Capital Importation into Nigeria falls 36.45% to $654m in Q3 of 2023
According to the latest data from the National Bureau of Statistics (NBS), Nigeria experienced a significant decline in capital importation during the third quarter of 2023. The total amount stood at $654.65 million, marking a 36.45 percent decrease compared to the second quarter of the same year, and a 43.55 percent decline compared to the third quarter of 2022. This is the lowest capital importation value Nigeria has seen in any quarter over the past decade.
The decrease in capital importation can be attributed to the challenges with foreign exchange, which have eroded investor confidence and even led to the departure of some international firms. A closer look at the numbers reveals that Foreign Direct Investment (FDI) and Portfolio Investment contributed 9.13 percent and 13.31 percent, respectively, amounting to $59.77 million and $87.11 million. However, the majority of the capital importation came from loans, accounting for 77.55 percent and totaling $507.71 million. This indicates a preference for debt financing over equity among investors.
When examining the sectors, the manufacturing sector attracted the largest inflow, representing 42.70 percent of the total. Shares followed at 13.06 percent, and the financial sector at 19.54 percent. It is crucial to note that without significant improvements in the macroeconomic conditions, capital importation is expected to decline further, which will have a negative impact on the overall economic performance.
To reverse this trend, the government needs to take strategic measures to address the issues at hand. Lowering the rate of inflation, increasing forex liquidity, and improving security are key areas that require attention. Implementing policies and reforms aimed at stabilizing the economy, boosting the availability of forex, and enhancing security will be crucial in attracting more capital importation and fostering economic growth.
