The head of a United States of America's congressional delegation on a visit to Nigeria, Senator Chris Coons, has said that American investors have held back their investment in Nigeria due to currency regulations, saying that they would increase their investment in the country when there is a free-floating Naira.
Coons told Bloomberg in an interview: "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. I have heard concerns from American companies that before they significantly increase their investment here they would hope they return to a floating currency."
Shortage of foreign exchange
Recall that Nigeria 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, many foreign observers believe the Central Bank of Nigeria (CBN) still manages the Naira.
USA is Nigeria's third biggest trading partner after India and China, with volumes between the two countries reaching $6.8 billion in 2016, according to data compiled by Bloomberg. That was, however, down from $12 billion in 2014.
The stock of USA's foreign direct investment in Nigeria was $5.5 billion in 2015, according to the State Department, mostly from oil and gas.
He, however, noted that the federal government has taken other steps to make the country more attractive to investors. "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 visited Nigeria with seven other members of US Congress. In Lagos, they met business leaders including Aliko Dangote, President of Dangote Industries Limited and Tony Elumelu, Chairman of United Bank for Africa Plc. They were also in Abuja, where they met Vice President Yemi Osinbajo.