Africa’s biggest economy Nigeria is missing on the United States’s 2019 investment climate statements.
The report was published on July 11. Written American economic officers stationed in embassies and other posts across, the statements provide “country-specific information on the business climates of more than 170 countries” and identify to potential countries where American organisations can do business.
“While there are examples of countries taking steps to make it easier to do business, the reports highlight that a large number of barriers to business activity still exist,” a statement published on State Department’s website said.
It is unclear why Nigeria was left out of the statement considering its huge market and strategic leadership in Africa. But Nigeria’s romance with China may be a significant factor signalling that the spiral rise of US-China trade conflicts might be the cause of Nigeria’s miss out.
Nigeria, although, made the list in the preceding two years, the US State Department highlighted different concerns to investors in Nigeria. The department listed the poor power supply, corruption risk and insecurity as major bottle-necks to broad-based economic development and investors.
The United States is the second largest foreign investor in Nigeria with a total capital imported in 2017 at $1.3 billion. In 2016, the U.S. was Nigeria’s third largest import partner with 8.01% of Nigeria’s total imports emanating from the country. Nigerian imports from the U.S. included wheat, vehicles, machinery, refined petroleum products etc.
In 2016, Nigeria-based majority-owned affiliates of U.S. multinational enterprises employed over nine thousand people, a decrease of 3.2% from 2015; Sales made by the MNEs were $10.9 billion, down 22.1% from 2015.
In 2017, the U.S. direct investment in Nigeria (outward) was $5.8 billion, with Nigerian investment in the United States totalling $61.0 million.
The fallout of Nigeria in U.S. investment climate statement will further cripple the slump in foreign direct investment which has since accelerated under President Muhammadu Buhari administration.
The administration has come into conflict with companies including MTN Group Ltd. and JPMorgan Chase & Co. In 2018, FDI flows into Nigeria totalled just $2.2 billion, less than a third of the amounts South Africa and Egypt attracted.
A Bloomberg report said many foreign investors’ biggest gripe over the past four years was how Nigeria handled the naira in the wake of the oil crisis – Nigeria maintains multiple official exchange rates for different transactions.
Economy analysts say Buhari should aim to float naira by unifying the exchange rates and liberalising access to hard currency would be a big step forward.
Economic reform could also lure more foreign direct investment, which is needed for the country’s infrastructure and economic developments. The president should, therefore, prioritise restoring security, curbing corruption and reviving the crippled economy.
