Nigeria is facing economic problems like rising prices, a weaker Naira, and changing trust from investors. Experts say that the country needs to create a steady and predictable Foreign Exchange (FX) environment to attract foreign investors.
At a Newslodge webinar called “Renewed Hope or Reality Check,” Olusegun Zaccheaus, a partner and strategy leader for West Africa at PWC, stressed the importance of developing infrastructure (like roads and power supply) through partnerships between the government and private companies.
He said that having clear and steady rules is key to solving economic issues.
Zaccheaus believes that Nigeria needs a stable FX market to attract Foreign Direct Investments (FDI). Investors want consistent policies. He explained, “No one wants to see rules changing within just nine months. As a country, we must understand that policies have trade-offs and need to follow a sequence.”
He also mentioned that it is important to review an administration’s progress in building infrastructure every year. Two main points are: first, building infrastructure requires a lot of capital, and second, benefits from these projects take time to be seen after construction.
While the current government is making progress with infrastructure, this should be viewed in Nigeria’s broader context. The government should focus on medium-term growth and the quality of investments. The main question is how to achieve quality investment for sustainable growth.
What You Should Know
According to the World Investment Report 2024 by UNCTAD, Africa, including Nigeria, had mixed results in 2023 amid a global decline in Foreign Direct Investment (FDI).
Africa saw a 3% drop in FDI to $53 billion. In Nigeria, FDI went up to $1.87 billion in 2023, from $895 million in 2022, but it’s less than the $3.3 billion previously reported. Nigeria’s 2023 FDI was adjusted to $3.9 billion, and $377 million were accounted for.
The Nigerian government’s efforts to attract new investments in renewable energy are showing good results. There are now new incentives for investing in this sector, similar to steps taken in Italy and South Africa.
Nigeria has also made progress in green hydrogen projects, like a $34 billion project in Mauritania and big green ammonia and hydrogen projects in Egypt worth $10.8 billion. These projects highlight Africa’s growing role in global renewable energy developments.
Additionally, South Africa announced three major green hydrogen projects totalling $7.1 billion, while Morocco attracted significant investments in renewable energy as well.
Even though there were fewer new greenfield projects across Africa, declining to $175 billion from $196 billion in 2022, there were notable increases in investment values in sectors like chemicals ($13 billion) and electronics ($7.6 billion).