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Foreign investment in Nigeria’s oil and gas sector falls to zero in Q2 2023



Nigeria crude oil

The Nigerian oil and gas industry was totally sidelined by foreign investors in Q2 2023 for the first time on record, as the once lucrative sector attracted no capital inflow in the review quarter.

This is according to analysis of data from the National Bureau of Statistics (NBS).

Nigeria recorded a total of $1.03 billion as capital importation in Q2 2023, slightly lower than the $1.13 billion recorded in the previous quarter, which is also 32.9% lower than the $1.54 billion recorded in the corresponding period of 2022. It is also worth noting that the Q2 2023’s figure is the lowest since the second quarter of 2021.

A further breakdown of the data from the NBS indicates that most of the foreign inflows during the period came into the country as loans, accounting for 74.9% of the total capital import. Meanwhile, foreign direct investment which was $86.03 million accounted for 8.4%, while foreign portfolio investment with $106.85 million accounted for 10.4% of the total.

Nigeria has endured significant pushback from foreign investors in recent times, evidenced by the recurrent declines in capital importation numbers. A development that has had severe implications for the general economy as FX illiquidity continues to drive exchange rate depreciation.

In May 2023, President Bola Tinubu announced the full deregulation of the downstream oil sector, in line with the Petroleum Industry Act signed by former president Buhari. The announcement which is premised on the expectation of increased competition and investment in the local industry is yet to incentivise foreign investors towards the Nigerian oil sector.