Nigeria hatches a crooked plan to attract foreign investors

Nigeria is getting ready to launch a massive $10 billion diaspora fund. They’re targeting Nigerians living abroad to pour money back home into big sectors like roads, health, and schools to boost the country’s growth.

The government, through the Ministry of Industry, Trade, and Investment, announced late Thursday that they’re looking for asset managers to handle this giant pot of money. This fund is about reconnecting with nearly 20 million Nigerians who live overseas and getting them involved as big-time changemakers for the country.

Economic Reforms to Lure Investors

Since President Bola Tinubu stepped into office this May, Nigeria has been hustling hard to bring investors back. They’ve relaxed some tight rules around foreign money and tried to fix issues with their currency, the naira, which has really been through the ringer, losing over 60% of its value since last June.

Exciting news! @TradeInvestNG invites firms to engage in the $10 Billion Nigeria Diaspora Fund Multi-Sectoral Investment. An unprecedented opportunity for our citizens in diaspora to drive Nigeria's economic growth. Partners interested in managing this transformative initiative… pic.twitter.com/YaJ3o3sCxj

— Hon (Dr) Doris Nkiruka Uzoka-Anite MD,CFA (@DrDorisAnite) April 25, 2024

Nigerians outside the country sent back a whopping $20.1 billion in 2022, according to the World Bank. But a big chunk of that cash is slipping through official cracks and feeding into a black market, making the dollar shortage back home even worse and the naira more unstable.

The types of investments they’re thinking about include stuff like infrastructure funds, credit funds, and venture capital. Companies interested in managing these funds have until May 6 to throw their hats in the ring.

The Bigger Picture and Financial Inclusion

It’s no secret Nigeria’s economy has seen better days. Just last year, it slid from being the biggest economy in Africa to third place, thanks to the naira’s tumble. The International Monetary Fund isn’t too hopeful either, predicting that Nigeria might fall another spot by the end of 2024.

To combat this, the government has rolled out some perks to boost the struggling oil and gas sector, which, despite making up a small part of the GDP, pulls in almost 90% of the export bucks.

They’re hoping these new perks will get more oil pumping — about 4 million barrels a day — and attract $10 billion in investments over the next year or so. But it’s not all about oil. Nigeria is also pushing hard for financial inclusion. This means making sure all Nigerians, no matter their wallet size or where they live, can get into banking and other financial services.

The Central Bank of Nigeria has been vocal, pointing out how important it is to get more Nigerians into the banking system to help grow the economy. They’re tying this push to several of the United Nations’ Sustainable Development Goals. Financial inclusion is key to driving growth, sparking innovation, and even reducing poverty by helping people manage money better, especially in rural or underprivileged areas.

Mobile banking and other techy financial services could help reach those who are usually left out because they’re too far from a bank or don’t have the means to start an account. Sadly, despite these efforts, millions in Nigeria still don’t have basic banking services. As of 2020, a staggering 21.3 million women were financially excluded, more than the 17 million men in the same boat.

In rural Nigeria, where about 69.7 million adults live, almost half don’t have formal financial services and rely on informal means, which only a fraction can access. It’s clear that while there’s a plan, there’s still a long way to go to make sure everyone can get a piece of the financial pie.