How Nigeria can boost FDIs despite global headwinds

Foreign direct investment (FDI) into Nigeria has experienced a significant decline of 59% to $2.4 billion over the past 11 years, according to the latest International Debt Report by the World Bank. This downward trend can be attributed to various factors such as insecurity, economic policies, and the global recession, which have all impacted investor confidence in the Nigerian economy. Sam Chidoka, the Chief Executive Officer of Kairos Capital, shed some light on these issues in a recent interview with CNBC Africa. Chidoka highlighted the negative impact of insecurity, particularly the activities of Boko Haram, on foreign investments in Nigeria. The prevalence of insecurity has led to capital flight as foreign investors seek more stable and secure investment opportunities in other regions. Additionally, economic policies and the overall business environment in Nigeria have not been conducive to attracting and retaining foreign direct investment. Chidoka emphasized the importance of transparent and sustainable funding mechanisms for the government, urging a shift away from relying on debt accumulation through ways and means financing. He suggested that the government should explore alternative avenues such as capital markets to fund budget deficits and reduce dependence on borrowing. In light of the changing landscape of debt financing, with a shift towards private creditors and bondholders, Chidoka raised concerns about the potential long-term implications of mounting debt levels in Nigeria. He emphasized the need for a strategic approach to debt management to prevent any adverse effects on the economy. The interview also touched upon the ongoing US-Africa Summit, where the United States has committed $55 billion to Africa across various sectors including economic development, health, and security. President Muhammadu Buhari is expected to address key issues such as climate adaptation and the just transition process, advocating for a fair and equitable approach to environmental policies. Chidoka expressed optimism about the summit and the potential for Nigeria to secure beneficial deals and partnerships with Western countries. He highlighted the importance of the US taking a more active role in engaging with African nations to foster mutual cooperation and development. Chidoka emphasized the need for President Buhari to articulate Nigeria's interests clearly and advocate for policies that prioritize the country's growth and development. In conclusion, the challenges facing Nigeria's foreign direct investment landscape require a multifaceted approach that addresses security concerns, economic policies, and sustainable debt management practices. By enhancing transparency, promoting investor confidence, and fostering international partnerships, Nigeria can position itself as an attractive destination for foreign investments despite the prevailing global economic headwinds.