ATTRACTING FOREIGN DIRECT INVESTMENT TO YOUR BUSINESS

ATTRACTING FOREIGN DIRECT INVESTMENT TO YOUR BUSINESS

It is worrisome, especially for Small and Medium Scale Enterprises that Nigeria is not benefiting from its status as the largest economy as well as the country with the largest population in Africa.
The attention of the federal and state governments is fixated on the forth coming 2023 general election rather than paying the much-needed attention to the security challenges that has hindered business activities and discouraged local and foreign investors.

According to the recently published capital importation report, released by the National Bureau of Statistics (NBS), Nigeria attracted a total of $1.57 billion in capital inflows in the first quarter of 2022, falling by 28.1% compared to $2.19 billion recorded in the previous quarter.

Nigeria remains attractive to foreign investments because of lower labour costs, large market size, preferential tariffs, and high demand on goods and services due to its large population. However, security challenges like terrorism, kidnapping, killer Fulani herdsmen and Islamic insurgents have negatively affected foreign investment inflows into the country.
 
SMEs should consider the following guidelines to attract Foreign Direct Investment (FDI) into their businesses

  • To attract Foreign Direct Investments, small and medium scale enterprises should endeavor to compile significant data showing the businessā€™s success and trend in their current financials. Projections on how they plan to continue that success with adequate supportive data.
  • Documentation of how your business will work under the proposed new arrangement and the commercial viability should be prepared. As an experienced SME operator, consider having a list of potential pitfalls and how you plan to navigate them for the investor to understand the inherent business risk and their mitigants.
  • Having a detailed information memorandum about how investing in your business is beneficial to the investor should be gathered. FDIs will expect you to know everything about your business and how it will function with additional shareholders or equities.
  • Good reputation is important in attracting FDIs. As a firm should ensure that they have good reputation in the business environment, good historical records, and show of commitment to social responsibilities.
  • All government regulations, policies, and approval needed should be compiled and make sure that you have all the process detailed as well as provide an accurate timeline for getting documentation sorted.
  • Even though some challenges have negatively affected foreign investment inflows in the first half of the year, Nigeria being the largest economy in Africa, and the 3rd most technologically advanced country in Africa remains a major attraction for foreign investment because of the large market and population.

Strong business models, good business structure and culture, impressive infrastructure quality, return on investment and innovation are bedrock that can help a business thrive and attract foreign investments and growth your business.