The Capital Importation Report for the third quarter of 2023 reveals that foreign loans make up approximately 78% of the capital imported into Nigeria, amounting to $507.71 million. This coincides with a notable decline in foreign capital inflow into the country, reaching its lowest level in over a decade at $654.65 million in Q3 2023, according to the latest National Bureau of Statistics (NBS) report.
A closer look at the data indicates an 18% decrease in the value of foreign loans received by Nigeria in Q3 2023 compared to the same period the previous year ($619.16 million). Moreover, there was a significant 34.19% decline from the $771.53 million recorded in Q2 2023. This decline is attributed to the government’s strategy favoring domestic borrowing over foreign sources.
Q3 2023 saw a reduction of about $1.57 billion in the country’s external debt for the first time since 2007 under the administration of former President Olusegun Obasanjo. This reduction, however, was primarily due to debt servicing activities, including the redemption of a $500 million Eurobond and a $413.86 million principal repayment, representing the first installment of the $4.3 billion loan obtained from the International Monetary Fund (IMF).
Foreign Direct Investment (FDI) constituted a mere 0.091% of the total capital imported into Nigeria, falling short of 1%, despite government efforts to attract investments. In Q3 2023, Nigeria attracted FDI worth $59.77 million, marking a decline of 26.86% compared to the same quarter in 2022 and a 30.52% decrease from the previous quarter of the same year.
Despite initiatives under the administration of Bola Tinubu, aimed at attracting investments, the current capital importation report suggests that significant near-term results are yet to materialize. Nigeria’s reliance on foreign loans is underscored by struggles with low foreign exchange reserves and forex scarcity, prompting the need to turn to foreign lenders for foreign exchange. Hopes are pinned on anticipated forex inflows and investment pledges to positively impact the country’s economic trajectory in subsequent reports.
