Nigeria has retained its spot as the third most attractive country in Africa for foreign investment in 2021 according to the Absa Africa Financial Markets Index 2021 report.
23 African countries were surveyed in the report which used six pillars to rank their openness and attractiveness to foreign investment with South Africa and Mauritius coming first and second respectively.
The report also noted that “South Africa, Mauritius and Nigeria maintain their lead in the index, despite having lower overall
scores than last year’s.”
“Nigeria continues to make strides in creating an enabling investment environment for foreign investors, with the necessary regulatory developments and policy initiatives.” the report added.
In Digital developments in financial markets, the report commended Nigeria’s effort in employing technology to help businesses understand regulations.
It read, “Nigeria’s SEC launched FinPort, a fintech and innovation portal to assist fintech businesses to understand the regulatory requirements for the Nigerian capital market. The SEC will also be rolling out a regulatory incubator for fintech seeking to conduct capital market activities.”
In the six pillars used in the survey, Nigeria scored 62 in market depth, 20 in access to foreign exchange, 86 in market transparency, tax and regulatory environment, 44 for capacity of local investors, 69 in macroeconomic opportunities, and 100 for enforceability of the standard master agreement.
However, the AAFMI report noted that Nigeria has continued to perform poorly in access to foreign exchange while it has imposed administrative controls that expanded the number of goods subject to import restrictions, enforcing existing export repatriation rules and restricting the supply of FX to certain windows.
“While these measures restricted capital outflows and helped keep reserves stable, market liquidity remained below pre-pandemic levels.
“Due to the control measures and global macroeconomic imbalances, foreign portfolio investors’ appetite remained subdued. The volatile FX market and the delays in the repatriation of foreign currency out of Nigeria caused further problems. Despite a rebound in oil prices and remittances, the FX shortage persists as imports recover faster than exports,” the report adds.