Nigeria has been ranked the third largest recipient of foreign direct investment in Africa, data from Ernst & Young has shown.
The EY Africa Attractiveness Survey 2019 Report, which was launched in Lagos on Wednesday, showed that FDI inflow into Nigeria stood at $8bn in 2018.
Egypt was the largest recipient of FDI in 2018 with $12bn, while Algeria was second largest with $9bn.
The data showed that the $8bn invested in Nigeria were in 85 projects, which created 10,000 jobs.
In terms of number of projects, South Africa was ranked as number one as 110 projects were created by FDI worth $5bn, which created 12,000 jobs.
The data said Africa’s FDI was dominated by services projects making, which made two-thirds of the total.
It noted that the services were majorly retail, financial services, telecoms, media, technology, business services and life sciences.
The report read in part, “West Africa was the fourth largest FDI destination in Africa in 2018. Over a five year period (2014 – 2018) West Africa was larger than East Africa in terms of FDI, and ranked third.
“Consumer accounts for just under 25 per cent of the total FDI in West Africa, the bulk flowing to Nigeria and Ghana, the two key markets.
“Nigeria and Ghana also attract the bulk of business services FDI, along with telecoms, Financial services, manufacture and automotive. China is the second largest investor into West Africa, but it has committed the most capital over the last five years.”
Analysts said the rising influence of intra African investment was led by South Africa.
The report described intra-African investments as an important sign of confidence, saying it would send a positive signal to foreigners.
According to data, South Africa has invested $375m in Nigeria in the past five years and $190m in Kenya.
The Head of Markets, EY, Mr Roderick Wolfenden, said investors in Africa described Nigeria as the most attractive destination for investment, while those that did not have investment in Africa described it as the worst investment destination.
He said, “This speaks volume to the perception gap that exists. Increase in intra-African trade would send a good signal that would address the perception gap people have about Africa.”
“Nigeria is a key investor into the rest of West Africa, with Morocco also a major player in the region. The key drivers of FDI in Nigeria would be sound economic reform agendas, economic growth, market size and the ease of doing business.”
Wolfenden added that the FDI investment in the country was not creating sufficient amount of jobs, compared to other countries.
He said the various governments in Africa were not doing enough to make it easy to do business in the continent, which was slowing down FDI inflow.
Wolfenden stated that if more governments could be more deliberate in their economic reforms, they would become more attractive for FDIs, which would translate to faster economic growth.