•Oil, gas receives only 0.21 per cent
The aggressive global monetary tightening and rising political cum business risk are taking their tolls on the country’s investment market as capital importation contracted last year by 20 per cent.
The figure, according to data released by the National Bureau of Statistics (NBS), dropped from $6.7 billion in 2021 to $5.33 billion last year ahead of the country’s general election.
But the impact of the election on the capital inflow, which measures the attractiveness of a market, is more felt in the quarter four performance, especially when measured on year-on-year (y/y) changes.
The country attracted $1.06 billion in Q4, 51.51 per cent lower than the $2.19 billion recorded in Q4 2021. It was also 8.53 per cent lower than the $1.16 million in Q3 2022.
Last year’s figure is also a deep dive when weighed against the COVId-19 year (2020) when the country still managed to pull $9.66 billion from the international market as inflow.
The recent fall in capital importation has been attributed to rising business risk, insecurity, recent political risk and foreign exchange market rigidity, including the high arbitrage between official and black markets.
On state-by-state analysis, Lagos alone accounted for 68 per cent of the inflow or $3.61 billion while the Federal Capital Territory (FCT) recorded $1.63 billion – an equivalent of 31 per cent.
About 27 states, including Abia, Bauchi, Bayelsa, Benue, Borno, Cross Rivers and Delta, did not receive an inflow. Interestingly, Ogun and Rivers are among the countries with zero capital importation in the entire year.
The bulk of the capital went into production, banking and telecommunications, which accounted for 37.01, 24.08 and 15.86 per cent respectively. Share and trading also came to over five per cent each while oil and gas, which used to be the toast of foreign investment, received only 0.21 per cent of the total inflow.
An economist, Eze Onyekpere, said the uncertainty that surrounded the 2023 elections and the likely policy direction of the new administration were key reasons for the poor performance of capital inflow.
Onyekpere, who is the Lead Director of the Centre for Social Justice, told The Guardian that the fall was a result of the wait-and-see position of investors in the build-up to the general elections that were held in the first quarter.
“Many investors and stakeholders wanted to see the outcome of the elections, the new policy framework and whether there would be peace in the country before committing in terms of investment,” he said.
He said there would be a likely rebound, if the new administration pursues a policy direction that investors consider favourable, and which offers a positive outlook for the economy.
