‘Nigeria Needs More Foreign Direct Investments to Fund Capital Projects’

Goddy Egene
A securities dealer and Managing Director, Cowry Asset Management Limited, Mr. Johnson Chukwu, has said that Nigeria needs appropriate policies that would attract Foreign Direct Investments (FDIs) into the country.
He stressed that FDI is an important source of capital funding for a country like Nigeria.

Chukwu who stated this at a virtual workshop organised by the Capital Market Correspondent Association of Nigeria(CAMCAN) with the theme: “Addressing Nigeria’s Fiscal Challenges – Exploring Alternative Fund Approach” , noted that FDIs are what go to private sector and infrastructural developments.

He, however, said FDIs have remained flat in the last six years (2015-2020), disclosing that Nigeria recorded $1.44 trillion inflow of FDI in 2015 as against $1.028 trillion in 2020.

“It is a far cry compared to country like Ghana whose receipt are two times what Nigeria realised and Egypt which is seven times what we received. FDI is an important source of capital funding for a country like Nigeria. Nigeria needs to come out with appropriate policies that will attract FDI especially on foreign exchange,” Chukwu said.

According to him, investors channel their FDIs towards economies where they have the highest potential for profit and the least risk.

“As such, the dent of the social unrest to the image and perceived risk of long-term capital investment would mean that the country will struggle in attracting the much-desired long-term finance needed for accelerated growth and enhanced job opportunities,” he said.

On revenue, Chukwu said Nigeria has a huge revenue shortfall, indicating that we have to look for fund outside government budget.

“The challenge we have in this country is a revenue challenge, we don’t have the revenue size to support the type of government we run, that’s why our recurrent expenditure has been increasing while our revenue remain flat. The government needs to interrogate issues of recurrent expenditure,” he said.

On the outlook of financial markets in 2021 Chukwu said: “We sustain our positive outlook for the Nigerian bourse in 2021 as its overall positive performance in 2020.This is also justified by the strong fundamentals of the several quoted companies on account of their resilience during the pandemic and the likelihood that they will remain resilient in 2021.”

Meanwhile, the stock market rebounded with the Nigerian Stock Exchange (NSE) All-Share Index (ASI) by 0.78 per cent to close 41,014.30 after three days of decline.