Mismanagement in Nigeria draws huge oil FDI to Angola

A new report on foreign direct investment, FDI into Africa saw Nigeria losing the top ranking to minion Angola, in 2014 on account of bad policies and mismanagement of the country’s oil industry.

 

The report prepared by the data division of the Financial Times reported a huge 65 percent surge in capital investment in Africa to an estimated $87bn in FDI into Africa but Nigeria failed to measure up with the exponential rise in oil country Angola which received $16bn mainly into its oil and gas sector in the period under review.

In a year when Africa’s share of the global FDI reached a record 23 percent, Nigeria received only $11bn with very little of this going to the oil industry on account of the persistent stagnation in the industry which is responsible for about 80 percent of the country’s foreign earnings.

Nigeria accounted for virtually nothing in the estimated $33bn in FDI into the continent’s oil and gas sector last year with Angola’s oil and gas industry scooping the most FDI to top the league of beneficiaries yet again.

Mozambique, where the IMF is forecasting  seven per cent GDP growth for 2015, attracted $9bn in capital investment last year.

Apart from its thriving oil and gas industry, other sectors benefitting in Mozambique include real estate, bolstered by Belgium based Pylos which is building more than a dozen shopping malls around the country, as well as plans by South Africa based Attenbury Property Development for mixed use developments in Pemba, Beira and Nacala.

The massive growth in real estate projects are a direct result of the rapid growth of Mozambique’s well managed oil and gas industry in the last five years the report said.

According to the FDI report, roughly a third of the capital investment coming into the Africa is directed at the oil and gas industry, the place where Nigeria is losing its allure after years of failed policies and uncertainty over a bogus Petroleum Industry Bill that lies dead in the National Assembly.

The oil and gas sector is followed in appeal by real estate as the second most popular attraction for foreign investors. A total of $11bn in capital investment in real estate was recorded by Africa last year, the report said.

It was not only Angola’s oil and gas sector that soared in attracting FDI last year. Egypt received a whopping $5bn for the establishment of a petroleum refinery within the Suez governorate and this was boosted by the announcement by US based Coca-Cola that it would expand production capacity at its factory in Cairo, as part of a $500m growth strategy focused on Egypt.

In a similar report in 2012, the Financial Times reported that FDI flows into Nigeria can rise sharply “if the government fixes the oil and gas sector.”

That report of three years ago added that the struggles of the oil industry in Nigeria highlight difficulties that can accompany dealing with the Nigerian government and the situation has gotten even worse over the years.

Even in the area of domestic investment, Nigeria comes third in Africa with 11.6percent, shoved aside by South Africa, the largest domestic investor in the continent with 35 percent and Kenya taking the second position with 16percent.

One positive mention of Nigeria comes by way of Dangote Group cited for its rapid expansion around the continent.