understanding the impact of covid-19 on investments in nigeria€¦ · 24/06/2020 · q1 2017 q2...
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UNDERSTANDING THE IMPACT OF COVID-19 ON INVESTMENTS IN NIGERIA
Yewande SadikuExecutive Secretary/CEO
Zoom call | 24 June 2020
2
11 March
11 February
08 March
It has only been 3+ months since a pandemic was declared
Only 4+ months since the virus was named
3
Global cases on 23 June
Source: WHO Coronavirus Disease (COVID-19) Dashboard, data last updated: 2020/6/23, 4:58pm CEST
Global cases now almost 9m with about 470,000 deaths
WHO Regions
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It has evolved from a public health crisis to an economic crisis
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Latest economic growth projections
COVID-19 has probably dealt the global economy its most severe blow
since the Second World War
Implications for FDI
8
Impact of the pandemic on FDI
Source: UNCTAD
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Global FDI flows, last 20 years
1 076.3
2009, 1.2
1.3
115.4
511.7
525.0
171.9
308.1
291.4
88.6146.7
19.893.6
7.134.2
11.9
45.90.4
1.7
1999 2000 2001 2002 2006 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
World AsiaEurope NALA&C ODETE AfricaOceania
US$ billion
Source: World Bank Database
Global financial crisis
FDI flows which were already under pressure before COVID-19; impact
expected to be worse than the global financial crisis
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1,919
1,4971,410 1,390
2016 2017 2018 2019P 2020 - 2021
Global FDI expected to drop by 30 - 40% in 2020/2021, the
lowest level in almost 20 years
Expected impact on COVID-19 on FDI flows
US$ billion
Source: UNCTAD Report
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Global FDI flows, last 10 years
World Asia Europe North America Africa
2009 20102011 20122013 20142015 20162017 2018
US$14.97tn
29% 20% 3%28%
Source: UNCTAD
Africa accounts for only 3% of global FDI flows, despite hosting 17% of the
world’s population
Nigeria
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1.21 1.18 1.31 1.28
2.04 2.17 2.13
4.98 4.90
6.09
8.25
8.65
6.10
8.91
7.13
5.61
4.69
3.06
4.45
3.50
2.00
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
FDI flows in Nigeria, last 20 years
Source: World Bank Database
Telco sector reforms sale of GSM licenses
Sale of oil assets to indigenous companies
Banking reforms lead to consolidation
Material FDI flows can only be driven by government policies
Material policy changes will be required to reverse decline
expected in 2020/2021
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Investment announcements in Nigeria, 2017 - 2020
6.38 6.38 6.38
66.35
29.55
12.71
4.81
12.96 12.96
16.18 16.18
2.44
22.37
27.34
9.29
24.64
17.82
90.89
5.47
29.91
Q1 2017 Q2 2017 Q3 2017 Q4 2017 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 2019 Q1 2020
US$ billion
112 projects across 27 States + FCT
19 projects across 14 States +
FCT
92 projects across 23 States + FCT
76 Projects across 17 States + FCT & Offshore
Source: NIPC Intelligence
Investment interest in Nigeria was under pressure before COVID-19
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66.35
90.89
29.91
3.5 2.0
2017 2018 2019
Investment Announcements Actual FDI Inflow
Investment announcements vs FDI inflow in Nigeria, 2017 - 2019
US$ billion
Sources: NIPC Intelligence, UNCTAD
A more proactive all-of-government approach to investor support, across federal and state
governments is required to convert more announcements to actual investments
Actual FDI flows have also been under pressure
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Flight to quality and safety!
Winners: economies that provide attractive prospects in a conducive business environment
Many economies will be focused on investment-driven recovery
Increase in domestic production capacity of essential or basic products
Geographical diversification of production capacity/value chains by multinationals to minimise concentration risk
More intense competition for FDI from developed economies
Shift from investments seeking lowest cost locations to seeking large domestic markets
Shift from primarily considering financial returns to equally considering tangible impact
Immediate attractiveness of
renewable energy, pharmaceuticals, and healthcare
all sectors driven by disruptive digital technologies: e-commerce, fintech, e-learning, telemedicine, etc
DDI prospects remain high, but needs to be actively courted
Expected impact of COVID-19
Policy Implications
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Investor feedback (no particular order, most frequent in red)
“poor private sector engagement in policy formulation”
“painful, long, unpredictable government approval process”
“corruption: you can’t get anything done without paying a bribe”
“difficult operating conditions: erratic power, bad roads, poor public utilities”
“lack of skilled labour, poor work ethic”
“frequent policy changes make long term planning difficult”
“government is anti-big business”
“corrupt judiciary; too many sacred cows”
“meeting with senior government officials cancelled after investor’s arrival”
“everything is smuggled in; borders are too porous, so tariff measures never work”
“multiple taxes by federal and state agents”
“security situation is getting worse”
“road to Apapa port costs us millions per day”
“difficulty with getting visas”
“insufficient investment incentives”
“access to long term capital is challenging”
“government agencies harass investors”
“high cost of doing business”
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Nigeria must URGENTLY become an easier place to do business
Focused implementation of credible, coordinated policies which reflect an all-of-government commitment to investment retention and attraction
Coordinated efforts by government agencies required to managing investors’ concerns and restoring confidence
Detailed mapping of the economic activities in collaboration with FMBNP
Country-wide mapping of competitive sectors, to determine Nigeria’s true competitive advantages
Sectors enhanced by the pandemic
Efforts should be at removing administrative and regulatory challenges to help them flourish
Sectors challenged by the pandemic
Support initiatives to prevent job losses
Strategic investment management/promotion, leveraging the work already done by NIPC
Aggressively encourage Domestic Direct Investments
Some policy recommendations
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Created a section on COVID-19 on the NIPC website to carry relevant government guidance
Hosted a knowledge sharing webinar with State Investment Promotion Agencies on 28 April
Hosted a knowledge sharing webinar with staff on 04 May
Updated its digital database of State IPAs to expediate virtual engagements
Spoken at over 20 webinars to share thoughts on COVID on investments
Currently in discussions with NBS to conduct a nationwide survey on impact on COVID on business and the policy recommendations that business will consider more valuable
Actions taken by NIPC
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Potential winners and losers from COVID-19
Nigeria-specific mapping in progress
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#TakeResponsibility
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#TakeResponsibility
Plot 1181 Aguiyi Ironsi Street Maitama District
Abuja
[email protected]@nipc.gov.ng
www.nipc.gov.ng
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