A new report detailing the top 10 investment-attractive destinations in Africa with Nigeria missing on the list reminds the government of the huge task ahead to reposition the country for investment and its economic turnaround. Economists at South Africa’s Rand Merchant Bank ranked Egypt, Morocco, and South Africa as the three most enticing countries in the continent, but Africa’s biggest economy was conspicuously absent in that bracket. President Bola Tinubu should adopt more effective policies to revitalise the economy and magnetise investments.
The report, which is “aimed at investors targeting real assets in an economy or looking to expand businesses that rely on physical infrastructure,” ranked Rwanda, Botswana, Ghana, Mauritius, Ivory Coast, Kenya, and Tanzania as fourth to 10th most investment-friendly countries in Africa.
RMB’s Africa Economist, David Kavishe, explained that the researchers moved away from the historical method of basing the rankings on the tenets of economic activity and business operating environment. They then added “extra layers of sophistication,” such as ease of doing business, fiscal scores, and development plans. Furthermore, the report assesses the continent’s landscape in the pre- and post-COVID-19 era and the current and potential outcomes.
The star performers were Egypt, regarded as one of the first economies to rebound to the path of growth anchored on “swift measures it introduced;” Morocco, where political stability, and a special fund amounting to 2.7 per cent of GDP jointly provided by the government and the private sector helped, and South Africa that leveraged its resilient manufacturing and retail base.
Rwanda and Botswana moved to fourth and fifth positions respectively, the former propelled by its National Transformation Strategy that has improved the operating environment and the latter by its strong foreign reserves and its SWF that enable it to finance the budget deficit. The report also cites the adoption of intelligent fiscal, infrastructural, and social investments by others in the top 10.
This is a challenge for Nigeria and Tinubu whose “eight-point agenda” includes food security, poverty eradication, job-creation, and access to capital, but faces multiple challenges, notably the country’s weak industrial base, dwindling investment, and an unfavourable macroeconomic operating environment. Insecurity, poor governance, and political instability compound the situation.
Macrotrends, an online resource, noted that foreign direct investment in Nigeria witnessed a 105.64 per cent decline in 2022; from $3.31 billion in 2021 to a net loss of $190 million. It had received $2.31 billion in 2019, a 197.34 per cent improvement over 2018, rose by 3.48 per cent to $2.39 billion in 2020, and by 38.9 per cent in 2021.
Nigeria was similarly missing among the top 10 FDI receiving countries in 2022 as revealed in UNCTAD’s ‘World Investment Report 2023,’ when Nigeria recorded negative FDI inflows due to equity divestments.
The top three were Egypt with $11 billion, South Africa $9 billion, and Ethiopia $3.7 billion. Apart from divestment by international oil companies amounting to $21 billion between 2014 and 2022, Procter & Gamble, a US consumer goods giant and other multinationals have been fleeing.
Tinubu needs more effective policies to stabilise the economy and attract investments. He should shift from consumptive expenditure to investment in infrastructure, drastically prune the cost of governance, reform the key agencies, and drive a transparent privatisation and liberalisation programme that will transfer the management of railways, seaports, airports, the steel sector, and the downstream oil sector to private investors.
Insecurity must be tamed, and the law enforcement system decentralised.
The states must adopt and implement economic plans with investment, job-creation, production, export, and human development targets. FDI is critical for a turnaround; Nigeria must deploy creative policies to attract it.