Nigeria’s FDI sees biggest quarterly decline in five years

Foreign Direct Investment (FDI) in Nigeria experienced its sharpest quarterly decline in at least five years in the second quarter (Q2) of 2024.

According to the latest data released Tuesday by the National Bureau of Statistics, FDI fell by a staggering 74.97% from $119.18 million in Q1 2024 to just $29.83 million in Q2 2024.

This drop is the steepest since at least 2019, surpassing the previous record decline between Q4 2021 and Q1 2022, when FDI dropped from $358 million to $155 million.

Comparing year-on-year, the situation appears just as bleak. FDI for Q2 2024 fell by 65.33% compared to Q2 2023, when the country attracted $86.03 million.

The troubling trend reflects Nigeria’s current economic instability, which has worsened under the administration of President Bola Tinubu, who assumed office in 2023.

Economic Crisis

Nigeria’s economy has been grappling with several issues under President Tinubu, including rising inflation, weakening currency, and challenges in key sectors like oil and gas. Despite the administration’s promises of reform, many of these problems have deepened, contributing to the sharp decline in investor confidence and the resulting plummet in FDI.

In his October 1st Independence Day speech, President Tinubu claimed that his government had successfully attracted $30 billion in foreign direct investments in 2023.

“The economy is undergoing the necessary reforms and retooling to serve us better and more sustainably,” he said.

“If we do not correct the fiscal misalignments that led to the current economic downturn, our country will face an uncertain future and the peril of unimaginable consequences.

“Thanks to the reforms, our country attracted foreign direct investments worth more than $30 billion in the last year.”

However, this claim was widely discredited, with several fact-checkers reporting that the correct figure for FDI under the administration stood at just $6.14 billion. Even after adding the latest Q2 figure, the total remains far below the $30 billion the president claimed.

Faced with this backlash, the presidency later clarified that the figure mentioned by Mr Tinubu included “promised investments” yet to materialize.

Past Data

To put the current situation in perspective, FDI data from the past few years shows a volatile trend. In 2023, FDI started at $47.60 million in Q1, rising to $86.03 million in Q2 before dropping to $59.77 million in Q3.

However, by Q4 2023, FDI surged to $183.97 million. Despite this positive end to 2023, the gains were not sustained in 2024, with FDI plummeting to $119.18 million in Q1 and then to the dismal $29.83 million in Q2.

The Q2 2024 figure is not just a sharp quarterly drop but also a significant year-on-year decline from the $86.03 million recorded in Q2 2023. This consistent downward trend highlights the extent of Nigeria’s current economic challenges.