NBS Report: 28 states fail to attract foreign capital in Q1, investment gap widens
According to the latest Foreign Direct Investment data released by the National Bureau of Statistics (NBS), 28 states failed to attract capital importation in the first quarter of 2023.
Out of the 36 states and the Federal Capital Territory, only Lagos, Abuja, Adamawa, Akwa Ibom, Anambra, Ekiti, Ogun, Ondo, and Niger witnessed capital inflows.
The cumulative capital inflows totalled $1.13 billion, with Lagos attracting the most capital at $704 million, followed by Abuja at $410.27 million and Akwa Ibom at $5.21 million.
Adamawa attracted $4.50 million, Anambra $4 million, Ogun $2.09 million, Niger $1.50 million, Ondo $0.20 million, and Ekiti $0.01 million.
The report stated, “By destination of investment, Lagos State remained the top destination in Q1 2023 with $704.87 million, accounting for 62.23 per cent of total capital investment in Nigeria. This was followed by Abuja, valued at $410.27 million (36.22 per cent).”
The NBS disclosed that there was a 28 per cent decrease in total capital importation compared to the first quarter of 2022.
The report further stated, “Total capital importation into Nigeria in Q1 2023 stood at $1.13 billion, lower than the $1.57 billion recorded in Q1 2022, indicating a decrease of 28 per cent. When compared to the preceding quarter, capital importation rose by 6.78 per cent from $1.06 billion in Q4 2022.”
It was also revealed that the largest capital importation during the period came from portfolio investment, accounting for 57.32 per cent ($649.28 million) of the total capital imported in Q1 2023.
This was followed by other investments with 38.31 per cent ($435.76 million) and Foreign Direct Investment with 4.20 per cent ($47.60 million).
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An analysis by sectors showed that the banking sector received the highest inflow of capital importation, amounting to $304.56 million, representing 26.89 per cent of the total capital imported in Q1 2023.
This was followed by the production sector, which received $256.12 million (22.61 per cent), and IT Services with $216.06 million (19.08 per cent).
The report also revealed that the United Kingdom was the top country of origin for capital importation in Q1 2023.
According to the report, “Capital importation by country of origin reveals that capital from the United Kingdom ranked top in Q1 2023 with $673.64 million, accounting for 59.47 per cent. This was followed by the United Arab Emirates and the United States, valued at $108.28 million (9.56 per cent) and $95.36 million (8.42 per cent) respectively.”
The report also noted that Citibank Nigeria Limited topped the list of banks in terms of capital importation, with $424.13 million (37.45 per cent). This was followed by Standard Chartered Bank Nigeria Limited with $360.33 million (31.81 per cent) and Stanbic IBTC Bank with $151.85 million (13.41 per cent).
Tosin Oshunkoya, the Co-Managing Partner and Chief Executive Officer of Comercio Partners Asset Management, recently expressed concern over the waning attraction of foreign investors to the Nigerian economy.
He said, “The ravaging trend of inflation across major developed economies has triggered hawkish policy responses such as interest rate hikes, which tend to spur capital repatriation from frontier economies such as Nigeria while discouraging foreign capital inflows into the local economy, particularly through foreign portfolio investments.”
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