Will Nigeria sustain foreign investors buy-in?

Nigeria's President Bola Tinubu recently announced that the country has attracted about $30 billion in Foreign Direct Investments and commitments in almost two years. However, Femi Oladehin, Partner at Argentil Capital Partners, has raised concerns about the sustainability of these investments amidst challenges facing the Nigerian economy. Oladehin pointed out that while the $30 billion figure sounds impressive, there are questions about the actual impact of these investments on the ground. He highlighted the need to differentiate between commitments and actual implementation, stating that long-term plans are required to realize the full potential of these investments. The economic crisis, including currency fluctuations, exchange rate volatility, and inflation, has also cast doubt on the viability of these investments. Despite various reform efforts by the government, including attempts to stimulate the economy and boost investor confidence, data indicates a downward trend in key economic indicators such as Purchasing Managers' Index (PMI) numbers and consumer demand. Oladehin emphasized the importance of allowing more time for these reforms to yield tangible results in the market. The partner further addressed the challenges facing the Nigerian economy, particularly in the power sector. He acknowledged the need for significant investments, estimated at $10 billion, to enhance the reliability of the national grid and improve productivity. Oladehin highlighted the urgent need for decentralization of the national grid to address current inefficiencies and ensure business continuity. The unreliability of the national grid and increased incidents of sabotage have underscored the critical need for infrastructure upgrades to support economic growth. Additionally, the partner discussed the importance of retaining existing investors and attracting local investment to drive sustainable economic development. Despite the challenges faced by multinational companies exiting the market, Oladehin stressed the significance of consistent government policies to instill confidence and create a conducive business environment. He commended the government's efforts in implementing reforms in the downstream sector, maintaining exchange rate flexibility, and addressing tax issues as positive steps towards economic stability. Oladehin emphasized the need for continued consistency in policy implementation to build investor trust and foster long-term growth. Looking ahead, he expressed optimism that sustained reforms and government commitment could lead to economic stabilization within a 24-month timeframe, allowing investors to plan for the future with confidence.