Capital inflows to Nigeria fall to $3.91bn in 2023
By Motolani Oseni
Nigeria has attracted a total of $3.91 billion worth of foreign capital amid the several policy summersaults and continued perennial issues clogging the investment landscape in the country.
According to the latest capital importation report published by the National Bureau of Statistics (NBS), the current inflow in 2023 is a 26.7 per cent year-on-year decline from $5.33 billion in 2022, and marks the lowest inflow since 2007, standing as a major decline compared to the total inflow into the economy in 2010 ($5.99 billion), and the total inflow in 2013, 2014 and 2019 which printed at $23.6 billion, $20.8 billion and $23.7 billion respectively.
Cowry Asset Management Limited said “capital inflow into Nigeria’s economy sustained its annual declines to the lowest level since the pre-coronavirus (2019 backward). These can primarily be attributed to the macroeconomic concerns about inflation which printed at 24.5 per cent in 2023, the high public debt at above $100 billion, and dependence on oil revenue which have deter some investors.”
The research firm added that, “in recent times, Nigeria seem to be losing the attraction as the big bride to investors; resultantly, the limited access to foreign exchange and the existence of multiple exchange rate systems still create uncertainties for investors on profit and dividend repatriation.
“There is also the concerns around insecurity which remains one of many threats to foreign investors and in turn discouraging investment inflows. The total foreign direct investment (FDI) inflow slipped by 19.4 per cent year-on-year to $377 million in 2023 from $468 million.
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“Meanwhile, data show that FDI inflow has been on a steady decline in the post pandemic years and was caused by the incoherent foreign exchange policies by the monetary authorities, leaving foreign investors to prowl for higher returns and a stable macroeconomic environment.
“Also, foreign portfolio investment into Nigeria dwindled by 52.8 per cent year on year to $1.15 billion from $2.44 billion in the previous year, and marks the lowest since 2016 ($1.83 billion) on the back of the exchange rate instability and the recession in the year. Then, other investments maintained steep declines to $2.38 billion from $2.42 billion in 2022.”
Cowry explained that, “capital importation inflow into Nigeria’s economy has failed to rebound to the pre-pandemic annual average of above N5 billion, this decline signals significant fall across the three broad categories in the year and raises concerns, prompting closer examination into the factors contributing to this significant downturn in foreign investment into the economy.”
It added that the concerns have continued to hover around policies on foreign exchange liquidity as well as other macroeconomic challenges that can continued to hamper on the sustainable inflow of investments.
The firm said: “we believe that the diversification of the economy away from oil dependence and focusing on sectors like agriculture, technology, and renewable energy could be long-term growth drivers.
“Also, when the government stands tall to address the foreign exchange liquidity challenges, implement reforms focused on improving the stability of the macroeconomy, and then enhancement of the regulatory environment for businesses and other multinationals are crucial to attract more foreign capital.
