Lagos — Foreign Exchange (FOREX) challenges may affect the country’s Foreign Direct Investment (FDI’s) inflow this year if the trend continues.
Mr Ifeanyi Uddin of the Strategy and Corporate Development Department of FirstBank, made the disclosure during a presentation to select entrepreneurs at the Enterprise Development Center ( EDC)/ FirstBank SME Breakfast Series – The Economy and You! held at the Lagos Business School (LBS) recently.
He said: “FDI inflows to Nigeria declined between 2011 and 2014. Nigeria was displaced from the first position in FDI inflows in Africa in 2013 and Forex management challenges may affect the country’s FDI’s inflow in 2016.”
He noted that the gap between the naira exchange rate at the interbank and parallel foreign exchange markets is huge and widening. To close the gap, CBN has continued to engage in several administrative measures. Yet, these have not stemmed the misalignment in naira exchange rate.
“Naira may continue to hover around N320/US$ at the parallel market until the CBN unveils a clearer and market-friendly forex policy regime and threats of dollarisation of the domestic economy are yet to dissipate”, he added.
Uddin said: “FDI outflows from Nigeria in 2014 was the highest in the last six years – principally influenced by political uncertainties. If government formulates ‘sound’ economic policies (in line with market expectations), and consolidates on the gains achieved in security in the North-east across all regions, FDI outflows may drop this year – thus increasing the liquidity in the domestic economy.”