NIGERIA suffered from a 50% drop in foreign direct investment (FDI) during the course of 2020 as capital inflows plummeted to a meagre $9.68bn representing a four year low according to figures just published by the National Bureau of Statistics (NBS).
Due to the debilitating effects of the coronavirus pandemic, global industrial production has been hit hard, with output down. Countries like Nigeria that rely on the export of primary commodities, have felt the brunt of this slowdown as industrialised economies are restricting the amount of raw materials they import.
As part of an economic diversification plan, Nigeria has been trying to woo investors, hoping that FDI will lead to more commodities being processed at source. Over recent years, Lagos State in particular has enjoyed some success in attracting foreign capital but last year, this slowed to a trickle as the global pandemic curtailed FDI slows significantly.
According to the NBS, in its capital importation report for the fourth quarter and full-year 2020, the total value of capital importation into the country fell by 59.65% or $14.3bn last year from $23.99bn in 2019. It added that foreign capital flow into the country stood at $16.81bn in 2018, $12.23bn in 2017 and $5.12bn in 2016.
In what was a reversal of the gradual and incremental growth enjoyed over the last four years, FDI also dropped by each quarter as the year progresses. During the fourth quarter of 2020, the total value of capital importation stood at $1.07bn, down by 26.81% compared with the third quarter and by 71.87% compared to the same period of 2019.
An NBS spokesman said: “The largest amount of capital importation by type was received through other investment, which accounted for 73.22% ($783.26m) of total capital importation, followed by foreign direct investment, which accounted for 23.49% ($251.27m) of total capital imported and portfolio investment which accounted for 3.29% ($35.15m) of total capital imported in the fourth quarter of 2020.”
According to the NBS, the United Kingdom emerged as the top source of capital investment in Nigeria in the fourth quarter, with $236.88m, accounting for 22.14% of the total capital inflow. Historically, Lagos State has always been the largest recipient of FDI into Nigeria.
“By Destination of investment, Lagos State emerged as the top destination of capital investment in Nigeria in the fourth quarter of 2020 with $829.64m. This accounted for 77.56% of the total capital inflow in the quarter.
“By bank, Citibank Nigeria emerged at the top of capital investment in Nigeria in the fourth quarter of 2020 with $216.17m. This accounted for 20.21% of the total capital inflow in Q4 2020.”