Foreign direct investment (FDI) inflows to Nigeria increased to $2.4 billion in 2020 from $2.3 in the previous year despite the COVID-19 pandemic that plagued global economies.
This is contained in the United Nations Conference on Trade and Development (UNCTAD) World investment report 2021.
Nigeria emerged as the third largest economy, alongside Ethiopia ($2.4 billion), that attracted FDI inflows in Africa last year.
Egypt was the largest recipient in Africa, however, with a significant reduction of 35 percent to $5.9 billion in 2020; followed by the Republic of the Congo ($4 billion), while South Africa was fourth with $3.1 billion (a decline of 39 percent).
According to the report, the COVID-19 crisis caused a dramatic fall in FDIs in 2020 thereby pushing global FDI flows to $1 trillion from $1.5 trillion in 2019 (a decline of 35 percent).
It said the level of decrease is almost 20 percent below the 2009 trough after the global financial crisis.
The UN body said FDI flows in Africa likewise declined by 16 percent to $40 billion — lowest in 15 years — while FDI outflows fell by two thirds in 2020 to $1.6 billion from $4.9 billion in 2019.
On Nigeria, the report reads: “The average price of crude oil dropped by 33 per cent in 2020, and lower demand along with supply-side constraints caused by the slowdown in site development restricted FDI to the country in the first half of 2020.
“Despite the pandemic, the long-term policy of FDI diversification appears to have had some impact.
“One important greenfield investment ($66 million) in the non-oil economy was the construction of a manufacturing facility in the Lekki Free Trade Zone by Ariel Foods (Kenya).
“There was also a significant merger and acquisition (M&A) deal in the same region, with China Communications Construction Company providing the initial $221 million equity injection in Lekki Deep Sea Port, out of a planned total investment of $629 million.
“Other transactions that contributed to FDI diversification, such as the investment by Multichoice Group (South Africa) in Betking, a provider of data hosting services, were relatively small.”
The report listed MTN’s $1.6 billion investment to strengthen its 4G network services in Nigeria as a major FDI that would boost the nation’s investment going forward.
UNCTAD said FDI flows in Africa are expected to rise in 2021 but to a limited extent; adding that vaccine availability, domestic economic recovery policies and international financial support will be critical to the revival of FDI and the post-pandemic recovery in the continent.
It also projected that global FDIs will remain at a low level – about $1.2 trillion, over 2021 and 2022.