Marcel Okeke
Without any fear of contradiction, stocks trading (activity) on the floor of the Nigerian Exchange Group (NGX) in the first quarter 2025 resulted to a monumental capital flight from Nigeria. This means that there was a very large scale withdrawal of capital from the country via trading on the NGX, essentially by foreign investors. Specifically, foreign investors pulled out N420.37 billion from the Nigerian equities market in the first three months, 2025—representing over 250 per cent increase compared to only N119.80 billion that the investors pulled away during the same period in 2024.
This sudden, huge jump in the sum pulled out by foreign investors (in a very short time) obviously constitutes a sort of ‘drag’ on the Nigerian economy.A ‘drag’ refers to a factor that slows down or hinders economic growth, development or progress.
Massive pull out of funds from the NGX by foreign investors vividly depicts the volatility being unleashed by reliance on foreign portfolio investments (FPIs).In the past two years or so, the Central Bank of Nigeria (CBN) has entrenched a tight monetary regime, raising the Monetary Policy Rate (MPR) from 18 to 27.5 per cent.
It has used that stance to offer mouthwatering rates (of returns) on government securities it has been selling to investors (especially FGN Treasury Bills).Although the attractive rates pulled in FPIs, such investments only brought “hot money” that quickly leaves Nigeria soon after the investment. However, the surge in FPIs inflow has not only induced but also heightened the volatility and uncertainty in the Nigerian economy.
The huge assets repatriation (or capital flight) engendered by the FPIs has, in part, been responsible for the unceasing depreciation of the Naira (in the foreign exchange (FX) market). This is because the CBN could not effectively rely on the highly volatile FDIs to manage FX availability in the economy.
In point of fact, the impression now subsists among perceptive observers that the CBN’s persistent raising of the Monetary Policy Rate (MPR) is only aimed at attracting more and more of the FPIs. But the more such “hot money” flows into Nigeria (as in the past two years), the more elusive the nation’s macroeconomic stability gets. Adjunct to this scenario is that the deliberate moves to woo FDIs have unwittingly made local borrowing more expensive; thus, inadvertently slowing down economic activity.
Credit facilities are being priced out of the reach of many micro, small and medium-scale enterprises (MSMEs) and other start-ups.But it needs to be noted that huge outflow of FDIs (as recorded by Nigeria in the first quarter 2025) amounts to some sort of vote of no confidence on the state of the nation’s economy. Without a doubt, the subsisting high inflation, large and rising budget deficit, mounting public debt, continued Naira devaluation, and spreading insecurity create uncertainty that engender capital flight.
While the FDIs “hot money” is ‘flying’ away, another form of capital flight that has been raging on remains the unstoppable exodus of many ‘foreign’ companies from Nigeria. Although a number of factors, including policy somersaults, have led to the exit of many companies from Nigeria, the number in recent years is rather alarming.Some of the companies that left Nigeria fully or in part since 2023 include Procter & Gamble (P & G) Nigeria, Unilever Nigeria Plc, GlaxoSmithKline Consumer Nigeria Ltd, ShopRite Nigeria, Sanofi-Aventis Nigeria Limited.
Others are: Equinox Nigeria, Microsoft Nigeria, PZ Cussons Nigeria, Diageo Plc, Bolt Food and Jumia Food Nigeria, Kimberly-Clark Nigeria, etc.Directly or indirectly, each of the exiting companies, including the International Oil Companies (IOCs), largely blamed their departure on the negative impacts of recent economic reform measures of the Federal Government of Nigeria. While many of the exiting multinationals receded to their global headquarters at the metropoles, some opted to relocate to Nigeria’s neighboring West African countries.
