In the first half of 2023, Nigeria resorted to foreign borrowing, securing a total of $1.21 billion in loans to bolster capital importation.
A recent report from the National Bureau of Statistics on Nigeria’s Capital Importation revealed that 28 states failed to entice any foreign investments during this period.
Consequently, the nation experienced a significant 30.42% year-on-year decline in total capital importation, plummeting from $3.11 billion in 2022 to $2.16 billion in 2023’s first half.
The tumultuous blend of insecurity and a challenging business environment has hampered foreign direct investments in Nigeria, leaving the nation increasingly reliant on external loans to buoy its capital inflows.
Breaking down the composition of foreign investments, the NBS disclosed that “other investments” accounted for the lion’s share at 81.28%, totaling $837.34 million in Q2 2023. Portfolio Investment followed at 10.37% ($106.85 million), while Foreign Direct Investment lagged at 8.35% ($86.03 million).
Notably, only nine states—Lagos, Abuja, Adamawa, Akwa Ibom, Anambra, Ekiti, Niger, Ogun, and Ondo—managed to attract foreign investors, illustrating a stark regional disparity.
According to the World Bank and economic experts like Professor Akpan Ekpo of the University of Uyo, Nigeria’s dwindling foreign direct investment can be attributed to limited foreign exchange availability, persistent security concerns, and other structural impediments.
Explaining the crucial role of security in investor confidence, Ekpo said, “The states didn’t attract any investments for obvious reasons. With insecurity, there is no way you will attract foreign investment when your place is not secure. They will not come.”