Nigeria’s fall from grace is detrimental to the country that is in dire need of investment inflows to grow the economy and create jobs. Seven years ago, Nigeria ranked the second most attractive investment destination in Africa but it has slipped behind several other countries and now ranks 14th position, according to a 2021 report by Rand Merchant Bank (RMB).
In the report titled, ‘Where to Invest in Africa 2021’, Egypt ranked the most attractive investment destination in Africa with Morocco, South Africa, Rwanda, and Botswana coming in second, third, fourth and fifth place respectively. Nigeria’s fall from grace is detrimental to the country that is in dire need of investment inflows to grow the economy and create jobs.
The RMB Investment Attractiveness Rankings were based on the World Bank’s “Doing Business” ranking which was suspended in 2020 for reported data irregularities. However, the firm removed that metric and relied on other competitiveness indicators and the Economic Freedom Index provided by the Heritage Foundation to build our operating environment score.
The report noted that this year’s report took into account the extent of the pandemic’s impact by sketching the landscape of the continent pre-COVID-19, and then painting a picture of both its actual and potential outcomes through and post-pandemic. Nigeria’s poor performance in the ranking occurred despite its status as a frontier market with growth potentials and market accessibility. According to the report, this came as a result of a myriad of challenges the country has been unable to fix.
“The government, which has been criticized for its slow pace of reform, still faces a myriad of security challenges that destabilise the country, such as the activity of the Islamist terrorist group Boko Haram in the northeast, forcing many people to flee. The government’s protectionist policies have hampered trade with neighbouring countries, a decision that could have long-term consequences for the giant African nation,” the authors noted.
The Boko Haram insurgency, which began in 2009 in Nigeria’s northern state of Borno, combined with counter-insurgency operations and communal clashes over scarce resources has led to the loss of many lives. According to the Global Conflict Tracker, nearly 350,000 people have been killed in Northeast Nigeria since 2009.
Nigeria has also been named the third-most terrorised country in the world, according to the Global Terrorism Index. The security challenges have continued to put a dent in the perception of foreign investors regarding the safety of their investments.
The authors further explained that the threat of renewed attacks on oil infrastructure in the Gulf of Guinea, which led to a drop in black gold production in 2016 as well as theft and sabotage of facilities in the Niger Delta region, is still present.
According to the World Bank’s latest Nigeria Development Update report, inflation has pushed 8 million Nigerians into poverty between 2020 and 2021 as at November 2021. This is an increase from 7 million reported in June 2021. At 15.99 percent in October 2021, Nigeria’s inflation rate is far from the Central Bank of Nigeria’s desired 6-9 percent range.
According to the National Bureau of Statistics (NBS), Nigeria’s unemployment rate at 33.3 percent is the highest on record. The high number of jobless Nigerians only heightened social risks.