Research Document: NESG 2023 Q1 Capital Importation Alert

Posted Tue, Jul 11, 2023 10:06 PM

Key Highlights

• Nigeria’s foreign investment inflows fell by 31.3 percent (year-on-year) to US$1.1 billion in the first quarter of 2023 from US$1.6 billion in the corresponding period of 2022, reflecting the persistently high-risk aversion towards investing in Nigeria.

• Foreign Portfolio Investment (FPI) inflows were 32.2 percent (year-on-year) lower at US$649.3 million in 2023Q1, partly attributed to the subdued uptake of Nigerian equities among foreign investors. Meanwhile, the astronomic quarter-on-quarter increase in FPI is attributable to the waning election-induced risks.

• Foreign Direct Investment (FDI) inflows dropped by 69.3 percent (year-on-year) to US$47.6 million in 2023Q1 due to structural challenges, including the infrastructural deficit, foreign exchange scarcity, difficulty in funds repatriation abroad, and insecurity, among others.

• Other categories of Foreign investments – foreign loans, trade credits, currency deposits and other claims – declined by 5.4 percent (year-on-year) to US$435.8 million in 2023Q1, with foreign loans accounting for nearly 100 percent of the inflows in the quarter.