According to the National Bureau of Statistics, capital inflows into Nigeria, the most populous nation in Africa, experienced a significant decline of 28% in the first quarter of 2023 compared to the same period last year, amounting to $1.1 billion.
However, there was a modest increase of 6.8% from the previous quarter. The largest share of capital imports came from portfolio investors, accounting for 57.3% of the total. “Other investment” contributed 38.31%, while foreign direct investment (FDI) constituted 4.2%.
The United Kingdom accounted for 59.5% of capital imports, with the United Arab Emirates coming in second with 9.6% and the United States coming in third with 8.4%.
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The decline in foreign investment inflows can be attributed to various factors that have deterred external investors in recent years. These factors include tight capital controls, rising insecurity, and poor infrastructure.
Nigeria’s capital controls have created barriers and uncertainties for investors, limiting the flow of foreign funds into the country. The nation’s security challenges, such as insurgency and other forms of violence, have also negatively impacted investor confidence.
Additionally, inadequate infrastructure, including power supply, transportation networks, and telecommunications, has posed challenges for businesses and investors alike.
To attract more foreign investment, Nigeria will need to address these issues and create a more conducive environment for external investors. This may involve implementing reforms to ease capital controls, enhancing security measures, and investing in critical infrastructure development.
By taking these steps, Nigeria can improve its attractiveness to foreign investors and stimulate economic growth and development.