A review of the capital importation report of the Nigeria Bureau of Statistics reveals that foreign investment inflow to the manufacturing sector increased by 67.69% in 2023.
For the year 2023, FDI inflow to the manufacturing sector stood at $1.59 billion representing an increase of $642.05 million from the $948.43 million recorded in 2022.
When analysed on a quarter-on-quarter basis for 2023, capital importation to the manufacturing sector was highest in the second quarter at $605.04 million while it was lowest in the first three months of the year at $256.12 million.
Capital importation for the third and fourth quarter recorded $279.51 million and $450.11 million respectively.
In comparison to the total capital import for the year, FDI to the production/manufacturing sector represented 41.79% of the $3.80 billion total capital import for the year. This is significantly higher when compared to the sector’s percentage representation of capital import for 2022.
In 2022, FDI to the manufacturing sector represented just 17.79% of the total capital import into Nigeria for the year.
However, it should be noted that Nigeria’s total capital import for 2023 declined by 28.58% from $5.32 billion in 2022 to the current figure for 2023.
The increase in FDI to the sector in 2023 comes amidst series of challenges confronting the sector and proves a testament of the faith of investors in the Nigerian market. Nigeria’s manufacturing sector have been confronted by series of challenges in the past few years which torpedoed in 2023.
From the lingering power problems to the recent foreign exchange woes coupled with multiple taxation, high lending rate and of recent skyrocketing inflation levels eroding sales. These problems were exacerbated by the twin reforms of fuel subsidy removal in 2023 and the subsequent unification of the foreign exchange market leading to the devaluation of the naira.
The unfavourable macroeconomic conditions necessitated the exits of notable multinationals and even local operators like P&G, GSK, Mabisco etc.
To address these problems and further reinforce foreign investor confidence in the Nigerian market, President Tinubu had early in his administration set up the committee on fiscal policy and tax reforms to harmonise the nation’s tax laws and reduce the tax burden on businesses.
Also, the President had promised to provide N75 billion loan to manufacturing companies across the country at 9% interest rate. However, the Director-General of the Manufacturers Association of Nigeria (MAN) had stated that the figure is just a drop in the ocean and would prefer an interest rate of 7%.