ALSO READ Salient historical mistakes some Igbo leaders made By Prof Lawrence ETIM Discussions about Nigerian history, particularly the events leading to the Civil War and the continuing agitation for self-determination, often evoke strong emotions and divergent interpretations. While many people focus on external factors that affected the Igbo people, it is equally important to examine certain decisions and actions by prominent Igbo leaders that some critics regard as STRATEGIC ERRORS or POLITICAL MISTAKES. Whether one agrees with these assessments or not, they remain part of the broader historical debate. 1. Dr. Nnamdi Azikiwe's Rejection of the Right to Secession Before Nigeria attained independence, Chief Obafemi Awolowo reportedly supported constitutional provisions that would allow any region to withdraw from the federation if it so desired. Dr. Nnamdi Azikiwe, however, opposed such provisions, favouring a stronger and more indivisible Nigerian federation. As a consequence, the Nigerian Constitution evolved without a recognised legal pathway for secession, making any attempt at breaking away from the federation constitutionally impermissible. Critics argue that this position reflected a lack of foresight, particularly in light of later political crises. Interestingly, many of those who advocate self-determination today, notably the Igbos, rarely attribute any responsibility to Azikiwe for supporting a constitutional framework that effectively foreclosed the option of lawful secession. Canada has a constitutional provision that guarantees the right of any region to break away through a plebescite. In 1992, a French speaking region Quebec narrowly missed the threshold score in a referendum that would have allowed it to break away. Ethiopia, former Soviet Union, Yugoslavia, St Kitts and Nevis are other examples of countries that provide constitutional rights for any of its region to break away. Critics say Nigeria missed such opportunity because of Zik's opposition during the pre-indepedence constitutional conference and public debate. 2. The January 1966 Coup and Its Perceived Ethnic Imbalance The January 15, 1966 military coup, led principally by Major Chukwuma Kaduna Nzeogwu, remains one of the most controversial events in Nigerian history. During the coup, several prominent Northern political leaders and senior military officers were killed, while leading Igbo military officers and politicians were spared. Ojukwu himself was living in Kano but was spared. Madiebo (who would later serve as the chief of defence staff in Biafra) and many other military officers of Igbo extraction were also spared. This apparent imbalance created widespread perceptions in Northern Nigeria that the coup was ethnically motivated, regardless of the intentions of its planners. The resulting suspicion and resentment contributed significantly to the counter-coup of July 1966. Critics contend that Nzeogwu's actions unintentionally deepened ethnic divisions and destabilised the country. They further argue that many Igbo commentators have been reluctant to subject Nzeogwu's actions to the same level of criticism directed at other historical actors. 3. The taking over of power by Aguiyi-Ironsi was uncalled for. J. T. U Aguiyi-Ironsi had no business taking over power when the president, speaker of Parliament and chief Justice of the Federation where there. These were the people (in that order) stipulated by the Constitution to take over power in the event of the absence of the Prime minister. So, it was mistaken for Ironsi to take over the reigns of power. According to critics, that action also portrayed Ironsi as being sympathetic to the coup plotters. No Igbo person has ever openly criticized Ironsi for that malfeasance. 4. General Ironsi's Failure to Swiftly Prosecute the Coup Plotters Following the January 1966 coup, Major General Johnson Aguiyi-Ironsi assumed power as Nigeria's Head of State. During his six-month administration, the principal coup plotters were not prosecuted or subjected to any judicial proceedings. To many Northern officers and political leaders, this appeared to validate suspicions that the new government was sympathetic to the coup's objectives. Whether justified or not, these perceptions further eroded trust in the federal government and intensified regional tensions. Critics therefore argue that Ironsi missed an important opportunity to reassure the country and restore confidence in national institutions. The Igbos have never blamed ironsi for such inertia. 5. The Introduction of a Unitary System of Government by Ironsi One of the most consequential decisions of the Ironsi administration was the promulgation of Decree No. 1, which sought to replace Nigeria's federal structure with a unitary system of government. By concentrating greater authority at the centre and reducing regional autonomy, the decree generated widespread opposition, particularly in Northern Nigeria. Critics maintain that the policy was politically ill-timed and insufficiently sensitive to Nigeria's ethnic and regional diversity. They also argue that it made any future attempt at regional self-determination more difficult by strengthening the authority of the central government. I'm not aware of any Igbo person clamouring for cessation today who had ever blamed Ironsi for promulgating such a retrogressive law, whose reverberations are still felt upto this moment. 