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FDI Overview
Nigeria has made it into the top 20 global destinations for FDI
Nigeria receives the largest amount of Foreign Direct Investment (FDI) in Africa. Foreign Direct Investment inflows have been growing enormously over the course of the last decade: from USD1.14 billion in 2001 and USD2.1 billion in 2004, Nigeria’s FDI reached USD11 billion in 2009 according to UNCTAD, making the country the nineteenth greatest recipient of FDI in the world.
Nigeria’s most important sources of FDI have traditionally been the home countries of the oil majors. The USA, present in Nigeria’s oil sector through Chevron Texaco and Exxon Mobil, had investment stock of USD3.4 billion in Nigeria in 2008, the latest figures available. The UK, one of the host countries of Shell, is another key FDI partner – UK FDI into Nigeria accounts for about 20% of Nigeria’s total foreign investment. As China seeks to expand its trade relationships with Africa, it too is becoming one of Nigeria’s most important sources of FDI; Nigeria is China’s second largest trading partner in Africa, next to South Africa. From USD3 billion in 2003, China’s direct investment in Nigeria is reported to be now worth around USD6 billion. The oil and gas sector receives 75% of China’s FDI in Nigeria. Other significant sources of FDI include Italy, Brazil, the Netherlands, France and South Africa.
Investment Framework and Bodies
In 1995, the Nigerian Investment Promotion Commission Act laid out the framework for Nigeria’s investment policy. Under the Act, 100% foreign ownership is allowed in all industries except for oil and gas, where investment is constrained to existing joint ventures or new production-sharing agreements. Investment from both Nigerian and foreign investors is prohibited in a few industries crucial to national security: the production of arms and ammunition, and military uniforms. Investors can repatriate 100% of profits and dividends.
