In the second quarter of 2024, Nigeria experienced a notable shift in foreign capital inflows, with overall capital importation in Q2 2024 witnessing a 22.85% decline, falling from $3.37 billion in Q1 to $2.60 billion, according to the latest data from the National Bureau of Statistics (NBS).
There is also notable shift from African investors, who accounted for 19.45% of the total capital importation. Out of the total $2.60 billion in foreign capital received by Nigeria, $506.68 million came from investors within Africa, excluding Nigerian contributions. This data marks a drop of interest from African investors who recorded 22.97% in Q1 2024.
While African investors continue to play a significant role in Nigeria’s capital importation, Q2 2024 saw a 34.65% quarter-on-quarter decline from the $775.47 million received in Q1 2024. However, year-on-year comparisons reveal substantial growth, with African contributions rising by 98.22% from $255.56 million in Q2 2023 to $506.68 million in Q2 2024.
Despite this decline from Q1, the year-on-year rise underscores an overall increase in Nigeria’s appeal to investors within the continent. Analysts suggest that this growing interest could be linked to Nigeria’s recent economic policies, new investment opportunities, and shifts in regional dynamics, which have made the market more attractive than it was a year ago.
Mauritius and South Africa Are Major Contributors
Breaking down the numbers, two countries stood out as the primary sources of foreign capital from Africa in Q2 2024: Mauritius and the Republic of South Africa. Mauritius was the largest contributor, providing $250.70 million, a staggering rise from $17.05 million in Q2 2023.
South Africa, on the other hand, contributed $255.98 million in Q2 2024, though this represents a decrease from the $582.34 million it invested in Q1 2024. Despite the drop, South Africa remains a major player in African investment in Nigeria.
While external African investments flourished, Nigerian local investors contributed only $3.63 million in Q2 2024. This is a slight recovery from a negligible $0.07 million in Q1 2024 but still pales in comparison to the $99.74 million recorded in Q2 2023. The sharp decline in domestic contributions signals a growing reluctance among Nigerian investors to reinvest in the local economy. Experts attribute this to economic uncertainties and the allure of more attractive investment opportunities abroad.
The minimal contribution from Nigerian investors highlights a broader trend of reliance on foreign capital, with domestic investors’ contributions accounting for less than 1% of the total capital inflows from African sources in Q2 2024.
Capital from Non-African Countries
Although there is significant involvement of African investors, non-African countries continued to dominate Nigeria’s foreign capital inflows. The United Kingdom led the pack with $1.12 billion in Q2 2024, though this was down from $1.81 billion in Q1 2024. The decline reflects a potential shift or re-evaluation by UK investors, who may be reassessing Nigeria’s evolving business climate.
Similarly, capital inflows from the United States dropped slightly, with the US contributing $81.58 million in Q2 2024, compared to $89.27 million in the previous quarter. However, the United Arab Emirates (UAE) bucked the trend, increasing its investment in Nigeria to $143.44 million in Q2 2024, up from $101.76 million in Q1. This rise indicates growing Middle Eastern interest, particularly in sectors such as real estate, infrastructure, and energy.
Other contributors, include Hong Kong with $15.47 million, and Germany with $13.88 million.
Despite these investments, Nigeria’s overall capital importation in Q2 2024 witnessed a 22.85% decline, falling from $3.37 billion in Q1 to $2.60 billion. This drop, though significant, still represents a 152.8% year-on-year increase compared to Q2 2023, when capital importation was just $1.03 billion.
The Foreign Direct Investment (FDI) figures, however, present a different picture. FDI in Q2 2024 dropped sharply to $29.83 million, the lowest level on record since 2013. This is a 65.33% decrease from the $86.03 million recorded in Q2 2023, highlighting a broader trend of dwindling investor confidence in long-term, on-the-ground investments in Nigeria.
The reasons for this decline are multifaceted, with analysts pointing to persistent economic uncertainties, security concerns, and policy inconsistencies as key factors deterring investors from making substantial direct investments in the country.
