In the first quarter (Q1) of 2023, Nigeria’s total capital importation grew 6.78 percent to $1.133 billion from $1.061 billion in Q4 2022.
However, the Foreign Direct Investments (FDI) component stood at $47.6 million, indicating a 43.48 percent decline compared to the $84.23 million recorded in Q4 2022, according to a CSEA Africa post.
This also represents the fourth decline in five successive quarters, and a year-on-year decline of over 69 percent compared to $154.97 million in Q1 2022.
The FDI which is the amount of assets commitments of foreigners is an essential factor to growth and development of the economy, as it contributes to employment creation and expansion in output.
This decline, therefore, suggests a persistent drop in foreign investors’ confidence in the economy and could be attributed to some infrastructural gaps in the economy and unstable exchange rates, but more significantly, the political uncertainties in the build-up to the country’s 2023 general elections.
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This has implications for overall economic performance and may continue to fall or stay at a low level until the election petitions are over.
Therefore, the government should provide an enabling business environment for foreign investors to come in and retain those available by addressing infrastructural deficits that increase the cost of business operations and eliminating unhealthy regulations that prevent easy repatriation.
It is also essential to address insecurity challenges and to develop a consistent long-term master plan that will direct investment promotion strategies in the country.
There is a need for the government to create an enabling environment for foreign investments, as this contributes a significant proportion of the revenue inflow for the country.
Ultimately, there is a need to improve subnational investment agencies and assist them in enacting business-friendly policies necessary to attract international investments.
