Nigeria’s quest for economic growth has taken a fascinating turn in the first half of 2023, as it tackles challenges that have prevented foreign investors from its shores.
According to a striking report from the National Bureau of Statistics, a massive 28 states found themselves unable to attract a single penny of foreign investment during this period, painting a stark picture of the hurdles this nation faces.
In a dramatic response, Nigeria has turned to foreign borrowing, securing a substantial $1.21 billion in loans to strengthen its capital importation. This inflow of foreign funds stands as a lifeline for the nation’s economic aspirations.
However, the statistics reveal a troubling trend as total capital importation took a significant nosedive, plummeting by 30.42 per cent year-on-year, from $3.11 billion in 2022 to a modest $2.16 billion in the first half of 2023. The culprits? Persistent issues such as insecurity and a challenging business environment continue to cast a shadow on foreign direct investments.
Foreign loans, once a supplementary source of capital, have swelled by 17.43 per cent, reflecting the nation’s increasing reliance on external financing to keep its economic engine running.
Breaking down the composition of foreign investments, the NBS report reveals that other investments dominated the scene in Q2 2023, commanding a hefty 81.28 per cent share, followed by Portfolio Investment at 10.37 per cent and Foreign Direct Investment at 8.35 per cent.
The production sector spearheaded the inflow, securing $605.04 million, while the banking sector followed with $194.58 million and shares trailed at $68.63 million.
Remarkably, only a select few states—Lagos, Abuja, Adamawa, Akwa Ibom, Anambra, Ekiti, Niger, Ogun, and Ondo—managed to entice foreign investors, underscoring the regional disparities in attracting international capital.
The World Bank has boomed, attributing the decline in foreign direct investment to the scarcity of foreign exchange, security concerns, and structural challenges.
Akpan Ekpo, a respected economics professor at the University of Uyo, echoes this sentiment, noting that the crisis-shy nature of foreign investors and lingering security issues have sapped confidence in certain regions of Nigeria.
The nation finds itself at a climactic crossroads, wrestling with economic obstacles that demand innovative solutions and concerted efforts to restore confidence in its investment landscape. In this intricate dance between foreign borrowing and investment attraction, Nigeria’s economic future remains a high-stakes drama with global implications.
