28 STATES THAT FAILED TO ATTRACT FOREIGN INVESTMENTS
One issue of national importance, which should elicit policy-makers’ concern and urgent action, is the recent report by the National Bureau of Statistics (NBS) that 28 states failed to attract foreign investments, as the value of capital importation into Nigeria grew by 6.78 per cent in the first quarter of 2023.
To underscore the significance of the figures released, as they relate to informing the political leaders on the steps to take to reverse the drift to economic doldrums, eight states failed, and woefully so, to attract Foreign Direct Investment (FDI) between 2019 and 2022. These include Ebonyi, Gombe, Jigawa, Kebbi, Taraba and Zamfara.
According to the NBS report for the first quarter of 2023, the total capital imported stood at $1.13 billion, up from the $1.06 billion recorded in the fourth quarter of 2022. Among the 28 states that failed to attract foreign investments in the first quarter of 2023 are Bauchi, Bayelsa, Benue, Borno, Cross River, Ebonyi, Edo, Plateau, Taraba and Zamfara.
On the brighter side, states such as Lagos, Adamawa, Akwa Ibom, Anambra, Ekiti, Ogun, Ondo and Niger witnessed capital inflows within the period. In the quarter under review, Lagos took the lead, followed by the Federal Capital Territory (FCT), to top the list of states that attracted the most investments.
As the NBS stated, Lagos State attracted $704.87 million, representing 62 per cent of the total capital inflow into Nigeria while the FCT emerged as the second top investment destination with $410.27 million, representing 36 per cent of the total capital inflow in the country.
It would be recalled that in 2022, Lagos stood head and shoulders above its peers, outshining them by attracting $3.61 billion, which represents 68 per cent of the total capital inflow into the country. Interestingly, that was an increase compared to $2.21 billion investment it received in 2021. And Abuja, which came second as an investment destination, attracted $1.63 billion, representing 31 per cent of the capital inflow in 2022.
Other states that attracted foreign investments in Q1 2023 are Akwa Ibom ($5.21 million), Adamawa ($4.50 million), Anambra ($4 million) and Ogun ($2.09 million). The pertinent question this situation brings to the public sphere is the lesson other state governments should learn from the success of their peers.
According to Governor Babajide Sanwo-Olu, Lagos State remains the right place for investments, “the crown subnational jewel of the African economy.” The state is ripe for investments in some attractive sub-sectors of the economy. These include financial technology, education technology, and health technology. Others are Business Process Outsourcing (BPO), talent training and placement, or physical infrastructure like data centres.
To key into the facilitating factors that drive economic development, the state governors have to be futuristic and think out of the box. According to the Economy Help, factors affecting Foreign Direct Investment are predicated on providing the enabling environment for businesses to thrive.
For instance, are the states safe for business transactions and operations? Are the labour skills available? Are the wage and tax rates affordable and sustainable? Is the judiciary independent? Are the transport facilities and infrastructure put firmly in place? Having a reasonable size of economy that guarantees potential for growth as well as political stability, property rights, and affordable exchange rate are most germane.
The way forward is for a holistic restructuring of the Nigerian entity in line with the vision of our founding fathers. Doing so will not only discourage the over-dependence on the monthly allocation from the Federation Account but instil the culture of creative competition which will encourage each state to develop its rich natural and man-made resources. Therefore, it is high time Nigeria returned