Adedapo Adesanya
By Adedapo Adesanya
Nigeria’s economy recorded a sharp drop in foreign investments in 2020 as investors’ commitments declined by 44.1 per cent to $16.7 billion from $29.9 billion in 2019.
This is according to the investment announcements captured by the Nigeria Investment Promotion Council (NIPC).
Analysis of the data released by the NIPC showed that investments declined in the first three quarters of the year.
In the first quarter of the year, $4.8 billion was recorded compared to $12.7 billion in the same period of the preceding year, showing a 62 per cent decline.
Similarly, in the second quarter of the year under review, $250 million was recorded, 89.8 per cent lower than the $2.44 billion achieved in Q2 of 2019.
Also, in the third quarter of last year, there was a decline of 58.1 per cent in the investments to $3.9 billion from $9.3 billion in the same period of 2019.
However, investments in the fourth quarter of 2020 surpassed that of the same time of 2019 as announced investments stood at $7.76 billion in Q4 2020 versus $5.47 billion in Q4 2019.
According to NIPC, the $16.74 billion investments announced last year were committed to a total of 63 projects across 21 states of the federation, the FCT, and the Niger Delta region.
The manufacturing sector got the lion share of the investments as it received $8.4 billion, representing 50 per cent of the total investments announced last year.
The transportation sector got $4.61 billion, which is 28 per cent of the total investments announced. The Information and Communication Technology (ICT) sector was the third favourite sector for investors $1.81 billion, representing 11 per cent of the total sum, was committed to projects in the sector.
Mining and quarrying sector attracted $1.07 billion in investments in the period under review, thus accounted for six per cent of the total investments.
Other sectors of the economy such as Agriculture, Finance and Insurance, Health and Social Services shared the remaining $0.88 billion, which is five per cent of the investments. In terms of destinations, $6 billion, representing 36 per cent of the total investments went into projects in Rivers State.
In terms of state, Kaduna State got 2.81 billion, representing 17 per cent of the total investments. Projects in Kogi and Lagos states attracted $1 billion and $0.89 billion respectively, which is six per cent and five per cent of the total investments.
Other states of the federation attracted $6.05 billion, representing 36 per cent of the investments.
In terms of countries of destination, the NIPC report explained that $6 billion, representing 36 per cent of the total investments came from Singapore, while $3.71 billion, representing 22 per cent of the investments came from Chinese investors.
The report indicated that $2.44 billion, representing 15 per cent, was from the United States of America, while $1.6 billion, representing 10 per cent of the total announced investments came from South Africa.
A total of $2.99 billion (18 per cent) came from other sources including Nigerian investors.
The NIPC also said top 10 investing organisations in the Nigerian economy last year include, Indorama Petrochemicals and Fertilizer from Singapore; Bank of China and Sinosure; 328 Support Services GmbH from the USA; MTN South Africa; Sinoma CBMI from China; Torridon Investments from the UK; African Industries Group from Nigeria; Savannah Petroleum from the UK; Stripe from the USA; and NESBITT Investment Nigeria Limited.
Looking ahead, global Foreign Direct Investments (FDIs) has been projected to drop by 50 per cent this year, being the worst in the last 20 years.
The Executive Secretary of the NIPC, Ms Yewande Sadiku, explained that global FDI is expected to plummet from $1.54 trillion recorded in 2019 to $924 billion in 2020 and further slump to $831.6 billion in 2021.
She said the downturn in the global FDI flow, occasioned by COVID-19, was not expected to record recovery earlier than 2022.
The NIPC boss advised that Nigeria would need to formulate and implement bold and coherent policy changes and deep economic reforms to reverse the expected declines in FDI between 2020 and 2022.
She said, “Investment interest in Nigeria was under pressure before COVID-19; coherent investment-supporting policies are urgently required to reverse the trend.”
“A more proactive all-of-government approach to investor support, across federal and state governments, is required to convert more announcements to actual investments,” she added.
