Nigeria attracted a sum of $698.78 million as foreign direct investments (FDIs) in 2021, representing its lowest level on record. This is according to data compiled by Nairalytics from the Central Bank of Nigeria (CBN).
A year-on-year comparison shows that FDIs into Nigeria dipped by 32% in 2021 to $698.8 million compared to the $1.03 billion recorded in the previous year. This also represented the fourth time Nigeria has recorded foreign direct investment below $1 billion in the past 15 years.
Foreign direct investment is related to purchases made by a company or an investor from another country in a Nigerian company. According to the Organisation of Economic Co-operation and Development (OECD), FDI is an integral part of an open and effective international economic system and a major catalyst to a country’s development.
Nigeria has been suffering from dwindling foreign inflows in recent years, piling significant pressure on the country’s FX liquidity, as surging demand for dollar in the economy ensured recurrent negative balance of payments for 10 quarters.
Most economies target increased FDI due to its importance in driving economic growth. Foreign Direct investment boosts the creation of jobs in the host country as investors build new companies in the country, which in turn leads to increased income, more purchasing power, and an overall expansion in the economy.
– Nairametrics