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Nigeria’s capital inflow declined to $1.63 billion in November 2024, marking a 13.8% drop from October’s figure of $1.89 billion.
This is according to the Central Bank of Nigeria’s (CBN) Economic Report for November 2024.
The decrease was driven by a reduction in portfolio investments, foreign direct investment (FDI), and other investment categories, including loans.
The falling capital inflows reflect investor concerns regarding Nigeria’s macroeconomic environment, exchange rate stability, and policy direction.
“Capital inflow declined to US$1.63 billion in November 2024, from US$1.89 billion in October 2024. A breakdown showed that portfolio investment inflow decreased to US$1.36 billion, from US$1.41 billion, mainly due to lower purchases of equity and shares.
“Similarly, foreign direct investment decreased to US$0.12 billion from US$0.18 billion in October 2024. ‘Other investments’, primarily loans, also declined to US$0.15 billion from US$0.30 billion in the preceding month,” the CBN Economic Report for November 2024 stated.
A detailed breakdown of the data shows that portfolio investment inflows, which comprise foreign purchases of Nigerian equities, bonds, and money market instruments, fell to $1.36 billion from $1.41 billion in October. This decline was primarily attributed to reduced equity and share purchases by foreign investors.
Foreign Direct Investment (FDI) dropped to $0.12 billion in November, reflecting a 33.3% decline from $0.18 billion in October. This suggests that investor confidence in long-term projects in Nigeria remains weak.
Other investments, including loans and trade credits, fell significantly to $0.15 billion from $0.30 billion in the previous month, representing a 50% decline.
The drop in capital inflows can be attributed to several factors, including:
Monetary Policy Uncertainty – Investors remain cautious due to the CBN’s evolving foreign exchange policies and interest rate adjustments.
Naira Volatility – The continued fluctuation of the exchange rate deters foreign investors who seek stability in Nigeria’s financial markets.
High Global Interest Rates – With central banks in developed economies maintaining high interest rates, investors prefer safer assets in the US, Europe, and Asia over emerging markets like Nigeria.
Economic and Political Uncertainty – Ongoing challenges in Nigeria’s economic and political landscape have further contributed to reduced investor confidence.
The persistent decline in capital inflows could place additional pressure on Nigeria’s external reserves, affect the exchange rate, and reduce liquidity in key sectors of the economy.
Foreign investments are crucial for economic growth, job creation, and infrastructure development, making the continued decline a significant concern for policymakers.
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