15 June 2015, Lagos – A report by African Economic Outlook (AEO) has revealed that foreign direct investment (FDI) in Nigeria and a couple of other African countries are expected to reach $73.5 billion (N14.553 trillion) in 2015, underpinned by increasing greenfield investment from China, India and South Africa.
The AEO presents the current state of economic and social development in Africa and projects the outlook for the continent. The AEO is a product of collaborative work by three international partners: the African Development Bank (AFDB), the OECD Development Centre and the United Nations Development Programme (UNDP).
The AEO pointed out that foreign direct investment is diversifying away from mineral resources into consumer goods and services and is increasingly targeting large urban centres in response to the needs of a rising middle class.
The report also observed that African sovereign borrowing is skyrocketing adding that remittances have increased six-fold since 2000 and are projected to reach $64.6 billion in 2015 with Egypt and Nigeria receiving the bulk of flows.
“Conversely, official development assistance (ODA) will decline in 2015 to $54.9 billion and is projected to diminish further. More than two-thirds of states in sub-Saharan Africa, the majority of which are low-income countries, will receive less aid in 2017 than in 2014. Despite significant improvements in tax revenue collection over the last decade, domestic resource mobilisation remains low.
“Financing the post-2015 development goals will depend on the capacity of African policy makers and the international community to harness these diverse funding options and exploit their potential to leverage additional finance. The financial landscape has changed considerably in Africa since 2000.
Private external flows in the form of investment and remittances now drive growth in external finance,“ AEO stated.
Meanwhile, THISDAY findings revealed that investment in the Nigerian retail market has reached an all time high, attracting over N200 billion in the last two years owing to rising purchasing power and the huge potential of the nation’s economy.
Experts believe investors are flocking to the sector as a result of Nigeria’s potential, a large population, positive macro-economic growth and a strong appetite for consumer goods.
Findings by Oxford Business Group (OBG) made available to THISDAY revealed that both foreign and local investors are dramatically expanding their domestic retail footprint in the country.
According to OBG, “By the end of June 2012, Shoprite the continent’s biggest retailer opened its fifth shop in Nigeria, and another two in 2013. Shoprite, has outlined plans to open up to 700 stores in the country, and Massmart, South Africa’s second-largest retailer and partly owned by Walmart, has announced that it intends to increase its presence from two to 20 stores.
“Also, Spar, Europe’s largest retail network, has partnered with Nigeria-based Artee Group to tap into the local market, cutting ribbons at a new outlet in Lagos and one in Abuja. Looking ahead, the firms aim to increase their Lagos network and expand into Port Harcourt and Ota in Ogun state.”
*Eromosele Abiodun – Thisday