Nigeria’s Foreign Direct Investment (FDI) plummeted to $29.83 million in the second quarter of 2024, marking the lowest level recorded since 2013, according to the latest capital importation report from the National Bureau of Statistics (NBS). This figure reflects a staggering decline of 65.33% compared to $86.03 million in Q2 2023 and a 74.97% decrease from $119.18 million in the preceding quarter.
The decline in FDI was primarily driven by a sharp reduction in equity investments, which accounted for $29.82 million—down 74.98% from $119.17 million in Q1 2024 and a 65.33% drop from $86.02 million year-on-year. The “Other Capital” component saw a minimal inflow of $0.0085 million, down 33.33% from $0.01275 million in both Q1 2024 and Q2 2023.
Despite the downturn in FDI, total capital importation reached $2.60 billion, with foreign currency loans—including portfolio investments and direct loans—contributing $2.55 billion, representing 98.08% of total inflows. This shift towards loans over equity investments indicates a cautious approach from foreign investors, who are opting for safer financial instruments instead of committing to long-term projects.
The report also highlighted a significant decline in both portfolio investments and foreign currency loans in Q2 2024. Portfolio investments dropped to $1.40 billion, a sharp decrease of 74.97% from $5.60 billion in Q1 2024 and a 65.33% decline from $4.05 billion in Q2 2023. Foreign currency loans recorded an inflow of $1.15 billion, reflecting a 74.98% decrease from $4.60 billion in Q1 2024 and a 65.33% drop from $3.32 billion in Q2 2023.
The significant decline in FDI raises concerns about Nigeria’s long-term economic stability, particularly as the country seeks to diversify its economy beyond oil and gas. FDI is typically viewed as a stable source of capital crucial for job creation and infrastructure development. However, the current data suggests that foreign investors are wary of Nigeria’s investment climate, influenced by policy uncertainties, security challenges, and shifting global economic trends.
Despite efforts by the Nigerian government to improve the ease of doing business and attract foreign investment, the latest figures indicate that these measures have not yet resulted in increased long-term capital inflows. Earlier this year, President Bola Tinubu announced that his administration secured $30 billion in FDI commitments within the first nine months of his term, but available data does not align with claims of economic stability.
Credit: Nairametrics (Text Excluding Headline)
