Yewande Sadiku, CEO of Nigerian Investment Promotion Council (NIPC) says Nigeria is more ready for the African Continental Free Trade Area (AfCFTA) due to Nigeria’s domestic market manufacturing value addition capacity which is 7 times the average of the top 20 economies in Africa and other.
She disclosed this on Thursday at the AfCFTA Sensitization Seminar organized by the National Action Committee of the implementation of the agreement.
She addressed challenges facing the continent such as competition for capital flow, which was already under pressure before the pandemic. “Africa accounts for 3% of global FDI, and FDI flow post-COVID will be worse,” she said.
She said that countries that were the top 5 sources of FDI in 2019 were also part of the highest destinations of FDI in 2019. Citing that Africa is also a source of FDI to others but Southern Africa accounts for 66% of Africa’s outflows compared to just West Africa’s 1%.
“AfCFTA will help balance intra-African investments,” she said while highlighting that the highest periods of recorded FDI inflows into Nigeria was a result of government policies through reforms that increased FDI.
Sadiku said Nigeria only captures less than 10% of investment announcements to Nigeria, citing data on 2017-2018 with investment announcements of $66 billion and $90 billion, but only realized $3.5 billion and $2 billion in actual investments.
On the implications of AfCFTA for Nigeria, she said Nigeria is more ready than most African nations. She also added that Nigeria’s large domestic market makes Nigeria an ideal gateway economy. She mentioned companies like UBA, Dangote, GTBank, Interswitch and Paga as Nigerian companies with significant presence in other African nations plus Nigeria’s entertainment production which is consumed all over Africa.
On the Impact of the pandemic on FDI, she said the slowdown of implementation of ongoing projects due to closures of sites was a roadblock as global FDI is expected to drop by 30-40% in 2020/2021, the lowest level in almost 20 years.
“Many countries will be focused on investment-driven recovery, there would be more intense competition for FDI from developed economies,” Sadiku said as she mentions that economies that provide the most comfort to investors will win.
On policy recommendations, she urges that Nigeria must become an easier place to do business by aggressively encouraging Domestic Direct investments and aggregate social capital. She added that there must be a coordinated effort by MDAs to manage investor concerns, minimize job losses and restore confidence to investors.