SAT, FEB 24 2024-theGBJournal| On an annual basis, capital importation declined for the fourth consecutive year, dipping by 26.7% to US$3.91 billion in 2023FY (2022FY: US$5.33 billion), according to data released by the National Bureau of Statistics (NBS).
This is despite the 2.6% y/y to US$1.09 billion in Q4-23 (Q4-22,: US$1.06 billion)
The data also shows increases in Foreign direct investments (+118.4% y/y to US$183.97 million) and portfolio investments (+8.6% y/y to US$309.76 million), amid a decline in other investments (-14.0% y/y to US$594.75 million).
The persistent slowdown in capital importation reflects foreign investors’ lacklustre interest in the country given the lingering FX liquidity constraints, uncompetitive domestic interest rates and the adverse macroeconomic environment.
We anticipate that foreign investors will adopt a cautious stance in the near term, closely monitoring the activities of the Central Bank of Nigeria (CBN) in improving FX liquidity and ensuring sustainability.
At the same time, we envisage an improvement in foreign participation over the medium term, to be driven by the complete clearing of the FX backlog, substantial inflows from foreign sources through multilateral borrowings or Eurobond issuances, and meaningful intervention and support of forex liquidity by the CBN.
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