Research Document: NESG 2023Q3 CAPITAL IMPORTATION ALERT

Posted Mon, Jan 22, 2024 9:14 PM

Key Highlights from the Capital Importation Alert for 2023Q3

• Nigeria’s foreign investment inflows fell by 43.6 percent (year-on-year) to US$654.7 million in 2023Q3 from US$1.2 billion in 2022Q3. Cumulatively, foreign investment inflows were 34 percent lower at US$2.8 billion in the first three quarters of 2023 relative to US$4.3 billion in the corresponding period of 20222, reflecting the unfavourable investment climate which has doused investors' confidence in the Nigerian economy.

• The country’s capital importation profile for 2023Q3 was dominated by Other Investment at 77.6 percent of the total inflows (US$507.8 million), followed by Foreign Portfolio Investment (FPI) at 13.3 percent (US$87.1 million) and Foreign Direct Investment (FDI) at 9.1 percent (US$59.8 million).

• Despite being entirely dominated by foreign loans, the decline in Other Investment (particularly the foreign loan component) signals the current administration’s low external borrowing drive. Meanwhile, the government needs to improve dollar liquidity and the business environment to attract FPI and FDI, respectively.