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Foreign direct investment (FDI) into Nigeria fell to less than one percent of the country’s gross domestic product (GDP) in 2024, according to the World Bank’s latest report. The Bank attributed the decline to persistent structural barriers that continue to undermine the country’s investment climate.
The report highlighted the adverse effects of macroeconomic instability—including naira depreciation, volatile foreign exchange markets, and high operational costs—as key factors eroding investor confidence. In Q1 2024, Nigeria attracted just $119.18 million in FDI, representing a mere 3.53% of the total capital importation of $3.376 billion. This figure dropped sharply in Q2 to $29.83 million, the lowest level recorded in over a decade. A modest rebound occurred in Q3, with FDI inflows climbing to $103.82 million.
While foreign portfolio investment (FPI) surged by 110% to $13 billion in 2024, driven by attractive short-term yields and potential currency gains, the World Bank cautioned that such flows remain volatile and unsustainable for long-term development. It emphasized that FPIs—though helpful for short-term foreign exchange liquidity and fiscal balancing—are prone to rapid reversals and are no substitute for stable, productive FDI.
The investment exodus has been marked by the departure of major multinational firms including Unilever Nigeria, Procter & Gamble, GlaxoSmithKline, ShopRite, Sanofi, Equinox, Bolt Food, and Jumia Food, a trend exacerbated by high energy costs, inflation, insecurity, and regulatory uncertainty.
Amid this backdrop, Dr. Yemi Kale, Group Chief Economist and Managing Director of Afreximbank, called for a paradigm shift from external reliance to intra-African capital mobilisation. Speaking at the African Direct Investment (ADI) Sensitisation Workshop in Cairo, Egypt, Dr. Kale challenged the prevailing FDI-centric development narrative, arguing that the continent’s growth must be anchored in African-led investments.
Presenting insights from the inaugural ADI Baseline Report, he revealed that over $44 billion in intra-African investment was recorded between 2017 and 2020. “This isn’t just capital,” Kale said. “It’s a catalyst—an expression of confidence by Africans in Africa.”
He criticised the long-standing overreliance on foreign capital tied to extractive industries and commodity cycles, warning that such dependence distorts policy priorities and underrepresents the transformative potential of indigenous investment.
“African Direct Investment (ADI) embodies institutional and entrepreneurial capital that is attuned to local contexts and long-term regional development,” Kale noted. He described ADI as critical to unlocking the potential of the African Continental Free Trade Area (AfCFTA), enhancing regional value chains, and building resilient industries.
The ADI Baseline Report shows that East and Southern Africa accounted for nearly 70% of intra-African investments. The top source countries include Mauritius, Kenya, South Africa, Egypt, and Nigeria, while the financial services sector alone attracted over $30 billion. Notably, emerging investment destinations like Zimbabwe and South Sudan underscore a shift in investor perception and risk tolerance.
Kale, a former Statistician-General of Nigeria’s National Bureau of Statistics, urged African policymakers, investors, and trade institutions to embrace the data-driven roadmap offered by the ADI report to guide risk management, policy reform, and regional integration strategies.
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