The Group Managing Director/CEO, Cowry Asset Management Limited, Mr. Johnson Chukwu, has hinted that creating the right environment as well as appropriating fiscal incentives is the way forward if Nigeria is determined to attract Foreign Direct Investments (FDIs).
According to him, Foreign Direct Investors currently prefers China, India, Vietnam, among others due to their stable macro-economic policy environment with low or moderate inflation; stable interest rates; stable or predictable exchange rates; easy access to foreign exchange and minimal capital controls.
Chukwu in his presentation at the February 2022 bi-monthly forum of the Finance Correspondents Association of Nigeria (FICAN), held at its headquarters in Lagos, noted that Investors are interested in large and skilled labour market, relatively free labour of less union and government control.
He noted that Nigeria recorded $1.44 trillion inflow of FDI in 2015, $1.028 trillion recorded in 2020 as against $340.55 million in 9 months 2021, which according to him is a far cry from those of other countries in the region.
“Investors gear their foreign direct investments toward economies where they have the highest potential for profit and the least risk. As such, the dent of social unrest to the image and perceived risk of long-term capital investment would mean that the country will struggle in attracting the much-desired long-term finance needed for accelerated growth and enhanced job opportunities,” he said.
Speaking further, he detailed reasons why the Nigerian government’s investment in capital project will be low this pre-election year, stressing that the country needs appropriate policies that will attract Foreign Direct Investment (FDI).
The securities dealer revealed that because of the US Fed’s normalization exercise, interest rate will be high globally. He, therefore, projected that the government may not borrow at the international market, neither will there be sufficient liquidity to be borrowed from the local bond market in order to finance the 2022 budget deficit.
As such, Chukwu espoused that the Nigerian government will do minimal capital investment this year but will do more political expenditures especially on activities that will keep the voters happy in order to get their votes.
According to him, though government will pay salaries and other overhead expenses, the private sector will smile as some sectors will have good patronage. These include advertising, printing and designs, graphics blogging, media and television through adverts; food and beverages, breweries and people in the fashion industry, comedians and musicians to mention a few.
