Loans accounted for 75% of total capital importation to Nigeria in 2nd Qtr of 2023

Nigeria’s total capital importation was US$1.03 billion in the second quarter (Q2) of 2023, according to data from the National Bureau of Statistics (NBS). This represents a decline of 9.04 percent from the US$1.13 billion recorded in the previous quarter (Q1, 2023) and a year-over-year decline of 32.90 percent from the US$1.54 billion recorded in Q2 2022.

When broken down down by category, other investments made up 81.28 percent (US$837.34 million) of all capital imports in Q2 2023, while FDI and portfolio investments made up less than 20 percent. Ninety-two percent of other investments came from loans; the remaining eight percent came from other claims.

Ninety-two percent of other investments came from loans; the remaining eight percent came from other claims. According to these figures, loans made up 75% of all capital imports into Nigeria throughout the studied period. The low percentage of FDI and portfolio investments indicates that international investors are not very confident about making investments in Nigeria. Consequently, corporate entities replace loans with equity investments. Furthermore, the fact that total capital imports and FDI value have been declining on a quarter-by-quarter basis below the pre-pandemic level suggests that the recent changes have not yet increased foreign investor trust or interest in Nigeria.

Weak macroeconomic conditions are reflected in low capital imports, which can have an impact on the overall performance of the economy by limiting investment in vital sectors that lead to low economic growth, low infrastructure development, and limited job creation. Since foreign investments support local investments, the government needs to take deliberate, calculated action to boost trust in Nigeria’s economy. The administration must give priority to achieving single-digit inflation and enhancing security, even as the ongoing changes are vital.