• Sunday, June 23, 2024
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BusinessDay

Nigeria’s capital investment slows to $5.62bn in 2022

Investment migration offers Nigeria opportunities to boost FX inflows

Capital investments into Nigeria declined sharply by over 20 percent to $5.32 billion in 2022 from $6.70 billion recorded in 2021.

Quarterly breakdown of the total figure for 2022, according to the National Bureau of statistics report, showed that total capital importation in the first quarter was $1.573 billion, which dropped to $1.53 billion in the second quarter.

The value fell further by 24 percent to $1.159 billion in the third and by 8.53 percent to $1.06 billion in the fourth quarter.

Loan represented the highest form of capital received during the period at $2.311 billion.

By type of investment, foreign direct investment for the year was valued at $468 million, this comprised equity and other capital at $462.91 million and $5.16 million.

Also, portfolio investment was valued at $2.442 billion, comprising equity ($56.57 million), bonds ($980.34 million) and money market instruments ($1.405 billion).

Other investment was valued at $2.418 billion in 2022. This comprised total credit ($3.01 million), Loans ($2.311 billion), currency deposit ($9.32 million) and other claims ($95 million).

Speaking to Businessday, Ishaya Isa, Abuja based economic analyst decried the decline recorded in capital investment, stating that the current level of foreign investment should be a concern to the government, as it may have grave implications for the overall economy.

He stressed on the need for policies and programs that can boost investors’ trust and confidence.

“There has been some level of uncertainty in Nigeria’s economy, and that must be addressed if we must record growth in investment.

“The declined investment can be attributed to the diverse issues bedevilling the Nigerian economy.”

For him, the government must undertake some urgent reforms such as resetting monetary policy, adopting a new tax regime, strict implementation of the petroleum industry Act, among others to unlock the nation’s economic growth and investment in 2023.

For Muda Yusuf, Director, Centre for the Promotion of Private Enterprise, the current tax regime is unfavourable to investors, especially for an economy that desires job creation, investment growth and poverty reduction.

“This multitude of taxes is crippling investment in the Nigerian economy. There is a need for an urgent review.

“The current tax regime is in conflict with the National Tax Policy which prescribes that there should be less emphasis on direct taxation in order to incentivise investment. Meanwhile, investors are grappling with numerous macroeconomic, structural and regulatory headwinds.

He also noted that while the enactment of the petroleum industry Act was a major step towards the reform of the oil gas sector, there is need for greater commitment to its implementation.

“The deregulation of the petroleum downstream sector is a major economic reform imperative.

“This is inevitable if we must unlock investment in the sector and put an end to the perennial fuel scarcity and the monopolistic structure of the sector.

Commenting on the high level of loans (debt) Yusuf, said that the current debt levels of the country are currently unsustainable.

He stressed on the need for governments both at state levels to build capacity to repay loans as well generate substantial revenues.

Lagos State and the Federal Capital Territory topped the list of capital importation destinations, with $3.613 billion and $1.62 billion respectively.

Other states that attracted foreign investments in 2022 were Akwa Ibom, Anambra, Ekiti, Enugu, Katsina, Kogi, Oyo and Plateau.