In a pivotal economic revelation, the third quarter of 2023 paints a picture of Nigeria’s shifting financial landscape, marked by a significant dominance of foreign loans, accounting for an impressive 78 per cent of the total capital imported into the country.
According to the recently released Capital Importation Report, these loans totaled a substantial $507.71 million, reflecting a reliance on external financial sources that is reshaping the nation’s fiscal dynamics.
However, amidst this surge in foreign loans, the broader context reveals a contrasting narrative. The overall foreign capital inflow into Nigeria plummeted to its lowest point in over a decade, registering at $654.65 million for Q3 2023, according to the National Bureau of Statistics (NBS).
Delving deeper into the data, a detailed analysis unveils an 18 per cent decrease in the value of foreign loans compared to the same quarter in the previous year. Moreover, there was a significant 34.19 per cenr decline relative to the preceding quarter, painting a nuanced economic landscape that demands attention.
This decline in foreign loans is attributed to a strategic shift by the government, favoring domestic borrowing over foreign alternatives. The third quarter of 2023 marks a noteworthy milestone, signaling the first reduction in Nigeria’s external debt since 2007, during the administration of former President Olusegun Obasanjo.
This reduction, amounting to approximately $1.57 billion, was primarily driven by debt servicing activities, including the redemption of a $500 million Eurobond and the repayment of $413.86 million as the first installment of the $4.3 billion IMF loan.
In a surprising twist, Foreign Direct Investment (FDI) paints a less optimistic picture, contributing a mere 0.091% to the total capital imported into Nigeria. Despite concerted efforts by the current government to attract investments, the third quarter of 2023 saw FDI amounting to $59.77 million, marking a 26.86 per cent decline compared to the same period in 2022 and a substantial 30.52 per cent decrease from the previous quarter of the same year.
These figures suggest that the investment initiatives under the administration of Bola Tinubu have yet to yield significant near-term results, challenging the administration’s aspirations for increased foreign investment.
This development contradicts Tinubu’s earlier stances on local industry growth, highlighting the need for a nuanced approach to economic policies in navigating the intricate balance between foreign and domestic investment in the Nigerian economic landscape
