Nigeria’s FDI falls to $29.8mn in H1’24

Foreign direct investment (FDI) into Nigeria has taken a hit, falling to $29.8 million in the first half of 2024, according to data released by the National Bureau of Statistics. This amount contributed approximately 1.15 per cent of the total capital importation during the review period. Victor Aluyi, the Head of Investment at Sankore Global Investment, shed light on these numbers during a recent interview on CNBC Africa. While the overall capital importation volume showed an increase of 152.8 per cent, the decline in FDI inflow to Nigeria signals a weak investing climate in the country. Aluyi pointed out that FDI inflow was at its weakest, coming in at just 29 per cent, since the start of 2023. This trend reflects the economic challenges in Nigeria, causing concern among foreign investors. Despite the sluggish FDI numbers, portfolio investment remains dominant, fueled by higher fixed income yields observed in the country this year. The report highlights that money market investments accounted for 77 per cent of the $1.4 billion portfolio investment total. Aluyi attributed the influx of funds in this sector to the significant rise in fixed income yields, which averaged around 12 per cent compared to last year. However, he noted that the real sectors of the economy continued to struggle with weak FDI inflows. The interview also touched on the impact of global developments on Nigeria's market attractiveness. With increasing tensions in the Middle East and adjustments in global central bank policies, investors are closely monitoring market movements. Aluyi expressed skepticism about the potential benefits of interest rate cuts in developed markets on Nigeria's attractiveness to foreign investors. He emphasized that stability in price and currency valuations is crucial for bolstering market confidence. As the year progresses to its final quarter, uncertainties persist regarding the fair value of the Naira. Aluyi stressed the importance of economic strength in determining the Naira's value. He suggested that boosting oil production could be a key strategy to stabilize foreign exchange earnings and address price stability challenges. Ultimately, the outlook for the Naira remains uncertain, hinging on various economic factors. In conclusion, the interview with Victor Aluyi highlighted the challenges and opportunities in Nigeria's investment landscape. While FDI inflows have dipped, portfolio investments have surged, driven by attractive fixed income yields. The country's market attractiveness is influenced by global economic trends and internal economic stability. As stakeholders navigate these dynamics, the future trajectory of Nigeria's investment climate remains a subject of close scrutiny.