Amidst Inflation: Here Is Why Nigerian FDI Trails Botswana

A recent report by Estate Intel has highlighted the state of Foreign Direct Investment (FDIs) in the real estate sectors of various African countries.

The report points out that Nigeria is trailing behind Botswana and Morocco in attracting FDIs due to factors such as high inflation, a weakened naira, and expensive production costs.

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In 2023, Nigeria experienced the sharpest decline in its currency, the Naira, with an 83% drop in its official rate. This depreciation, coupled with soaring inflation and costly building materials, has made investors cautious about investing in Nigeria’s real estate market.

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The report emphasized Nigeria’s challenges, including significant currency fluctuations (83.66% Year-to-Date), a high inflation rate (28.92% as of December), and construction expenses averaging $1,700 per square meter. In contrast, Botswana and Morocco rank high due to their stable currencies, low inflation, and more affordable construction costs.

 

Furthermore, the report underlines how currency performance affects leasing activities in commercial real estate and financing for new projects. The depreciation of local currencies is expected to increase financing costs for real estate ventures across Africa, potentially limiting development opportunities in many markets.

 

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