According to the National Bureau of Statistics' capital importation report for the first quarter of 2023, foreign investments in Nigeria's manufacturing sector decreased by 35% from $392.5 million in the fourth quarter of 2022 to $256 million in the first quarter of 2023. The total capital importation into Nigeria in Q1 2023 was $1.1 billion, a 28% decrease compared to Q1 2022.
Despite the decrease, the production sector ranked second in terms of capital importation, accounting for 22% of total investments. The banking sector recorded the highest inflow of $304.5 million, representing 26.89% of total capital imported in Q1 2023.
The Manufacturers Association of Nigeria (MAN) has warned about the challenging business environment in the country, which has led to a scaling down of investments in the manufacturing sector. High energy costs, limited access to funding, and multiple taxation are among the factors contributing to the decrease in investment.
MAN's Bi-Annual Economic Review revealed that investment in the manufacturing sector declined by 10% in the second half of 2022 compared to the corresponding period in 2021. The decrease was attributed to government debt issues, high borrowing and energy expenses, and weak consumption.
The President of MAN has expressed concerns that more international manufacturing companies may leave the country if power distributors implement the planned tariff hike. He cited the power crisis and the unpredictability of the foreign exchange rate as factors that have already led to the exit of some international manufacturing firms.
The high cost of doing business, including the need for manufacturers to provide their own infrastructure, such as power and security, further adds to the challenges faced by the sector.
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