In the second quarter of 2023, Nigeria experienced a substantial decline in portfolio investment, with figures dropping by a staggering 83.54% compared to the previous quarter, according to the latest report from the National Bureau of Statistics (NBS), titled ‘Nigeria Capital Importation (Q2 2023).’

The flow of portfolio investment dwindled from $649.28 million in Q1 2023 to just $106.85 million in Q2 2023, marking a sharp downturn.

The NBS report revealed a year-on-year decrease in portfolio investment of 85.89%, with the various components contributing to this decline.

Equities contributed a mere $8.52 million, bonds accounted for $85.29 million, and money market instruments brought in $13.04 billion.

All three components exhibited significant quarter-on-quarter depreciation rates of 96.17%, 71.67%, and 89.64%, respectively.

This drastic decrease in portfolio investment can be attributed to various factors. The COVID-19 pandemic, which began in 2020, initially triggered a decline in foreign investment in Nigeria, aligning with the global trend seen in other emerging economies.

The recent reclassification of Nigeria as an unclassified market by FTSE in September has further exacerbated investor concerns.

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Investors fear that their funds may become trapped due to challenges in the Nigerian foreign exchange market.

In response to this alarming trend, Nigerian authorities have taken steps to regain foreign investor confidence.

Initiatives such as non-deal roadshows, like the one conducted by the Nigerian Exchange Limited in collaboration with the Debt Management Office, were implemented to generate foreign investor interest in Nigeria.

The message conveyed is that Nigeria is open for business, with President Bola Tinubu highlighting policy reforms, including a managed float exchange rate regime and the removal of fuel subsidies.

Temi Popoola, CEO of the Nigerian Exchange, emphasized their commitment to assisting the government in attracting foreign investments.

These efforts reflect the government’s determination to address challenges and restore foreign investor confidence in the country’s market. However, the path to recovery remains challenging, and future developments will be closely monitored.