Minister of Trade and Investment, Olusegun Aganga
Financial analysts at Dunn Loren Merrified (DLM) Limited, an investment bank, have called on the government to work harder in attracting more foreign direct investments (FDIs) instead of more portfolio investments currently flowing into the country.
In a review of the financial markets, made available to THISDAY last Monday, DLM noted that there had been a gradual return of offshore investors to the Nigerian market.
According to the analysts, the presence of international investors had been observed in the market which could also be seen in the strengthening of the domestic currency.
They explained that the intractable financial and economic challenges of the Eurozone had made frontier and or emerging markets with attractive yields, such as Nigeria, the likely destination for flow of capital from portfolio investors with the appropriate risk appetite.
“However, rather than attracting portfolio investors, the Nigerian economy should be positioned to attract FDIs in view of the decline in the inflow of FDIs to Nigeria in recent times.
“In our analysis of FDI inflow to the West-African sub-region, we observed that while Nigeria is the leader in absolute terms with inflow of $6.1 billion in 2010, growth was negative with 29.5 per cent recorded for the same period. Comparatively, there has been a significant increase in FDI inflow to Ghana, which recorded a 50 per cent increase in FDI to $2.5 billion,” they said.
The analysts noted that the return of the portfolio investors impacted the demand for treasury bills last week. The auction statistics showed that an oversubscription of 203 per cent.
At the treasury bills auction, total stood at N290.23 billion against N95.56 billion on offer. A breakdown for auction showed that N31.16 billion worth of 91day was offered and sold at the rate of 13.75 per cent against N21.84 billion which was sold at 14.09 per cent at the previous auction, whilst N65.40 billion worth of 182day was offered and sold at 14.89 per cent compared to 15.31 per cent at the previous auction.