Foreign Investment Falls, Global Banks HSBC and UBS Close Offices In Nigeria

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Global banking giants, HSBC and UBS have closed their offices in Nigeria, while a report published by the Central Bank of Nigeria (CBN) revealed that foreign investment had fallen sharply since last year.

The report said foreign direct investment in Nigeria fell to 379.84 billion naira ($1.2 billion) in the first half of the year from 532.63 billion naira ($1.7 billion) a year earlier.

Although the CBN said given higher oil prices and production, the outlook for the Nigerian economy in the second half could be better, it is imperative to note rising foreign debt and uncertainty surrounding the 2019 presidential election are still drawbacks

Investor confidence has been shaken since the central bank in August ordered MTN to bring back $8.1 billion to Nigeria, part of profits which the South African telecoms firm sent abroad.

According to a research note published by HSBC dated July 18, 2018, the bank said the re-election of the current Nigerian President, “raises the risk of limited economic progress and further fiscal deterioration, prolonging the stagnation of his first term, particularly if there is no move towards completing reform of the exchange rate system or fiscal adjustments that diversify government revenues away from oil.”

Without naming them, the CBN also said three lenders failed to meet its minimum liquidity ratio of 30 percent. In the report, the bank added that non-performing loans (NPLs) have dropped to 12.4 percent as at June 2018 from 15 percent a year ago, still a long way above its 5 percent threshold.

The bank said “to further consolidate on the improvement, the Central Bank of Nigeria directed banks to intensify efforts at debt recovery, realisation of collateral for lost facilities and strengthening their risk management processes.”

Nigerian banks have been trying to raise fresh capital after huge loan losses worsened by an economy that has just emerged from a recession.

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