Nigeria oil sector witnesses decline in foreign capital by 43%

Adebayo Obajemu

A major plunge was recorded in foreign capital inflow into the Nigerian oil gas industry in 2023, as investments into the sector plummeted sharply by 42.84 per cent to $3.64 million, compared with an inflow of $6.37 million recorded in 2022.

The above is obtained from the Nigeria capital importation report for the fourth quarter of 2023, released recently by the National Bureau of Statistics (NBS).

The NBS revealed that total foreign capital inflow into the oil and gas sector in 2023 accounted for 0.09 per cent of total foreign capital inflow into the Nigerian economy in 2023.

Giving a breakdown of inflow into the petroleum industry in the year under review, the NBS stated that in the first and second quarter of 2023, capital imported into the sector stood at $0.75 million and nil, respectively, while in the third and fourth quarter of the year, $2.04 million and $0.19 million foreign capital was imported into the sector, respectively.

In comparison, in the first quarter of 2022, $0.61 million foreign capital inflow was recorded in the oil and gas industry, while in the second, third and fourth quarter, respectively, $1.93 million, $1.57 million and $2.26 million was recorded.

The NBS noted that the production and manufacturing sector recorded the highest foreign capital inflow in the year under review, accounting for 40.73 per cent of total inflow with $1.59 billion; followed by the banking sector and with $832.64 million, accounting for 21.32 per cent of total inflows.

The finance sector accounted for 11.42 per cent of total inflows, with $445.94 million, while the Information Technology Services industry accounted for 5.79 per cent of total foreign capital inflow with $216.06 million capital inflow.

In its analysis of capital importation in the fourth quarter of 2023, the NBS said: “In fourth quarter 2023, total capital importation into Nigeria stood at $1.09 billion, slightly higher than $1.06 billion recorded in the fourth quarter of 2022, representing an increase of 2.62 per cent.

“In comparison to the preceding quarter, capital importation rose by 66.27 per cent from $654.65 million in the third quarter of 2023. Other Investment ranked top accounting for 54.64 per cent ($594.74 million) of total capital importation in fourth quarter 2023, followed by Portfolio Investment with 28.46 per cent ($309.76 million) and Foreign Direct Investment (FDI) with 16.90 per cent ($183.97 million).”

The NBS added that in the fourth of 2023, capital importation into the country originated largely from the United Kingdom with $267.24 million, accounting for 24.55 per cent of the total inflow; followed by Mauritius with $226.18 million inflow into Nigeria, accounting for 20.78 per cent of the total inflow, while $149.93 million, about 13.77 per cent of the total inflow emanated from the Netherlands.

It added that “Lagos state remained the top destination for capital importation in the fourth quarter of 2023 with $771.68 million, accounting for 65.38 per cent of total capital importation, followed by Abuja with $370.80 million, accounting for 34.07 per cent of total inflow and Rivers state with $6 million, representing 0.55 per cent of total inflow.