Nigeria turned to foreign borrowing to bolster its capital importation in the first half of 2023 as 28 states failed to attract any foreign investments during the period, according to a report from the National Bureau of Statistics (NBS) on Nigeria Capital Importation. The report revealed that total capital importation decreased by 30.42% year-on-year in H1 2023, falling from $3.11 billion in the corresponding period of 2022 to $2.16 billion.
Foreign investments in the form of loans increased by 17.43% to $1.21 billion in H1 2023, up from $1.03 billion in the same period of 2022. Nigeria’s reliance on foreign loans to boost capital importation highlights the challenges of attracting foreign direct investment (FDI) amid issues such as insecurity and a difficult business environment.
The NBS reported that in Q2 2023, other investments accounted for 81.28% ($837.34 million) of total capital importation, followed by portfolio investment at 10.37% ($106.85 million) and foreign direct investment at 8.35% ($86.03 million). The production sector received the highest inflow with $605.04 million, representing 58.73% of total capital imported in Q2 2023, followed by the banking sector at $194.58 million (18.89%) and shares at $68.63 million (6.66%).
Only nine Nigerian states—Lagos, Abuja, Adamawa, Akwa Ibom, Anambra, Ekiti, Niger, Ogun, and Ondo—managed to attract foreign investors during the period.
Foreign direct investment into Nigeria has declined due to limited forex availability, security concerns, and structural challenges, according to the World Bank. Insecurity in certain regions of the country has eroded investor confidence, making it challenging for states to attract foreign investments.