Market News

By Oluwakemi Abimbola

Members of the Monetary Policy Committee of the Central Bank of Nigeria have called for a coordinated and whole-of-government approach to boost the nation’s Foreign Direct Investments.

This call was made in the Personal Statements of the members, which were published on the website of the apex bank on Monday, ahead of this month’s MPC meeting.

According to the latest Capital Importation report released by the National Bureau of Statistics, Foreign Direct Investments into Nigeria dropped sharply by 70.06 per cent quarter-on-quarter to $126.29m in the first quarter of 2025, down from $421.88m recorded in the final quarter of 2024.

The steep decline in FDI occurred despite an overall increase in capital importation into the country, indicating that foreign investors are favouring short-term, high-yield financial instruments over long-term, productive commitments in the Nigerian economy.

One of the MPC members, Aloysius Ordu, in his statement, lamented the decline, noting that it was lower than what other countries were bringing in.

He said, “Inflows of foreign direct investment amounted to $1bn in 2024, according to the United Nations Centre on Trade and Development. This amount is considerably lower than FDI flows to comparable countries, Indonesia ($24bn), India ($28bn), Egypt ($46bn), and Brazil ($59bn), during the same year.

“Clearly, the task of attracting inward investments into Nigeria must not rest on CBN alone. A whole-of-government approach is urgently needed, including the Ministries of Trade and Industry, Solid Minerals, Digital Economy, Finance, Planning, Agriculture, etc., and security agencies to attract long-lasting FDI to boost economic growth and create jobs for the country’s burgeoning population of unemployed youths. Such a coordinated effort to improve the investment climate will make it easier to raise Nigeria’s economic size to a trillion-dollar economy in the future.”

Another member, Lydia Jafiya, however, suggested that some of these FDIs were already coming in, especially into the oil & gas sector.

She said, “There is a need to strengthen the positive real interest rate to align with global financial conditions, leading to improved capital flow and competitiveness. I reiterate my support for the MPC’s decisions, which have consistently been guided by data and aligned with the fiscal and monetary authorities’ objectives. Indeed, the objectives of price stability and growth acceleration are mutually inclusive.

“The fiscal authority remains committed to fiscal sustainability, structural reforms, and private sector participation. The reforms have ushered in market transparency, competitiveness, and an improved business environment. Resources are being attracted in Foreign Direct Investment inflows, some targeting the oil and gas sector.”

At the end of the 301st meeting of the MPC in July, the members had voted to retain the Monetary Policy Rate at 27.50 per cent, maintain the asymmetric corridor around the MPR at +500/-100 basis points, retain the Cash Reserve Ratio for Deposit Money Banks at 50.00 per cent and for Merchant Banks at 16.00 per cent, and keep the Liquidity Ratio unchanged at 30.00 per cent.

Meanwhile, the Governor of the Central Bank, Olayemi Cardoso, in his statement at the July meeting, argued that the pace of disinflation remained tepid and insufficient to warrant any easing of monetary conditions.

He maintained that the “underlying inflation pressures and high stock of money supply call for a firm response before price stability is threatened. The negative real yields obtainable in the market also pose a deterrent to savings and investments in the domestic economy, and our focus must remain on lowering inflation levels further to improve the attractiveness of local assets.”

However, inflation dipped for the fifth month in August to 20.12 per cent, down from 21.88 per cent in July. With this dip, experts anticipate a moderation in the benchmark before the end of the year.