These sectors attracted the most capital inflows in Q4

Manufacturing, banking, financing, trading and shares are the top five sectors that attracted the most foreign investment in the fourth quarter of last year, the latest Nigeria Capital Importation report has shown.

The report by the National Bureau of Statistics (NBS) shows that the manufacturing/production sector attracted the highest sum of $450.11 million followed by banking with $283.30 million.

Financing, trading, shares, electrical and telecommunication got $135.59 million, $66.34 million, $51.45 million, $50.94 million and $22.84 million respectively.

Other like marketing which received $13.35 million, IT Services had $9.08 million, Drilling ($2.11 million), Oil & Gas ($2.04 million), consultancy ($0.50 million), agriculture ($0.42 million), construction ($0.25 million) and transport ($0.14 million).

Further analysis shows that loans in other investments are the most common source of investment which amounted to $594.75 million in Q4.

The NBS report also revealed that sectors operating in Nigeria recorded a total investment of $1.09 billion in Q4 from $1.06 billion in the same quarter of 2022.

Money market instruments in portfolio investment stood at $231.78 million in Q4, equity in foreign direct investment was $183.96 million, bonds in portfolio investment stood at $67.16 million, equity in portfolio investment at $10.83 million and other capital was $0.01 million.

BusinessDay reported last week that the number of states that attracted foreign investments in Q4 dropped to the lowest in almost three years.

Only four of the 36 states in the country got foreign capital in Q4, down from six in the previous quarter. The number rose to nine in Q1 before dropping to five in Q2.

Lagos, Abuja, Ekiti and Rivers attracted $1.09 billion in the last three months of the year, according to the NBS.

“The trend in the number of states getting investments has become very abysmal. It is just showing the perceived risk level of the market,” Damilare Asimiyu, macroeconomic strategist and head of investment research at Afrinvest West Africa Limited, said.

President Bola Tinubu, who took the helm of Africa’s most populous nation last May, stoked foreign investors’ interest with some of his actions including the removal of petrol subsidy and the start of foreign exchange reforms.

A few weeks after taking office, he hosted several major companies including Airtel, ExxonMobil, Shell Petroleum Development Company and Bank of America as part of efforts to drive up investments in the country.

But his reforms have worsened inflation, currently in double-digits and at a record high. The rising inflationary pressures have weakened the purchasing power of consumers, even as businesses grapple with higher operating costs.

According to the NBS, Nigeria’s headline inflation rate rose for the 13th consecutive time in January to 29.90 percent from 28.92 percent in the previous month.

Food inflation, which constitutes 50 percent of the inflation rate, rose to 35.41 percent from 33.93 percent.

“Several factors such as poor institutional development, property rights concerns, policy inconsistencies, multiple exchange rates, scarcity of forex, security concerns, and structural challenges have dimmed investor confidence and hampered inflow of foreign investments into the country,” analysts at CSL Research said in a note on Monday.