6. Ojukwu and the Decision to Go to War History offers numerous examples of leaders who have faced scrutiny for taking their nations into unsuccessful wars. Critics often cite the example of General Leopoldo Galtieri the military president of Argentina, whose decision to engage the United Kingdom in the 1982 Falklands War led to military defeat and subsequent legal consequences. After the war, Argentina prosecuted Galtieri in a court of law and jailed him for 12 years for losing the war and bringing opprobrium to the country. Similarly, Lieutenant Colonel Chukwuemeka Odumegwu Ojukwu led the Eastern Region into the Nigerian Civil War following his declaration of the Republic of Biafra in 1967. With huge propaganda machinery but little arms and ammunitions, Ojukwu dragged his people and other Easterners into a three-year period of mass suffering and death. The war ended in Biafra's defeat with immense human suffering, humongous loss of life, and severe economic devastation. Critics argue that Ojukwu should have taken responsibility for the consequences of the conflict. They further contend that many Igbo people continue to celebrate his legacy while paying comparatively little attention to his strategic errors that contributed to the catastrophic outcome. Had Ojukwu been prosecuted or even criticized for losing the war, younger generations of IPOB leaders would have been more circumspect with a lesson to learn. President Obasanjo should always be appreciated for not dragging Nigeria into a senseless war with Cameroon over Bakasi Peninsula. History will for ever remember President Jonathan for knowing that his political ambition is not worth the blood of any Nigerian. 7. Nnamdi Kanu and Contemporary Separatist Agitation In contemporary times, Nnamdi Kanu emerged as the leading figure of the Indigenous People of Biafra (IPOB), advocating the creation of an independent Biafran state. His movement has generated both support and controversy. Critics argue that aspects of the agitation, including the enforcement of Monday sit-at-home orders by various actors claiming allegiance to the cause, have inflicted substantial economic losses on businesses and communities in the South-East. They further contend that violence associated with separatist activities has disproportionately affected the very communities the movement seeks to protect. From this perspective, Kanu's leadership deserves critical scrutiny alongside criticism directed at other political actors in Nigerian history. Sadly, no Igbo person has ever openly criticized Kanu. 8. Important Igbo political leaders do not support Peter Obi presidency. Is it a big mistake that many important Igbo political leaders do not support Obi's presidential bid? For instance, the governor of Anambra State Chukwuma Charles Soludo is in the wont of declaring his anti-Obi sentiments openly, declaiming that Obi will never win. The Minister of Works Engr David Umahi does not support Obi either. Obi's public campaigns are essentially plebs-driven. Critics are wondering why Igbos do not criticize their leaders for not supporting Obi. A mature assessment of history requires the willingness to examine both external injustices and internal mistakes. No ethnic group, political movement, or historical figure is beyond criticism. Understanding the successes and failures of past leaders can provide valuable lessons for future generations and contribute to more balanced and constructive discussions about Nigeria's past, present, and future.
Till date, rather than improve, the asphyxiating environment foisted by recent reform measures, has continued to scare existing and potential investors. This trend is heavily buttressed by the reactions of the Manufacturers Association of Nigeria (MAN) to the outcome of the CBN’s Monetary Policy Committee (MPC) meeting that ended on Tuesday, May 20, 2025. Specifically, MAN vehemently decried the retention of the very high interest rate stance of the monetary authority.
MAN’s Director-General/CEO, Segun Ajayi-Kadir, in a statement warned that the current interest rate regime “is undermining the country’s manufacturing base and economic resilience.” He said the decision by the CBN to retain the Monetary Policy Rate (MPR) at 27.5 per cent since November 2024 was out of step with global economic trends, where many nations were reducing interest rates to support growth and industrial recovery.“Over the last quarter, countries such as members of the Euro Area, the United Kingdom, Denmark, Australia, China, India, Thailand, and Egypt have implemented interest rate cuts to bolster economic growth and support productive sectors”, the MAN boss said, warning that “Nigeria’s rigidity continues to create unintended consequences that may deepen the parlous performance of the productive sector.”
The MAN D-G pointed out that with credit priced as high as 37 per cent (given the MPR at 27.5%), Nigeria ranked among the most expensive environments globally for manufacturers seeking loans. “A nation cannot industrialize on the back of prohibitively expensive credit,” he warned.
MAN’s stance boldly underpins the growing suspicion in the polity that the sustained high MPR is mainly targeted at wooing FDIs at the expense of the local productive sector. This accounts for why local manufacturers (big or small) keep struggling to meet operational costs and sustain production, as rising borrowing costs have forced them into low capacity utilization and declining investment returns.In this regard, the MAN boss again warned that: “A nation that woos foreign portfolio investors at the expense of its real sector may unwittingly be aspiring to build prosperity on the back of volatility.”
While maintaining a high interest rate of 27.5 per cent may temporarily attract speculative FPIs, “it is doing so at the expense of Nigeria’s manufacturing base, which is now choked by unsustainable borrowing costs,” Ajayi-Kadir said.It has therefore become a ruse or unacceptable subterfuge for the CBN to cling to “fighting inflation” to keep choking local businesses. The oncoming “Nigeria First” policy should therefore be couched with the capacity to stem the high tide of capital flight that has been dwarfing Nigeria’s economic growth and development.
As Nigerians are made under the “Nigeria First” to consume what we produce, and produce what we consume, local businesses must be adequately encouraged to keep bracing the odds, and avail Nigerians with quality alternatives to imported goods. The Government must begin to address head-on, the horrible infrastructural gaps that scare or frustrate businesses out of Nigeria.It is hereby strongly recommended that in the seeming absence of any overarching economic blueprint, the “Nigeria First” Presidential Executive Order has a lot of challenges to address.
Enough of mantras, singsongs, sloganeering, and propaganda!
The author, Okeke, a practicing Economist, Business Strategist, Sustainability expert and ex-Chief Economist of Zenith Bank Plc, lives in Lekki, Lagos.
He can be reached via: obioraokeke2000@yahoo.com (08033075697) SMS only
