New data from the National Bureau of Statistics (NBS) has revealed a significant decline in Nigeria’s capital importation, with the third quarter of 2023 recording the lowest inflow in over a decade. The report shows that the total capital imported during this period was $654.65 million, marking a substantial decrease compared to previous years.
A staggering 78% of the capital imported into Nigeria in Q3 2023 comprised foreign loans, amounting to $507.71 million. This indicates a shift in the country’s borrowing pattern, with a preference for domestic loans over foreign ones. The value of foreign loans received in this quarter was 18% lower than the same period in the previous year and saw a 34.19% decline compared to the preceding quarter.
Notably, the third quarter of 2023 also saw a rare occurrence – a reduction of approximately $1.57 billion in Nigeria’s external debt. This reduction was attributed to debt servicing activities, including the redemption of a $500 million Eurobond and a $413.86 million principal repayment for a loan from the International Monetary Fund (IMF).
Despite efforts by the current government to attract foreign investments, Foreign Direct Investment (FDI) accounted for a mere 0.091% of the total capital imported into Nigeria. In Q3 2023, Nigeria attracted FDI worth $59.77 million, representing a decline of 26.86% compared to the same period in 2022 and a 30.52% decrease from the previous quarter.
The low foreign exchange reserves and forex scarcity have led Nigeria to rely on foreign lenders for foreign exchange. While there have been promises of significant forex inflows, particularly from overseas trips by government officials, these pledges have yet to materialize into actual investments.
With hopes pinned on future reports from the NBS, Nigerians are eager to see if these promises and expected forex inflows will help improve the country’s economic situation.
Source: Nairametrics