The Oasis Reporters
November 3, 2018
Two international banks, HSBC and UBS have voted with their feet ahead of Nigeria’s general elections in February 2018 by closing their offices in the country, Central Bank sources said in a report on Friday as it revealed foreign investment had fallen sharply from a year ago.
The apex bank said foreign direct investment, FDI, 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.
It did not given reasons for the bank closures neither was HSBC available to comment and UBS declined to comment according to a Reuters report.
The Central Bank said the outlook for the Nigerian economy in the second half was “optimistic” given higher oil prices and production but rising foreign debt and uncertainty surrounding the 2019 presidential election was a drawback.
Investor confidence in the West African country has been shaken since the Central Bank in August ordered MTN to bring back $8.1 billion to the country, part of profits which the South African telecoms firm sent abroad. This remains a sticky point in relationships between the Buhari administration and businesses operating in the country. His first foray into governance as a military dictator on the heels of a disruptive coup de’tat was characterized by restrictive foreign exchange policies. The economy went into an unprecedented recession.
The same scenario played itself out in Mr. Buhari’s second coming as a democratically elected president, mid 2015. The economy went into a quarter to quarter decline precipitating Nigeria’s second recession since 1983. The underpinnings have always revolved around his foreign exchange policies, expecting that foreign companies should keep a substantial part of their earnings in the country. Most of them would rather leave.
An HSBC research note dated July 18 said a second Buhari term “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.”