The FDI into Nigeria dropped by 34% in 2015 to $3 billion compared to the previous year. The plunge in oil prices has immensely affected the country’s investment landscape and economic growth prospects since crude sales account for around 70% of government revenues. The IMF expects Nigeria’s GDP will grow only 0.8% in 2017.

Nigeria - FDI Inflows

Source: UNCTAD

The number of greenfield FDI projects declined from 77 in 2013 to 53 in 2015. The countries with the highest investments in Nigeria are Canada, South Africa, UK, United States, Mauritius, India, and France.

Nigeria - Greenfield FDI Projects

Source: UNCTAD

Oil and gas sectors are the biggest recipients of FDI by value in Nigeria. However, oil and gas investments have been hard hit by low oil prices and attacks by militants on oil and gas facilities. Crude production fell largely due to attacks on pipelines in 2016.

Telecom and IT sectors are also major recipients of FDI in Nigeria. Abu Dhabi’s Etisalat and South Africa’s MTN have made large capital investments in Nigeria. However, communication companies, which invested in Nigeria while oil prices high, are struggling to repay loans or keep operating. MTN posted first ever annual loss ($107m) in March 2017. Etisalat is considering selling its stake, which has defaulted on a $1.2 billion loan.

Foreign investors also target consumer goods and retail sectors in Nigeria. Considering Nigeria’s large and growing population, both sectors offer investment opportunities. However, with the recession in the economy, disposable income has dipped, and many foreign retail brands have exited the Nigerian market.

Nigeria - FDI Inward Stocks

Source: UNCTAD

Nigerian government is committed to improve the business and investment climate of the country. However, urgent reforms are needed in order to re-establish investor confidence in Nigeria. The government should speed up its efforts to increase its non-oil revenue sources, boost infrastructure, and improve the security situation. Otherwise, Africa’s biggest economy will not come back on investors’ radar and the level of FDI inflows will remain low in the medium term.