Capital Importation into Nigeria fell in Q4 of 2022
According to data from the National Bureau of Statistics (NBS), Nigeria’s total capital importation was $1.06 billion in the fourth quarter of 2022, down from $2.19 billion in the third quarter and 50.51 percent year over year. It also decreased by 8.53 percent from the $1.16 billion in the second quarter and $1.16 billion in the third quarter. Portfolio investment, foreign direct investment (FDI), and other investments are the three types of capital importation, which quantifies the amount of investments that foreigners are prepared to import into the host economy.
According to Q4 statistics for 2022, other investments (65.17 percent) and portfolio investments (26.89 percent) made up the majority of Nigeria’s imports, while FDI (7.94 percent) made up the least amount. By industry, the production sector imported the most capital (37.11%), followed by finance (24.88%), and telecommunications (15.86%). A sharp reduction in total portfolio investment and FDI, which plunged from $967.58 million to $285.26 million and from $154.97 million to $84.23 million between Q1 and Q4 2022, is what caused the decline in total capital imports.
Such a sharp decline shows that foreign investors may have found Nigeria less desirable for investment during the last year, which might have a detrimental impact on overall economic performance, including job creation and GDP growth. Given that foreign investments are a significant contributor to economic growth and development, the government must make intentional and strategic efforts to increase foreign investment in the nation.
The decline in investment patterns, which is typically related to the political seasons in the country and is a result of the loss of investor confidence at this moment, must be addressed by the government. Other policy options include raising the country’s security profile and giving qualified foreign investments well-structured tax holidays because they can boost the economy overall and create jobs. SOURCE: Center for Study of the Economies of Africa (CSEA)
