The sharp downturn in FDI coincides with escalating security challenges across the nation. The rise in violent incidents, kidnappings, and insurgent activities has heightened risks for potential investors. This environment has deterred long-term investments, leading to a preference for short-term capital inflows such as foreign currency loans, which accounted for $2.55 billion of the $2.60 billion total capital importation in Q2 2024.
Despite these challenges, President Bola Tinubu's administration has initiated several economic reforms, including the removal of fuel and electricity subsidies, naira devaluation, and tax sector overhauls. These measures have garnered international attention and are part of efforts to stabilize the economy and attract foreign investment.
The decline in FDI underscores the urgent need for comprehensive strategies to address security concerns and restore investor confidence. While the government continues to implement reforms, the path to sustainable economic growth will require a concerted effort to enhance security, improve infrastructure, and ensure policy consistency.