The total value of Foreign Direct Investment in Nigeria in 2012 was $6.8bn, representing an increase of 17.24 per cent.
Analysts at Financial Derivatives Company Limited, in a report made available to our correspondent on Friday, however, said the increase in the country's FDI notwithstanding, it remained below par as a result of the Nigeria's vulnerability to commodity price movements, insecurity and over-dependence on the oil and gas sector.
The analysts noted that the FDI in Nigeria would have been significantly better without the security challenges in some parts of the country.
The report started, "In addition, the uncertainties surrounding the Nigerian macroeconomic environment have contributed to the slow growth in foreign investment inflows in recent years. However, Nigeria's improved macroeconomic outlook for 2013 and the persistent drive for fiscal discipline are good signs and a motivation for foreign investments inflows despite the security challenges.
"Nigeria's market size, commitment towards infrastructure development, and the potential for a stable macroeconomic policy in 2013 are positive indicators for foreign investors and can improve FDI inflows to Nigeria significantly."
According to the report, the country stands a good chance of increased FDI given the 2013 budget position and the government's drive towards infrastructure development.
It added, "We estimate that 40 per cent of the total funds inflow to the power sector will to be through FDI in 2013. Also, the recent success of the Petroleum Industry Bill at the Senate is a positive move for the final passage of the bill and the oil sector, though it is unlikely that the implementation will be seen in 2013.
"Sectors with major FDI inflows over the years have been the oil and gas, manufacturing, infrastructure development, services and consumer goods sectors. We expect that the FDI inflows into the sectors will be sustained. Furthermore, the emerging opportunities in hospitality, tourism, shopping mall development and restaurants cannot be ignored as major grounds for FDI."
The report noted that the continuous development and introduction of additional reforms in the agricultural sector were likely to attract significant foreign investments.
"Reforms such as zero duty on imported plant and machineries, and similar incentives can help improve domestic production, establish new investments and reduce the country's unemployment rate," it added.
