In a development for Nigeria’s economy, foreign capital inflows from BRICS countries have surged by 189% over the past six months. This remarkable increase reflects a growing interest in Nigeria as a viable investment destination, particularly amid the global economic shifts and the ongoing efforts to diversify the nation’s economic partnerships.
Key Statistics
According to the latest report from the National Bureau of Statistics (NBS), Nigeria’s total capital importation for the second quarter of 2024 was $2.60 billion, marking a 22.85% decline from the previous quarter but a substantial rise of 152.8% compared to the same period last year. Notably, investments from BRICS nations—comprising Brazil, Russia, India, China, and South Africa—have played a pivotal role in this growth.
Breakdown of Investments
- Portfolio Investments: The largest share of foreign capital came from portfolio investments, totalling $1.40 billion, which accounted for 53.93% of total capital importation. This category includes investments in equities, bonds, and money market instruments.
- Other Investments: This segment contributed $1.169 billion, primarily driven by loans and other claims. Loans constituted a staggering 98.6% of this category, highlighting the reliance on external borrowing to bolster economic activities.
- Foreign Direct Investment (FDI): Despite the overall growth in capital inflows, FDI remained low at just $29.83 million, reflecting ongoing challenges in attracting long-term investments into Nigeria’s real sector.
Sectoral Contributions
The banking sector emerged as the leading recipient of foreign capital, attracting $1.12 billion, or 43.15% of total inflows. This was followed by the production/manufacturing sector with $624.71 million and the trading sector at $569.22 million.
What this Means for Nigeria
The surge in foreign capital from BRICS countries signals a positive shift in Nigeria’s investment landscape, suggesting that these nations are increasingly recognising Nigeria’s potential as a key player in Africa’s economic future. This trend aligns with broader geopolitical movements where developing economies seek to enhance their influence and reduce dependency on Western financial systems.
As Nigeria continues to navigate its economic challenges, fostering stronger ties with BRICS nations could provide critical support for its development goals and enhance its position within the global economy.
By Joseph Johnston,
Youth Editor,
Egogonews Hub
