Nigeria intends to diversify its economy away from oil by building a competitive manufacturing sector, which should facilitate integration into global value chains and boost productivity. The recent merging of trade, industry and investment under the ambit of the Federal Ministry of Industry, Trade and Investment reflects Nigeria's intention to effectively coordinate between these three key areas to improve its trading and investment environment. Some of the country's main advantages are a partially privatized economy, an advantageous taxation system, significant natural resources and a low cost of labor. On the other hand, widespread corruption, political instability, lack of transparency and poor quality of infrastructure are limiting the country's FDI potential. Intense bureaucracy also curbs foreign investment.
Nigeria is
the third host economy for FDI in Africa, behind Egypt and Ethiopia. The
country is among the most promising poles of growth in Africa and attracts
numerous investors in the sector of hydrocarbon, energy, buildings etc. The
country undergoes the effects of the oil counter-shock. According to the
UNCTAD 2020 World Investment Report, FDI flows to Nigeria totalled to
USD 3,3 billion in 2019, showing a 48,5% decrease compared to the previous year
(USD 6,4 billion in 2018) under the effects of austerity measures. The total
stock of FDI was estimated at USD 98,6 billion in 2019. Some of the main
investing countries in Nigeria include the USA, China, United Kingdom, the
Netherlands and France.
In
the World Bank's 2020 edition of Doing Business Report, Nigeria ranked
131st worldwide, for the ease of doing business. This represent a leap
from 2019 edition when the country was ranked 146th. The country has improved
in many subcategories of the rankings: Starting a business, dealing with
construction permits, getting electricity, registering property, Trading across
borders, and Enforcing contracts. Nigeria appears as one of the top-10
improvers for the second time (Doing Business). Nigeria has been attracting
strong inflows from American companies, including giants like Uber, and
Facebook, as well as Emergent Payments, and Meltwater Group. China has also
been investing considerably in the country, mainly in the textile, automotive
and aerospace industries.
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