Nigeria’s economy recorded a sharp increase in investment announcements in the first half of this year as investors’ commitments rose by 99.8 per cent. According to the record captured by the Nigeria Investment Promotion Council (NIPC), the economy attracted $10.11 billion in the first six months, representing an increase from $5.06 billion recorded in the same period last year. An analysis of the data released by the NIPC showed that the volume of investments announced declined in the first two quarters of the year. For instance, while the announced investments in Q1’20 stood at $4.81 billion, $8.41 billion was recorded in Q1’21, showing a 75 per cent increase.
Similarly, in Q2’20, $0.25 billion was announced compared with $1.69 billion recorded in Q2’21. According to NIPC, the $10.11 billion investments announced in the six months were committed to a total of 29 projects across 14 states. The manufacturing sector got the lion’s share of the funds as it received $5.8 billion, representing 58 per cent of the total investments announced in the six months.
The construction sector got $2.9 billion, which is 29 per cent of the total investments announced. Electricity got $0.68 billion, which is seven per cent of the total investments, while the Information and Communication Technology (ICT) sector received $0.41 billion within the period, accounting for four per cent of the total investments within the period under review.
Other sectors of the economy such as agriculture, finance and insurance, health and social services shared the remaining $0.21 billion, which is two per cent of the investments. In terms of destinations, $3.6 billion, representing 36 per cent of the total investments, went into projects in Bayelsa State. Delta State got $2.94 billion, representing 29 per cent of the total investments. Projects in Akwa Ibom and Lagos states attracted $.4 billion and $0.70 billion respectively, which is 14 per cent and seven per cent of the total investments.
Other states attracted $1.47 billion, representing 15 per cent of the investments. According to the NIPC report, $3.29 billion, representing 33 per cent of the total investments came from investors within Nigeria, while $1.40 billion, representing 14 per cent of the investments, came from Morocco. The report indicated that $0.95 billion, representing nine per cent, was from Chinese investors, while $0.64 billion, representing six per cent of the total announced investments came from the United Kingdom (UK). A total of $3.82 billion (38 per cent) came from other sources.
The NIPC said top 10 investing organisations in the Nigerian economy in the six months included the Nigerian National Petroleum Corporation (NNPC), Mercury Maritime Concession Company (MMCC), also a Nigerian firm, OCP of Morocco, Dahua Paper Company from China, and Soft- Bank, Sequoia Capital China, IDG Capital also from China.
Others are Transcorp from Nigeria, Flour Mills Nigeria, West African ENRG from the UK, Konexa from the UK, and PowerDot also from the UK. According to the NIPC report, the 10 top 10 investing entities invested a total of $9.72 billion in the period under review, representing 96 per cent of the total investments recorded. Analysts said the increase in investments, especially in the manufacturing sector, which recorded the largest capital inflow, may have led to the sustained growth in the country’s Gross Domestic Products recorded in the first quarter of this year. According to the data released by the National Bureau of Statistics, the country managed to slip out of the COVID- 19-induced recession in Q4’20 with a real GDP growth rate of 0.11 per cent.
The recovery was sustained in Q1-21 as the country’s GDP grew by 0.51 per cent year-onyear in real terms. That marked two consecutive quarters of growth following the negative growth rates recorded in the second and third quarters of 2020. The NBS had stated in its Q1’21 GDP Report that the manufacturing sector grew by 3.4 per cent in the quarter as against -1.51 per cent in Q4’20.
However, the Director-General, Lagos Chamber of Commerce and Industry, LCCI, Dr. Muda Yusuf, while reacting to the NBS data, had noted that the reported recovery of the manufacturing sector, though a pleasant surprise, was not reflective of the sector’s current realities. “The recovery of manufacturing from a negative growth territory in the fourth quarter, Q4’20, to a positive growth level of 3.4 per cent in Q1’21 was a pleasant surprise. The data does not reflect the reality of the experiences of most manufacturers. Most foreign exchange-dependent manufacturing sectors have not had a good experience over the past one year,” he said. Meanwhile, Global Foreign Direct Investments (FDI) 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, Yewande Sadiku, made this projection recently, adding that global FDI was expected to plummet from $1.54 trillion recorded in 2019 to $924 billion in 2020 and further slump to $831.6 billion in 2021. Sadiku said the downturn in the global FDI flow, occasioned by COVID-19, is not expected to record recovery earlier than 2022. The NIPC boss said 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. “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.