Foreign Direct Investment into Nigeria in the second quarter of 2024 dropped to $29.83m, marking the lowest level ever recorded based on available data up to 2013, findings by The PUNCH showed.
An analysis of data from the latest capital importation report by the National Bureau of Statistics shows that the FDI dropped by 65.33 per cent compared to the $86.03m recorded in the same period last year.
It also dropped by 74.97 per cent from the $119.18m reported in the preceding quarter of 2024.
Economists who spoke with The PUNCH on Tuesday blamed the significant drop in FDI on naira devaluation and unstable foreign exchange market, as the naira lost about 40 per cent of its value in the first six months of 2024.
Data from the NBS shows that Nigeria’s FDI includes equity and other capital. Most of the FDI in Q2 2024 came from equity investment, amounting to $29.82m.
This represents a sharp decrease of 74.98 per cent compared to $119.17m in Q1 2024. On a year-on-year basis, equity investment declined by 65.33 per cent from $86.02m in Q2 2023.
The other component of FDI, classified as “Other Capital,” recorded a minimal inflow of $0.0085m in Q2 2024, which is down by 33.33 per cent from $0.01275m in both Q1 2024 and Q2 2023.
Although this category traditionally accounts for a very small fraction of FDI, the decline indicates a further reduction in this already limited source of capital.
Despite the claim by President Bola Tinubu that his administration has successfully drawn $30bn in FDI commitments, the decline in FDI highlights the challenges Nigeria faces in attracting long-term investment amid a challenging global economic environment and domestic issues.
The PUNCH further observed that FDI made up only about 1.15 per cent of the total capital importation of $2.60bn in the quarter under review.
Also, foreign currency loans, which include portfolio investments and direct loans, contributed $2.55bn, representing 98.08 per cent of the total inflows.
This preference for loans over equity investments reflects investor caution, with foreign investors opting for safer financial instruments rather than committing to long-term projects.
The reliance on foreign currency loans highlights the ongoing trend where short-term investments and debt instruments dominate Nigeria’s capital importation landscape.
While these inflows can provide immediate liquidity to the economy, they do not offer the same level of stability or growth potential as direct investments into physical assets or infrastructure.
