Expatriates Cut Investments in Manufacturing Sector by 35%

Interests of foreign investors in Nigeria’s manufacturing sector dwindled significantly in the first quarter of 2023, the National Bureau of Statistics (NBS) revealed in its capital importation report for 2023 Q1.

According to the report obtained on Monday by BUSINESS METRICS, the expatriates staked $256 million in the sector between January and March 2023.

This represents a drop of 35 per cent from $392.5 million they invested in the sector in the Q4 2022.

The recorded lower participation of foreign investors in the sector reflected the general dampened mood of the expatriates as they activated cautious mode while waiting for the outcome of the general elections in Nigeria held earlier in the year.

According to the NBS report, the total capital importation into Nigeria in Q1 2023 stood at $1.1 billion, lower than $1.5 billion recorded in Q1 2022, indicating a decrease of 28 per cent.

Despite the decrease, capital importation into the production sector ranked second with 22 per cent share of total investments, while the banking sector recorded the highest inflow of $304.5 million, representing 26.89 per cent of total capital imported in Q1 2023.

In recent months, the Manufacturers Association of Nigeria (MAN) had warned that the increasingly harsh business environment, occasioned by high energy costs, lack of access to funding, multiple taxation, among others, had scaled down investments into the sector.

According to the Manufacturers Association of Nigeria Bi-Annual Economic Review, investment in the manufacturing sector dipped to N145.59 billion in the second half of 2022, in comparison to N160.88 billion in the corresponding half of 2021, representing a decline of N15.29bn or 10 per cent.

It further declined by N32.8 billion or 18 per cent when compared with N178.39 billion recorded in the first half of the year.

Records show that manufacturing investment totalled N323.98 billion in 2022 as against N305.02 billion recorded in 2021.

According to MAN, the decrease in investment during the period was mainly caused by the government’s debt issues, high borrowing and energy expenses, and weak consumption

Otunba Francis Meshioye, President of MAN had earlier hinted that more international manufacturing companies may leave the country should power distributors implement the planned tariff hike.

He said that some international manufacturing firms had already exited Nigeria as a result of the power crisis, coupled with the unpredictability of the country’s foreign exchange rate before it was recently unified.

Meshioye said, “Manufacturers provide almost every infrastructure by themselves. Outside the major roads, you find out that manufacturers provide water, power, security, etc. So, when you look at it, you find out that the cost of doing business is so huge.”