Foreign Direct Investment Falls as Two Global Banks Pull out of Nigeria
Fears from the International community over the viability of the Nigerian economy and the political leadership of President Muhammadu Buhari has led to a sharp decline in foreign direct investment in the country as announced by the Central Bank of Nigeria (CBN) on Friday.
The CBN also announced that international banking consortium, the HSBC as well as UBS have closed their offices in Nigeria and quit the country although the CBN failed to give reasons for the departure of the global banking giants.
Announcing the fall of direct foreign investment in the country, the CBN said FDI fell to N 379.84bn ($1.2bn) in the first half of the year from N532.63bn ($1.7bn) a year earlier.
The CNN said further that although the outlook for Nigeria’s economy was optimistic at best because of the rising prices of oil and oil production, rising foreign debts and uncertainty surrounding the 2019 presidential election put that outlook in jeopardy.
Also according to Reuters, Investor confidence in the Nigerian economy was low due to the ongoing row between the Federal government and MTN because of profits repatriated abroad.
Reuters also speculated on the reasons the HSBC quit Nigeria saying it could be as a direct result of its grim financial prophecy regarding President Buhari’s second term in office saying the outlook was grim if Buhari gets a second term in office;
“A second President Muhammadu Buhari term raises the risk of limited economic progress and further fiscal deterioration, prolonging the stagnation of his first term, particularly if there is no move towards completing reform of the exchange rate system or fiscal adjustments that diversify government revenues away from oil.”
On its part, the CBN said three lenders within the Nigerian economy failed to meet its minimum liquidity ratio of 30 per cent, adding that non – performing loans had dropped to 12. 4 per cent as of June 2018 from 15 per cent a year ago, still a long way above its five per cent threshold.
The Premier financial institution said in its report;
“To further consolidate on the improvement, the Central Bank of Nigeria directed banks to intensify efforts at debt recovery, realization of collateral for lost facilities and strengthening their risk management processes.”