According to records accessible up to 2013, Nigeria’s foreign direct investment (FDI) during the second quarter of 2024 fell to $29.83 million, the lowest figure ever recorded.
This is based on information from the National Bureau of Statistics’ most recent capital importation report (NBS).
The FDI amount is a significant 65.33% decrease from the $86.03 million reported in the second quarter of 2023.
Additionally, it demonstrates a noteworthy 74.97% decrease from the $119.18 million reported in Q1 2024, the previous quarter.
Capital other than equity is included in FDI into Nigeria. Of the FDI in Q2 2024, equity investments accounted for $29.82 million, or the bulk of the total. This is a 74.98% drop from the $119.17 million reported in the first quarter of 2024. The amount invested in equity fell by 65.33% year over year from $86.02 million in Q2 2023.
In Q2 2024, the other part of FDI, referred to as “Other Capital,” showed a negligible influx of $0.0085 million. Comparing this to $0.01275 million in Q1 2024 and Q2 2023, there is a 33.33% decrease.
Even while this group has always made up a very small portion of FDI, the fall suggests that this already scarce source of funding may get even smaller.
The fall in FDI emphasizes Nigeria’s difficulties in attracting long-term capital despite difficult local and international economic conditions.
Loans In Foreign Currencies Result In Capital Inflows
Foreign currency loans made up a sizable share of various capital importation methods that persisted in significance despite the decline in foreign direct investment (FDI).
Foreign currency loans, which comprise portfolio investments and direct loans, contributed $2.55 billion, or 98.08% of the total inflows, to Nigeria’s $2.60 billion total capital importation in Q2 2024.
Due to investor caution, international investors choose safer financial instruments over long-term initiatives, as evidenced by their preference for loans over equity investments.
Nigeria’s capital importation landscape is dominated by short-term investments and debt instruments, as seen by the country’s reliance on foreign currency loans.
Although these inflows can give the economy instant liquidity, they do not offer the same stability or potential for growth as direct investments in infrastructure or tangible assets.
Nairametrics also noted that Nigeria saw a notable decline in foreign currency loans and portfolio investments in Q2 2024.
The value of the portfolio investments for the second quarter of 2024 was $1.40 billion, a significant decrease of 74.97% from the $5.60 billion reported in the previous quarter, Q1 2024, and a 65.33% loss from the $4.05 billion reported in the second quarter of 2023.
Similarly, there was a notable decline in foreign currency loans, which make up a sizable amount of Nigeria’s capital imports. In Q2 2024, the loans category saw an inflow of $1.15 billion, a 74.98% decline from $4.60 billion in Q1 2024. The decrease was 65.33% compared to the same period in the prior year when loans totaled $3.32 billion in Q2 2023.
What To Note
Concerns have been raised about Nigeria’s long-term economic prospects due to the fall in foreign direct investment, particularly as the nation works to diversify its economy away from oil and gas.
FDI is frequently seen as a reliable source of funding that may support the development of infrastructure and the creation of jobs.
However, the available data indicates that international investors are still hesitant to invest in Nigeria because of changing global economic trends, policy uncertainty, and security issues.
The Nigerian government has implemented several changes to facilitate company operations and draw in international investment. However, the most recent data indicates that these initiatives have not yet resulted in a rise in long-term capital inflows.
President Bola Tinubu stated earlier this year that his administration has successfully attracted $30 billion in Foreign Direct Investment (FDI) commitments in the first nine months of his term, which has helped the Nigerian economy.
Through the Minister of Information and National Orientation, Mohammed Idris, President Tinubu stated that although the Nigerian economy is going through difficult times, it is not in danger.
Nevertheless, the information now accessible refutes the president of Nigeria’s assertion.
