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Capital Importation into Nigeria Down 32.90% YoY in Q2 2023

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Capital Importation into Nigeria

By CSL Research Team


According to the National Bureau of Statistics (NBS), total foreign capital importation into Nigeria in Q2 2023 was $1.03 billion, lower than $1.5 billion recorded in Q2 2022, indicating a decrease of 32.9% year-on-year.

On quarter-on-quarter basis, capital importation declined by 9.04% from $1.13 billion in Q1 2023.

Capital importation is the total foreign inflow a country receives, and it is divided into three main categories: foreign direct investment (FDI), foreign portfolio investment (FPI), and foreign other investments (FOI).

The largest capital importation during the period was received from other investments, which accounted for 81.28% ($837.34 million) of total capital imported in Q2 2023.

This was followed by portfolio investments with 10.37% ($106.85 million) and foreign direct investment with 8.35% ($86.03 million).

The production and manufacturing sector recorded the highest inflow of $605.04 million, representing 58.73% of total capital imported in Q2 2023.

This was followed by capital imported into the banking sector, valued at $194.58 million (18.89%), and inflow for shares of $68.63 million (6.66%).

Most of the foreign capital that flowed into Nigeria in Q2 2023 came from the United States ($271.92 million) accounting for 26.4%. This was followed by inflow from the Singapore and the South Africa valued at $177.4 million (17.2%) and $136.95 million (13.3%) respectively.

In Q2 2023, 32 states did not receive any foreign investments while Lagos state attracted the highest foreign investments with $778.06 million, accounting for 75.52% of total capital investment in Nigeria. This was followed by Abuja (FCT), valued at $194.28 million (18.86%).

Foreign capital importation inflow into Nigeria has been declining steeply in recent years. Factors such as exchange rate instability, scarcity of forex, security concerns, and structural challenges have continued to hamper the inflow of foreign investments into the country.

Though there were expectations that recent monetary and fiscal reforms by the Tinubu’s administration, which are considered market friendly should spur renewed interest by foreign investors, reported numbers show that foreign investments continue to decline.

We believe foreign investors will remain on the sidelines until they are certain that there are sufficient structural reforms to sustain the policy pronouncements.

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