The Nigerian Investment Promotion Commission has disclosed in its report that investment commitments declined from $8.41bn in the first quarter of 2021 to $2.58bn within the same period in 2022.
This shows that investment commitments declined by 69.32 per cent from Q1 2021 to Q1 2022, according to the Report of Investment Commitments in Nigeria (January to March 2022) by the NIPC.
According to the report, the investment commitments in Q1 2022 cut across 33 projects and five states, alongside the Federal Capital Territory.
In this period, the manufacturing sector attracted the highest investment commitments of $1.1bn, which is 45 per cent of the total commitments. It is followed by the agriculture sector with $0.64bn, which is 25 per cent of the total commitments.
Sokoto State attracted the highest investment commitments of $1.05bn, which is 41 per cent of the total commitments. It is followed by Lagos State with $0.88bn, which 34 per cent of the entire commitments.
About $1.13bn investment commitments came from Nigerian investors, which is 44 per cent of the whole commitments.
The United States investors made $1.01bn investment commitments, which is 39 per cent of the entire commitments in Q1 2022.
Economists have decried the effect of insecurity on the economy, stating that it is discouraging investments in the country.
A 2021 journal article by Kosy Aghaulor, titled ‘Growth impact of insecurity on the Nigerian Economy,’ indicated that the security challenge in Nigeria constituted a threat to lives and property and had hindered business activities, discouraging local and foreign investors, consequently, stifling and retarding socio-economic development.
A professor of Economics at Godfrey Okoye University, Enugu State, Felix Onah, recently said insecurity in Nigeria had affected the cost of production, and the level of foreign investment and prevented companies from planning for the future.
He said, “The insecurity in the country is affecting the level of investment in the country and also the Gross Domestic Product. When companies leave the country, their production in the country is taken away and this would negatively affect the GDP of the country. Domestic investment is also adversely affected by the insecurity of the country, for example, farmers cannot go to the farm and even manufacturers cannot plan for the future. This would then lead to the reduction in agricultural and manufacturing output that would cause an adverse economic effect on the GDP.”
Also, the Chief Executive Officer, Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, said the investment prospects in the country had nosedived due to insecurity.
Yusuf stated, “With the terrible news about kidnapping, Boko Haram, and all, how many investors want to come here? The only class of investors that would come are, one, those who would only come for a short term, maybe they are trading and would want to dump their products and go back. For those who want to invest long-term, not many of them would want to come in because the risk is high. Second, we would only be able to attract investors who have a high appetite for risk and not all investors have the same appetite for risk. These have made us lose investors that don’t have a high appetite for risk and attract those with a high appetite for risk.”
The Director-General, Lagos Chamber of Commerce and Industry, Dr Chinyere Almona, in November last year, noted that policy inconsistencies and rising insecurity in Nigeria were two of the major factors driving away investors.
She said, “Some investors make pledges or applications to establish businesses or invest in Nigeria and later renege on their applications for reasons that may not be far from policy somersault, worsening insecurity between the time of announcement and real investment, and the cumbersome registration and regulatory procedures.”
She advised that the federal and state governments must take urgent steps at addressing the issues that had made the Nigerian economy too risky for investors.
The Nigerian Economic Summit Group has said that it is crucial for the Federal Government to find a sustainable solution to the issue of insecurity in the country in order to retain the interest of existing local and foreign investors and attract new ones.
This is one of the key recommendations by the group in its research titled, ‘Sectoral Development: Assessing the Conditions that drive Youth Employment in Key Sectors of the Nigerian economy’.
