Emmanuel OchayiIn a move that raises concerns about Nigeria’s investment environment, foreign direct investors have amplified their asset disposals, reaching an astounding $200 million in the third quarter of 2023, as outlined in the Central Bank of Nigeria’s economic report.
“This notable rise in divestment underscores the challenges faced by foreign entities operating in Nigeria,” emphasized financial analyst Mark Davidson. “It reflects the growing trend of multinational corporations shifting their business focus away from the country.”
The surge in divestment, marking a 186% increase from the preceding quarter, primarily stems from divestments in direct investment equities.
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However, contrasting this trend, the report also highlights an influx of $2.86 billion, majorly driven by heightened portfolio investment in debt instruments by non-residents.
“The economic landscape of 2023 posed significant hurdles for businesses,” commented economist Jane Smith. “From uncertainties around elections to currency instability and inflationary pressures, these macroeconomic challenges resulted in a notable exodus of firms from Nigeria.”
The departure of prominent entities, such as GSK UK Group, underscores the gravity of the situation.
Hindered by forex access challenges, GSK opted to pivot its operations, highlighting the macroeconomic woes faced by businesses in the nation.
With approximately 10 firms exiting the Nigerian market in 2023, apprehensions regarding the ease of doing business in the country have heightened, signaling caution to potential foreign investors. The cumulative impact of these challenges has raised a red flag, urging a reassessment of the investment landscape in Nigeria.
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