Despite Nigeria moving up for the third year in a row Africa biggest economy, Nigeria, is still missing on the top ten most attractive investment destinations in the continent according to a new report by Quantum Global’s released yesterday.
The report ranks Nigeria’s 14th from 19th position last year, due to the recovery of the economy caused by the recent rise in oil prices.
Morocco grabbed the first position followed by Egypt, Algeria occupying the second and third position respectively.
South Africa shares the fourth with Botswana, which was ranked the top in the last edition of the Index and Kenya moving up to ninth position.
The index which is constructed from investment indicators, which include the share of domestic investment in GDP, the share of Africa’s total FDI net inflow, GDP growth rate forecast and a population-augmented GDP growth factor.
Other factors taken into account in the calculation are real interest rate, the difference of broad money growth to the GDP growth rates, inflation differential, credit rating, import cover, the share of the country’s external debt in its GNI, current account ratio, ease of doing business and the country’s population size.
Indicators are based on secondary data collected from World Bank Development Indicators, IMF World Economic Outlook, UNCTAD Data Centre and Quantum Global’s estimates.
Speaking on the report Mthuli Ncube, Managing Director, Quantum Global Research Lab said that “in spite of the improvements to oil production and prices, African economies are turning their attention towards diversification to stimulate industrial development, and to attract investments in non-oil strategic sectors. Morocco has been consistent in attracting an inward flow of foreign capital, specifically in banking, tourism and energy sectors and through the development of the industry.”
The Nigerian government has directed efforts towards diversifying the economy and it has laid out a roadmap to enhance public infrastructure and support high growth sectors in the country such as manufacturing, ICT, and agriculture. The country had also placed an import ban on some agricultural products in order to facilitate local production.
The market size of the country has been a prominent factor to attract investments, especially imports. Nigeria, which is ranked number 1 based on Demographics factors in this latest report, has not invested in the people or leverage the population size to build an industrialised society.
Giving further insight Ncube noted Nigeria continues to lag behind because the population lacks the necessary skills to for the future.
“the issue with this is that a large population gives you the fighting chance to have the right size of the marketplace, a substantial market in the future. A new source of skills in the future. But you have to invest in those skills. You need to invest in education in health and also, kill the dependency ratio. So that’s really the message that needs to be strong enough in terms of advocating that investment. That’s actually the key; that’s how you harness dividend.”
Last week, at the special National Economic Council (NEC) held in Abuja Bill Gates, had advised the economic team of the country to prioritize investment in human development.
“To anchor the economy over the long term, investments in infrastructure and competitiveness must go hand in hand with investment in people. People without roads, ports, and factories can’t flourish. And roads, ports, and factories without skilled workers to build and manage them can’t sustain an economy,” he explained. Nigeria’s potential to rise to the top of the most desired investment destination lies in the people. Massive investment in providing quality healthcare and education can see Nigeria rise to the top in a few years.
“Continued FDI inflows will continue to drive the much-needed capital to develop Africa’s primary sectors to meet the demands of the continent’s rapidly growing middle-class, and into manufacturing sectors to create more jobs, enhance economic growth and support structural transformation,” said Mthuli Ncube, head of research at Quantum Global and a professor of mathematical finance at Oxford University.
