Nigeria’s Capital Inflow Rises 66% in Q4 2023, Manufacturing Attracts Largest Share

Nigeria’s economy received a welcome boost as capital importation surged 66% in the fourth quarter of 2023, reaching $1.08 billion. This marks a 2.6% increase compared to the same period in 2022 and a significant jump from $654.65 million in Q3 2023.

Investment Breakdown:

• Other Investments: Dominated the inflow with $594.74 million (54.64%), encompassing loans, trade credits, and currency deposits.
• Portfolio Investment: Followed with $309.76 million (28.46%), representing investments in securities like stocks and bonds.
• Foreign Direct Investment (FDI): Came in at $183.97 million (16.90%), reflecting direct investments in businesses and operations.

Sectoral Distribution:

• Manufacturing: Led the way with $450.11 million (41.35%), highlighting investor confidence in the sector’s growth potential.
• Banking: Secured $283.30 million (26.03%), showcasing continued interest in Nigeria’s financial sector.
• Financing: Attracted $135.59 million (12.46%), indicating investments in areas like insurance and real estate.

Geographical Origins:

• United Kingdom: Emerged as the top source of capital with $267.24 million.
• Mauritius, Netherlands, Singapore, and South Africa: Followed closely, indicating diversification in investment sources.

Destination and Beneficiaries:

• Lagos State: Retained its position as the primary recipient with $771.68 million (65.38%).
• Abuja: Came in second with $370.80 million (34.07%).
• Stanbic IBTC Bank Plc: Received the highest inflow at $499.45 million (45.88%).
• Citibank Nigeria Limited and Rand Merchant Bank Plc: Also attracted significant investments.

Overall Significance:

This increased capital inflow signifies growing investor confidence in the Nigerian economy, fueled by factors like:

• Improved regulatory environment: Streamlined processes and investor-friendly policies.
• Growing domestic market: Large and expanding population offering potential for various sectors.
• Developing infrastructure: Ongoing investments in transportation, power, and other critical areas.

The rise in capital importation, particularly in manufacturing and other key sectors, is expected to stimulate economic growth, create jobs, and contribute to long-term development. However, sustained efforts are needed to address challenges like inflation and exchange rate volatility to maintain investor confidence and maximize the benefits of these inflows