By Franklin Alli

The Organised Private Sector, OPS, weekend, blamed drop in foreign investments into the country in the first quarter of 2016 on government’s monetary policies. Recall that analysts at Capital Economics, last week, reported that the flow of foreign capital into Nigeria was $711 million in the first quarter of 2016 – a whopping 74 percent drop from a year before.

Reacting, Chief Bassey Edem, OPS Chairman/ President of NACCIMA, noted: “We commend the government for encouraging the flow of FDI into the country through various trade visits and overtures to foreign countries. “However, all these efforts have not yielded the desired results due to government monetary policies which are currently not encouraging for investors.”

He said that for FDI to increase, government should encourage the ease of doing business by relaxing its stringent policies in selected sectors identified for high growth potential. However, data from the Central Bank of Nigeria, showed that FDI in Nigeria increased by $501.83 million in the fourth quarter of 2015.

It was averaging$1379.76 from 2007 until 2015, reaching an all time high of $3084.90 in the fourth quarter of 2012 and a record low of $501.83 million in the fourth quarter of 2015. The steepest decline came from portfolio inflows, which dropped 85 percent year-over-year, according to analysts at Capital Economics.

“The collapse in investment inflows will deal two very serious blows to Nigeria’s economy, which is already reeling from pressures from low oil prices,” warned Capital Economics’ Africa economist, John Ashbourne, in a note to clients. “This will exacerbate the country’s serious balance of payments problems and further depress investment in an economy that is starved of capital,” he continued.

Notably, although it’s easy to point the finger at lower oil prices, that’s not the only thing souring sentiment toward Nigeria. Many investors have also been discouraged by the government’s controversial policies. Recently, the government has pursued an agenda of currency and price controls – including on petrol – which has resulted in inflation soaring to its highest rate since July 2012 and in one of the worst fuel shortages in years.

The “complex FX restrictions caused Nigeria to be ejected from a widely-tracked JPMorgan EM bond index in Q3 2015 and have deterred potential investors who worry about repatriating earnings,” added Ashbourne. The  National Bureau of Statistics said that the FDI in this first quarter was the lowest since it began tracking the inflow since 2007.

This marked a year-on-year decline of 73.79 percent. It also represents a 54.34% decline since the last quarter of 2015. “As a result of these changes, total capital importation has fallen by 89.13% since its peak level in the third quarter of 2014. The NBS report also noted the complexion of the capital inflow.

“The first quarter of 2016 also saw a large change in the composition of capital imported. Following a quarterly decline in portfolio investment of 71.55% (also the largest quarterly fall on record) portfolio investment accounted for 38.12% of total capital imported, compared to 61.18% in the previous quarter.

“However, it remained the largest component, as Other Investment also recorded a sharp quarterly decline, of 44.84%, which prevented its share from rising higher than that of portfolio investment.