‘FDIs grew 114%’ — PwC says FG’s economic reforms yielding positive results

PricewaterhouseCoopers (PwC), business consulting services firm, says the reforms of the present administration have yielded positive outcomes. 

In its Nigeria economic outlook for June 2023, the company said the federation account allocation committee (FAAC) disbursements increased to N1.87 trillion in April 2024.

According to the firm, the amount represents a 91.3 percent increase from N976 billion disbursed in May 2023.

“The increase was driven by distributable VAT, statutory allocation and exchange rate difference revenue,” the report reads. 

“Fitch Ratings revised its outlook on Nigeria’s Long-Term Foreign-Currency Issuer Default Rating (IDR) from Stable to Positive.” 

PwC said the revision was due to exchange rate and monetary policy reforms, reduction in fuel subsidy payments, and scaleback of government financing by Central Bank of Nigeria (CBN).

“FDI’s grew 114% from $86 million recorded in Q2 2023 to $184 million in Q4 2023. Similarly, FPI’s increased to 190% from $106.9 million in Q2 2023 to $309.8 million in Q4 2023,” the company said. 

The firm’s report also highlighted the negative impact of the reforms on businesses and households. 

“The naira depreciated against the dollar by 67.8% from an average of ₦461.1 in May 2023 to ₦1,433.8 in May 2024. The depreciation took effect despite foreign exchange market reforms by CBN to achieve price discovery and attract liquidity to the market,” the further report reads. 

“The Monetary Policy Rate (MPR) was raised by 775 basis points between May 2023 and 2024 to address rising inflation.

“Although the rise in MPR may attract more Investors to the fixed-income market due to Higher yields, it has negatively impacted Borrowing costs for businesses.” 

The impact of pressure points on businesses, PwC said, may lead to a decrease in reinvestment and corporate exits from the industry.