchange Gains 0.26%

Published

14 hours ago

18/01/2025

Adedapo Adesanya

By Adedapo Adesanya

The NASD Over-the-Counter (OTC) Securities Exchange extended its upward movement with a 0.26 per cent gain on Friday, January 17 amid renewed interest in unlisted stocks.

This raised the market capitalisation of the trading platform by N2.79 billion at the close of business to N1.075 trillion from the N1.072 trillion it closed in the preceding session.

In the same vein, the NASD Unlisted Security Index (NSI) went up by 8.08 points at the close of transactions to 3,111.91 points from the 3,103.83 points recorded at the previous session.

Yesterday, the volume of securities traded by investors went down by 606 per cent to 486,215 units from 1.2 million units, the value of shares shrank by 84.7 per cent to N2.8 million from N18.0 million, and the number of deals decreased by 65 per cent to 14 deals from the 33 deals carried out a day earlier.

In the final trading day of the week, there were three price gainers and one price loser, Geo-Fluids Plc, which lost 9 Kobo to finish at N4.70 per unit versus the preceding session’s price of N4.79 per unit.

On the flip side, Okitipupa Plc gained N3.60 to settle at N39.59 per share compared with the previous day’s N35.99 per share, Industrial and General Insurance (IGI) Plc added 3 Kobo to wrap at 36 Kobo per unit compared with the preceding session’s 33 Kobo per share, as FrieslandCampina Wamco Nigeria Plc improved its value by 49 Kobo to N39.65 per unit from N39.16 per unit.

At the close of business, FrieslandCampina Wamco Nigeria Plc remained the most active stock by value (year-to-date) with 3.4 million units worth N134.9 million, trailed by Geo-Fluids Plc with 8.9 million units valued at N43.0 million, and Afriland Properties Plc with 690,825 sold for N11.1 million.

The most active stock by volume (year-to-date) remained IGI Plc with 23.5 million units worth N5.3 million, followed by Geo-Fluids Plc with 8.9 million units valued at N43.0 million, and FrieslandCampina Wamco Nigeria Plc with 3.4 million units sold for N134.9 million.

Economy

Naira Rallies by 0.06% to N,1547/$1 at NAFEM

Published

15 hours ago

18/01/2025

Adedapo Adesanya

By Adedapo Adesanya

The Naira extended its appreciation against the US Dollar by 0.06 per cent or N89 Kobo on the US Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Friday, January 17, trading at N1,547.58/$1 compared with the previous day’s value of N1,548.47/$1.

Market analysts expect that the Naira will appreciate in the first quarter of the year, backed by continued policy support by the Central Bank of Nigeria (CBN).

Vestance Nigeria, an agribusiness advisory firm, projects that the exchange rate will trade between N1,650/$1 and N1,750/$1 this year in its Resilience and Recovery for Agribusiness in 2025 outlook report.

“The Central Bank of Nigeria (CBN) will continue implementing reforms to enhance exchange rate market transparency while maintaining higher interest rates to curb inflationary pressures and attract foreign portfolio management,” it said.

Also, the Nigerian currency improved its value against the Pound Sterling by N20.84 to wrap the session at N1,883.59/£1 versus the preceding day’s N1,904.43/£1 and against the Euro, the Nigerian currency gained N10.45 to settle at N1,590.34/€1, in contrast to Thursday’s closing price of N1,600.79/€1.

In the parallel market, the domestic currency appreciated against the greenback by N5 yesterday to sell for N1,675/$1 compared with the N1,675/$1 it was traded a day earlier.

As for the cryptocurrency market, there was profit-taking amid excitement for a new era of crypto-friendly US government mounts ahead of Donald Trump’s inauguration next week.

Crypto investors expect a change from Mr Trump who promised on the campaign trail to position the US as a leader in the crypto space including creating a national stockpile of Bitcoin, in stark contrast to past years’ regulatory crackdowns and enforcements.

Litecoin (LTC) fell by 9.9 per cent to trade at $124.56, Ripple (XRP) slumped by 6.2 per cent to $3.10, Cardano (ADA) dipped by 4.9 per cent to $1.06, Ethereum (ETH) dropped 3.1 per cent to finish at $3,270.61, Binance Coin (BNB) went down by 2.3 per cent to $698.57 and Dogecoin (DOGE) depreciated by 2.2 per cent to $0.3927.

However, Solana (SOL) rose by 8.8 per cent to end at $235.12, Bitcoin (BTC) expanded by 0.8 per cent to $102,494.03, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) sold flat at $1.00 each.