Nigeria has retained its spot as the third most attractive country in Africa for foreign investment in 2021.
This is according to the Absa Africa Financial Markets Index 2021 (AAFMI) report.
The report surveyed 23 countries in Africa and used six pillars to rank their openness and attractiveness to foreign investment.
It also ranked Nigeria third in its 2020 survey.
According to the 2021report, Nigeria scored 63 points to occupy the third position while the first and second positions went to South Africa and Mauritius, which scored 86 and 70 points, respectively.
“Nigeria continues to make strides in creating an enabling investment environment for foreign investors, with the necessary regulatory developments and policy initiatives.” the report reads.
The report highlighted that Nigeria’s performance across the six pillars used in the survey: market depth, 62; access to foreign exchange, 20; market transparency, tax and regulatory environment, 86; capacity of local investors, 44; macroeconomic opportunities, 69 and enforceability of the standard master agreement, 100.
The report noted that nine countries, including Nigeria, have introduced products classified as green or sustainable, with green bonds as the most popular instrument.
Acknowledging Nigeria as one of the few countries in Africa using technology in their stock exchanges to boost retail participation, they noted that Nigeria’s Securities and Exchange Commission (SEC) launched FinPort, a fintech and innovation portal to assist fintech businesses to understand the regulatory requirements for the Nigerian capital market to support its digitalisation of the stock exchange.
However, the AAFMI stated that Nigeria has continued to perform poorly in access to FX and has imposed administrative controls that expanded the number of goods subject to import restrictions, enforcing existing export repatriation rules and restricting FX supply to certain windows.
“While these measures restricted capital outflows and helped keep reserves stable, market liquidity remained below pre-pandemic levels. The volatile FX market and the delays in the repatriation of foreign currency out of Nigeria caused further problems,” the report adds.
“Despite a rebound in oil prices and remittances, the FX shortage persists as imports recover faster than exports. All these factors contributed to Nigeria’s poor performance in Pillar 2.”
The report stated that Nigeria had kept its official borrowing relatively low.