Central Bank of Nigeria
Foreign Private Investment, Private Investment, Nigeria
Although the report of the 1989 survey showed that for the first time ever, a net outflow was recorded by the foreign private enterprises in Nigeria, the development was a welcome one. The easier access to foreign . exchange which led to a net capital outflow of N439.4 million was made possible through the creation of new outlets for the purchase of foreign exchange introduced in 1989. The Bureau de Change which took off in mid -1989 was put in place by the federal government to compete with the informal parallel market and thus expand the foreign exchange market. Also, 1989 witn~sed the year when investors were given an opportunity to trade in long term debt instruments through the Debt Conversion Auction geared towards financing investment within the country. In addition to th;se bold steps, a unified exchange rate system (which emerged through the fusion of the auction foreign exchange market and the autonomous market rates) put greater confidence into the foreign exchange management operations. These reforms accounted in no small way to the substantial outflow of the 'pent-up' liabilities of the foreign investors in Nigeria. Since the freedom to remit profits and dividends and to repatriate capital is an essential element in an attractive investment climate, the foreign investors reciprocated the gesture of the foreign exchange reforms by increasing the equity base of the existing enterprises as well as investing iri new businesses. Thus, the level of new foreign equity which was N287.0 million in 1988 stood at N525.0 million in 1989. This was made possible through the newly created Industrial Development Coordinating Committee (IDCC) -a regulatory body aimed at streamlining the approval processes of new foreign investments. The survey equally revealed the increased investment in fixed assets of foreign enterprises in the country, while at the same time exposed the continued interest of these companies in channeling their investment through their parent/affiliate companies alone.
CBN Economic and Financial Review
Central Bank of Nigeria (1991). Foreign Private Investment in Nigeria in 1989. CBN Economic and Financial Review, 29(4). 343-359.