Reasons Why FDI Inflow To Nigeria Is Declining Fast


…loses $6.91bn to FDI decline — NBS

  • Nigeria’s mishandling of security situations, crude oil theft, lack of sanctity of contracts, and in some cases policy reversal have led to a gross receding of inflow of foreign direct investment in the last four years.
  • Investors are concerned that they may not be able to repatriate the returns on their investments, hence their movement to other African countries, experts told Business Standards.

The country’s political risk is also a major factor experts have said.

The Nigeria Bureau of Statistics (NBS) disclosed in its quarterly report on ‘Nigerian Capital Importation’ released on Monday that the capital inflow to the country has over the last four years dropped to$1.57billion.

According to the bureau, since the first quarters of 2019, 2020, 2021, and 2022, there has been a steady decline in capital inflows into the nation’s economy.

The report indicates that the total capital inflow into the economy fell by 31.01 percent from $8.49bn in Q1 2019 to $5.85bn in Q1 2020; it fell by 67.45 percent to $1.91bn in Q1 2021 and declined further by 17.46 percent to $1.57bn in Q1 2022.

The report, which segmented foreign investment into three main investment categories: foreign direct investment, portfolio investment, and other investments, further explained that in Q1, 2019, the largest amount of capital imported into Nigeria was through portfolio investment.

It also shows that the banking sector dominated inflows that quarter and the United Kingdom was responsible for most of the inflows.

Similarly, the report shows that in portfolio investments also dominate inflows Q1 2020, while banking and the UK also retained their respective leadership positions.

In Q1 2021 and Q1 2022, portfolio investments was responsible for most of the capital inflows into the nation, while banking raked in the highest and the UK provided the most investment.“

Olusola Bello



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