While Nigeria continues to experience reduction in foreign direct investments, (FDI) due to mirage of challenges bedeviling the economy like conflicting and confusing monetary policies as well with fiscal policies and Covid-19 pandemic among others, her closest neighbour, Ghana has continued to witness upsurge, particularly in the last six months of this year, analysis has shown.
Specifically, in the first half of 2020, the overall investment inflows to Nigeria dipped by 50.9% to $7.1 billion from $14.6 billion in 2019. This drastic decline in foreign capital inflows could be attributed to Nigeria’s poor economic performance accentuated by the impacts of the COVID-19 pandemic within the period.
Ghana,on the other hand recorded total investments of US$869.47 million, with total FDI value amounting to US$785.62 million between January to June 2020 as FDI inflow showed rare strength in the final moments of the second quarter of the year, undeterred by the Covid-19 pandemic, according to a release distributed by APO Group on behalf of Ghana Investment Centre.
The implication, according to the analysts is the fact that while some countries like Ghana are forging ahead post pandemic with growth, Nigeria, which is currently mirred in the EndSARS protest with the attendant negative perception on the government for alleged bad governance and corruption, may find it difficult toake meaningful and inclusive growth
Infact some analysts havevpreficted that the challenges coupled with the current protests typified by destruction of properties might further impact negatively on the economy with likely rate of about negative seven percent by the end of the year.
In fact, according to Nigeria’s Bureau of Statistics (NBS), foreign investment inflows fell sharply by 78.6% (year-on-year) to $1.3 billion in the second quarter of 2020 from $6.1 billion in the same period of 2019. This represents the highest year-on-year decline in the recent history of Nigeria’s foreign investment inflows.
In Q2’2020, the Nigerian economy contracted sharply by -6.1% while return on investments slid into negative due to high inflation rate and single-digit T/bill yield. These events, coupled with the huge uncertainty, primarily served as a disincentive to foreign investors.
Atedo Peterside, Nigeria’s foremost investment banker said on Friday on the Arise Television program that the nosediving of Nigeria’s fortunes, coupled with socio-political uncertainty, even as currently being experienced, would naturally discourage foreign investors.
However, according to the release, the total FDI of US$785.62 million represents investment recorded by the Ghana Investment Promotion Center (GIPC).
Indeed, the United Nations Conference on Trade and Development (UNCTAD) has estimated that the Covid-19 pandemic worldwide would lead to global FDI plunging by about 40 percent – driving the total value of FDI below US$1 trillion for the first time since 2005.
However, in spite of a sluggish start in the first quarter of 2020 and a worrying slump in the beginning of the second quarter due to severe lockdown measures to contain the spread of the corona virus, FDI to Ghana have begun to rebound resulting in a notable increase in FDI inflow for the first half of the year.
At the GIPC, a total of 69 projects with a total estimated value of US$688.74 million was recorded by the end of June 2020.
Of this, the total FDI component amounted to US$627.52 million while local component accounted for an estimated US$61.22 million. The FDI value of US$627.52 million was a considerable increase of about 409.10 percent from last year’s FDI value of US$123.26 million recorded within the same period (Jan-Jun 2019), depicting a strong performance irrespective of the global pandemic.
Out of the 69 projects recorded, the services sector registered a majority of 25 projects followed by the manufacturing and export trade sector with 21 and 11 projects respectively. With regards to value, general trading recorded the highest amount of US
$246.05 million. This was tailed closely by the mining exploration sector with US
$231.02 million having sealed some major investments such as the Chirano Gold mine project for the exploration of minerals. The manufacturing sector also saw significant investments valued at US
$170.67 million on the back of some notable ventures such as a deal by Matrix industries for the manufacture of paper and aluminum products as well as the Rainbow Paints Limited project which is a joint venture between Ghana and Kenya for the manufacturing of paints and related products.
Geographically, the spread of the projects cuts across 6 regions namely, Greater Accra, Central, Eastern, Ashanti and Volta regions with most projects registered in the Greater Accra enclave. Together, the 69 projects are expected to make significant contribution to job creation in the country. Per estimations, a total of 14,614 jobs are expected to be created when the projects are fully operational. Out of this, 14,052 of the jobs representing 96.15 % will be for Ghanaians whilst the remainder of 562 jobs which represents 3.85% will be taken up by foreigners.
Meanwhile, additional equity totaling US$11.56 million was re-invested by existing companies within the first half of the year, while a total of GHC1,365.26 million was recorded as investments from 28 wholly owned Ghanaian businesses.
The seemingly positive performance of FDI inflows to the Ghana has been to an extent attributed to the gradual easing of the Covid-19 restrictions as well as government initiatives and incentives rolled out to buffer businesses and the economy at the height of the pandemic.
Regardless of the upbeat performance, the United Nations Conference on Trade and Development (UNCTAD) predicts that FDI will continue to see a decline of 5-10 percent in 2021 with a slow recovery to be initiated in 2022 driven by restructuring of global Value Chains and a general rebound of the global economy.
However, as Nigerians continue to appraise the address of The State of the Nation by President Muhammadu Buhari, after the overvtwo weeks #EndSARS protest, one major revelation by most stakeholders was the fact that the speech fell short of the much needed empathy at this critical moment of the country’s history where some individuals and the nature at large are mourning the death of some unarmed youths who were allegedly murdered by the military.
However, Femi Adesina, president’s spokesman said on Channels, program, politicsTodsy, on Friday that the president is mindful of growing the economy through encouragement of FDIs.
Adesina said president Buhari’s meeting with ex- leaders on Friday was essentially to brief them on happenings in the polity in the recent past and the need to grow the economy through foreign and domestic investments.
