ABUJA, AUGUST 31, 2017 – U.S. companies are deterred from investing more in Nigeria by its capital controls, according to the head of a congressional delegation visiting Africa’s largest economy.
“Some of the currency controls that remain I think raise the question of whether foreign direct investment, if successful and profitable, will be able to be returned to any country,” Senator Chris Coons of Delaware said Wednesday in an interview in Lagos, Nigeria’s commercial capital. “I have heard concerns from American companies that before they significantly increase their investment here they would hope they return to a floating currency.”
Nigeria, the continent’s biggest oil producer, tightened currency restrictions after the 2014 crash in crude prices, a move analysts blamed for creating a severe shortage of foreign exchange that made it difficult for companies to pay for imports and repatriate profits. While the scarcity has eased this year, the central bank still tightly manages the naira.
The U.S. is Nigeria’s third-biggest trading partner after India and China, with volumes between the two reaching $6.8 billion in 2016, according to data compiled by Bloomberg. That was down from $12 billion in 2014. The stock of U.S. foreign direct investment in Nigeria was $5.5 billion in 2015, according to the State Department. Most of that was in oil and gas.
President Muhammadu Buhari’s government has taken other steps to make Nigeria more attractive to investors, he said.
“The Buhari administration has made significant progress in addressing some of the structural challenges, both security and economic challenges, that were a barrier to more active American investment,” he said.
Coons, a Democrat, visited Nigeria with seven other senators. In Lagos, they met business leaders including Aliko Dangote, Africa’s richest man, and Tony Elumelu, chairman of United Bank for Africa Plc and investment company Heirs Holdings Ltd.
They traveled earlier in the week to the capital, Abuja, where they met Vice President Yemi Osinbajo, and to Maiduguri, the epicenter of an eight-year insurgency by the Islamist militant group Boko Haram that has devastated the north-eastern state of Borno. There, they spoke with U.S. military advisers and Nigerian commanders, who asked for more armored vehicles known as MRAPs.
“These were reasonable, achievable partnerships requests that I thought were doable,” Coons said. “It was important for us to get an assessment on the ground. It was a voluminous list of the structural damage done over years of fighting Boko Haram.”