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Nigeria’s FDI in manufacturing rises by $644m in 2023

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According to data from Nigeria’s National Bureau of Statistics (NBS), foreign investments into the industrial sector increased by $644 million in 2023 to $1.5 billion from $948 million the year before.

In its capital imports report, the NBS said that the manufacturing sector had the highest investment levels.

The industries comprising the top three investment magnates were banking and finance, which ranked distantly second and third, respectively.

Manufacturing investments of $1.5 billion in 2023 made up 39% of all capital imports that year ($3.8 billion). Compared to $5.4 billion in 2022, foreign investments in Nigeria decreased by $1.5 billion to $3.8 billion.

The total capital importation was primarily driven by foreign direct investments ($377.3 million) and portfolio investments ($1.1 billion), with other investments accounting for the largest share of the total at $2.37 billion.

With $2.5 billion, Lagos State was the most popular travel destination in 2023, followed by Abuja ($1.1 billion). $150 million and $6 million were recorded by Abia and Rivers States, respectively.

In the same year in review, investments were also drawn to Ogun, Ekiti, Abia, Akwa Ibom, Anambra, and Adamawa states. 29 states were unable to draw in any capital during that time.

Foreign investments in Nigeria have consistently decreased in recent years. The largest economy in Africa saw a $18.6 billion fall in foreign investment in just four years (2019–2022), according to NBS.

Eight states were unable to draw in any kind of foreign investment over the four years. Taraba, Yobe, Zamfara, Bayelsa, Ebonyi, Gombe, Jigawa, and Kebbi were the states that were impacted. The report indicates that $23.9 billion in foreign investments were made in Nigeria in 2019.

The amount fell to $9.6 billion by 2020, then to $6.7 billion the next year, and finally to $5.3 billion in 2022. This suggests a $18.6 billion drop in the following four years. Over the course of the four years, the world’s most populated black country earned roughly $46 billion.

With $35.4 billion in foreign investments, Lagos State topped the way, followed by Federal Capital Territory ($10 billion).

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IMF says South Africa needs to do more to cut spending, lower debt-to-GDP ratio

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A top official from the International Monetary Fund has revealed that South Africa needs to do more to cut spending and lower its debt-to-gross domestic product ratio. The multilateral body stressed that the ratio is expected to rise from 74% in 2022 to almost 86% by 2029.

Era Dabla-Norris, deputy head of Fiscal Affairs, said that the government could cut back on transfers to state-owned businesses, make cuts to subsidies that don’t help specific companies, and make big changes to the way the economy works to boost growth.

She told a news conference that South Africa’s energy and logistics problems had to be fixed right away.

A Statista study shows that between 2023 and 2028, the South African national debt was expected to keep going up by a total of 163.3 billion U.S. dollars, or 59.99%.

The national debt is expected to hit a new high point of 435.46 billion U.S. dollars in 2028, after going up for ten years in a row. Notably, the national debt has steadily risen over the past few years.

The IMF says that the general government’s gross debt is made up of all its debts that need to be paid back with interest and/or capital at some point in the future.

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Nigeria’s central bank insists depleting external reserves not due to Naira defence

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According to the Central Bank of Nigeria (CBN), the big drop in the country’s foreign exchange reserves was not due to the defence of the Naira. Instead, it was done to partly pay off debts owed to creditors.

Furthermore, the bank said it wanted to stay out of the market as much as possible, hoping to create an environment where costs are set by willing buyers and sellers.

The CBN governor, Olayemi Cardoso, clarified on Wednesday while the International Monetary Fund and World Bank held their Spring Meetings in Washington, D.C., USA following curiosity around the big drop in the country’s foreign exchange reserves—about $2.16bn in just 29 days—even though the government was working hard to keep the naira stable, underlying important it is to let the market decide prices instead of depending too much on the bank to step in.

The CBN website showed that as of April 15, 2024, the foreign exchange stocks had dropped to $32.29bn, a big drop from March 18, 2024, when they were $34.45bn. Also, the funds grew by $1.28bn over 43 days, from February 5, 2024, to March 18, 2024.

The apex had earlier stated that the rise was due to more money being sent back to Nigeria by Nigerians living abroad and more interest from foreign buyers in local assets, such as government debt securities. The top bank also said that the rise was caused by changes in the foreign exchange market and more oil being produced, among other things.

Cardoso maintained that the bank would not get involved in the exchange unless unusual circumstances arose. He also made it clear that the recent small change in reserves had nothing to do with protecting the naira. He said that there will be an increase soon because the country is getting an extra $600 million into its funds.

He said, “I want to make this as clear as possible, it is not in our intention to defend the naira. and as much I have read in the recent few days, some opinions concerning what is happening with our reserves and if the central bank is defending the naira. If you think about what our overall policy and philosophy has been here, you can see it is counterintuitive.

“What we are encouraging is for the market to be a willing-buyer and willing-seller price discovery system, and ultimately I perceive a future where the central bank would not intervene except in very unusual circumstances. What is important to us is that there is sufficient liquidity in the market. We recorded trading of $1bn, sometimes it is $600m or $700m as the case may be and that will continue. So as long as we have a vibrant currency market, why do we need to intervene? There has been little amount given to the Bureau de Change to get that segment going and a small amount of money has gone into that to catalyse because individuals must have access to funds for school fees, health and the rest.”

Foreign currency shortages in the country have been a problem for a long time for the CBN. That governments, commercial banks, merchant banks, other financial institutions (OFIs), or public officials cannot directly or indirectly own Bureaux de Change (BDCs) was ruled in February.

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