Former Deputy Governor of the Central Bank of Nigeria, Kingsley Moghalu, has stated that if foreign direct investment (FDI) is targeted towards the actual economy, it can help a country rise out of poverty. He made the remarks during a US-Nigeria investment summit in New York on Saturday.
The availability of a well-educated workforce and infrastructure, according to Moghalu, is the most critical criterion for FDI to successfully contribute to the actual development in a country like Nigeria. Nigeria, according to Moghalu, a former presidential candidate for the Young Progressives Party (YPP), needs to develop a strategy and include political risk guarantees in large FDI deals.
Moghalu Kingsley stated
“We are all aware that Nigeria is Africa’s largest economy, with a population of 200 million people and enormous economic potential. As a result, it is a country with a lot of room for foreign direct investment and foreign investors.
“However, FDI into Nigeria has dropped significantly in recent years due to a bad macroeconomic environment, policy inconsistency, and the lack of a well-defined strategy for FDI as a component of economic growth strategy,” Moghalu said.
“First, the impact of FDI on developing nations is highly dependent on the level of development of the host country. In high-income developing countries, FDI has a greater influence than in low-income developing countries.
In the latter, issues such as secondary school education quality and access are more crucial for development.
“Foreign investment that is targeted at the real economy, such as energy, manufacturing, service sectors, and export-oriented industries, and uses local suppliers, rather than a lopsided focus on extractive industries, can help bring a country out of poverty.
“The two essential “location factors” – the presence of a well-educated people and infrastructure – are the most crucial conditions for FDI to successfully contribute to the actual development in a country like Nigeria.
“Whether or whether FDI adds to genuine economic growth is determined by an economy’s absorptive capacity, which is defined by how well educated and skilled a workforce is to take advantage of the possible technology and jobs provided by FDI. Of course, if such growth is to be significant, it must be inclusive — broad-based across industries and accompanied by greater labour productivity.”