Foreign investments in Nigeria’s manufacturing sector fell by $326m (54 per cent) to $279.5m in the third quarter of 2023 from $605m recorded in the second quarter, according to the latest Capital Importation report published by the National Bureau of Statistics.
Further analysis of the report showed that despite the significant drop, the production sector had the highest capital importation in Q3 2023.
The sector was closely followed by the finance sector, which brought in $127.9m as capital importation during the period under review.
Recently, foreign investments in Nigeria have been on a decline, as NBS data showed that investments dropped by 35 per cent from $392.5m in the fourth quarter of 2022 to $256m in the first quarter of 2023.
This led the Manufacturers Association of Nigeria to express worry that government policies had contributed to capital flight in the industry.
MAN, in various MCCI reports, had warned that the increasingly harsh business environment, occasioned by high energy costs, lack of access to funding, multiple taxation, among others, had scaled down investments into the sector.
In a recent interview with The PUNCH, the President of the Manufacturers Association of Nigeria, Francis Meshioye, said that more international manufacturing companies may leave the country should power distributors implement the planned tariff hike.
He added that some international manufacturing firms had already exited Nigeria as a result of the power crisis, coupled with the unpredictability of the country’s foreign exchange rate before it was recently unified.
Meshioye said, “Manufacturers provide almost every infrastructure by themselves. Outside the major roads, you find out that manufacturers provide water, power, security, etc. So, when you look at it, you find out that the cost of doing business is so huge.”
The significant drop in foreign investments in the third quarter of the year was linked to the exit of some multinationals such as GlaxoSmithKline (which exited Nigeria in August) and Unilever, which winded down operations on its home and skin care categories in April.
In the fourth quarter of 2023, more multinational manufacturers such as Sanofi-Aventis and Procter & Gamble also winded down operations in Nigeria.