Nigeria’s capital importation down 51.9% in Q3’24

Nigeria's total capital importation has experienced a significant decline of 51.9% in the third quarter of 2024, amounting to $1.25 billion. While this marks a notable drop from previous quarters, there has been a year-on-year increase of 91.35%. Victor Aluyi, the Head of Investment at Sankore Global Investment, shared his insights on the factors contributing to these fluctuations in a recent interview with CNBC Africa. Aluyi highlighted the challenges facing Nigeria's investment landscape, including a drop in foreign direct investment (FDI) and the dominance of foreign portfolio investments (FPIs) in the market. Let's delve into the key points discussed in the interview and analyze the implications for Nigeria's economic outlook. One key observation made by Aluyi is the fluctuating trends in capital inflows throughout the year. While there was a notable improvement in the first quarter of 2024, subsequent quarters have seen a decline in investments. This inconsistency underscores the need for sustained reforms and policies to attract and retain foreign investments in the country. Aluyi emphasized the importance of maintaining momentum in implementing reforms to encourage sustained capital inflows. Another significant trend highlighted by Aluyi is the decline in FDI, which only accounted for 8.2% of total capital importation at just over $103 million. This trend reflects a longstanding challenge for Nigeria in attracting long-term and stable investments. Aluyi pointed out that FDI has historically been a weaker component compared to FPIs, indicating a need for structural changes to enhance investor confidence and promote substantial investments in the country. Moreover, the distribution of investments across states in Nigeria also came under scrutiny during the interview. Lagos State emerged as the top destination for investments, followed by Abuja, Kaduna, Enugu, and Ekiti States. Aluyi noted that investments primarily flowed into Lagos and Abuja, with the banking and finance sectors attracting a significant portion of funding. This concentration of investments in key states highlights the challenges faced by other regions in attracting substantial capital and underscores the need for broader economic development initiatives. In conclusion, while Nigeria has witnessed fluctuations in capital importation levels, the underlying trends raise concerns about the sustainability of investments in the country. Addressing issues such as the decline in FDI, the dominance of FPIs, and the uneven distribution of investments across states will be crucial for strengthening Nigeria's investment landscape. Sustained efforts to enhance investor confidence, implement structural reforms, and promote economic diversification are essential to driving long-term growth and attracting a more diverse range of investments in Nigeria's economy.