Nigeria secured $5.97 billion in capital importation during the first half of 2024, according to a recent report by the National Bureau of Statistics (NBS). However, the report highlights a significant drop in the second quarter, with investments totaling $2.6 billion—down 22.85% from the $3.38 billion recorded in the first quarter of the year. Despite this decline, the year-on-year growth remains impressive, with a 152.81% increase compared to the same period in 2023, when total capital importation stood at $1.03 billion.
The report shows that Nigeria’s economy continues to face severe challenges, particularly with rising inflation, currency instability, and high energy costs, which are discouraging investors. These issues have contributed to a gradual slowdown in foreign capital inflows, underscoring the need for more robust economic policies to attract long-term investment.
The Central Bank of Nigeria (CBN) has taken aggressive measures to combat the declining investment environment. Over the past year, the CBN has raised its benchmark interest rates to an unprecedented 27.25% in an attempt to stabilize the economy and attract foreign investors. However, these rate hikes have put additional pressure on local businesses, many of which are struggling with the higher cost of borrowing. So far, these efforts have yet to yield the expected surge in investments, reflecting the complex nature of the country’s economic landscape.
According to the NBS report, portfolio investment was the dominant source of foreign capital in the second quarter of 2024, contributing $1.4 billion, or 53.93% of total inflows. This was followed by other investments, which accounted for $1.1 billion, or 44.92% of total capital importation. Foreign Direct Investment (FDI) continued to underperform, bringing in just $29.83 million, or 1.15% of total capital inflows. The low FDI numbers signal the ongoing hesitation of foreign companies to commit to long-term investments in Nigeria, as they navigate the country’s volatile economic conditions.
The banking sector remained the largest recipient of foreign capital during the period, attracting $1.12 billion, which represents 43.15% of total inflows in the second quarter. The production and manufacturing sector followed, with $624.71 million, while the trading sector brought in $569.22 million. These figures underscore the importance of Nigeria’s financial services industry as a key driver of foreign capital, although the manufacturing sector’s growth shows the potential for increased diversification.
Geographically, Lagos retained its position as Nigeria’s top investment destination. The state accounted for $1.37 billion, or 52.52% of total capital importation in the second quarter. The Federal Capital Territory (FCT) Abuja followed closely with $1.24 billion, while Ekiti State recorded a negligible inflow of $0.0003 million. The concentration of investments in Lagos and Abuja highlights the ongoing regional imbalance in foreign capital distribution, with only a few states consistently attracting significant inflows.
In terms of the countries contributing to Nigeria’s capital importation, the United Kingdom led with $1.12 billion, accounting for 43.01% of total inflows in the second quarter. The Netherlands and South Africa also contributed sizable investments, further demonstrating Nigeria’s continued economic ties with key global partners.
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