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Foreign Direct Investment Analysis In Nigeria

FDI in Figures

According to the UNCTAD, Nigeria has the third largest FDI stock in Africa -- USD 86.6 billion - after South Africa (USD 145 billion) and Egypt (USD 87.8 billion). This is largely due to the fact that the country remains Africa's largest producer of oil.

Some of the country's main advantages are a partially privatised economy, an advantageous taxation system, significant natural resources and the low cost of labour. On the other hand, widespread corruption, political instability, lack of transparency and poor quality of infrastructure limit the country's FDI potential.

The primary countries investing in Nigeria are the United States, China, and the Netherlands.

In 2015, due to the fall in oil prices, FDI to Nigeria declined by 27% compared to 2014, amounting to USD 3.4 billion. 

Information on the FDI influx in the region is available in the Global Investment Trends Monitor published by the UNCTAD.

Foreign Direct Investment Analysis In Nigeria

Why You Should Choose to Invest in Nigeria

Strong Points
With a population of over 180 million people, Nigeria is the most populous country in Africa and therefore among its largest markets. The country has abundant natural resources and an inexpensive workforce, and it is strategically located near many West African countries. The Nigerian Government tends to pursue a policy of economic liberalisation, promoting public-privatepartnerships and strategic alliances with foreign firms.
Weak Points
There are a number of obstacles to FDI: poorly developed transport and energy infrastructure, which result in high operating costs; inefficient government institutions and corruptionan inefficientjudicial system and unreliable dispute settlement mechanisms; a high tax burden; a restrictive trade policy; and an increasing lack of security, especially in connection with the extremist group BokoHaram operating in the north-east of the country.
Government Measures to Motivate or Restrict FDI
The Nigerian Government has introduced many programmes to boost FDI, notably in agriculture, exploitation and mining, oil and gas extraction, as well as in the export sectors. Tax incentives are granted to pioneering industries deemed beneficial for the economic development of the country and employment of its workforce (such as clothing); allowances facilitating capital investments and the deduction of interest on loans for gas companies are also planned. Outside of the oil and gas sector where investment is limited to joint ventures or production-sharing agreements, foreign companies are allowed to own 100of businessesIndustries considered crucial to national securitysuch asweapons, ammunition, military and paramilitary clothing, are reserved for domestic investors.
Bilateral Investment Conventions Signed By Nigeria
Nigeria has signed bilateral investment agreements with Algeria, Bulgaria, China, Egypt, France,Finland, Germany, Italy, Jamaica, Montenegro, Netherlands, North Korea, Romania, Serbia, South AfricaSouth Korea, Spain, Sweden, Switzerland, Taiwan, Turkey, Uganda and United KingdomOnlyfour treaties (France, Netherlands, South Korea and United Kingdomhave been ratified by both partiesthe ratification process has been hesitant and poorly organisedThe government has expressed an interest in negotiating a bilateral investment treaty with the United States.
Foreign Direct Investment Analysis In Nigeria

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