Nigeria: Foreign capital flows to increase by 177% in first half of 2024

A rise stimulated by economic and monetary reforms

Nigeria recorded a spectacular growth in foreign capital flows in the first half of 2024. According to the National Bureau of Statistics (NBS), these capital inflows increased by 177% compared to the same period in 2023, reaching $5.98 billion. This strong increase is mainly due to the economic reforms carried out by the Nigerian authorities, notably the relaxation of exchange controls.

Nigeria’s economic reforms attract investors

The massive return of portfolio investors to Nigeria was fuelled by reforms implemented under President Bola Tinubu, who was elected in May 2023. A key measure was the reform of the exchange rate regime, aimed at establishing a market-determined exchange rate. Under this framework, the naira underwent two devaluations to reduce the gap between the official rate and that prevailing on the parallel market. This new monetary policy encouraged greater transparency in international financial transactions.

UK and Netherlands lead foreign investors

Between January and June 2024, the United Kingdom and the Netherlands were the main sources of foreign capital for Nigeria. These investments were mainly directed towards the banking sector, which captured the bulk of the capital flows. The relaxation of exchange controls played a major role in this dynamic, attracting investors looking for better opportunities in the Nigerian financial market.

A proactive monetary policy to attract capital

To support this positive trend, the Central Bank of Nigeria has adopted a series of monetary measures. Interest rates have been raised five times since the beginning of 2024, in a bid to control inflation and attract more international investors. In addition, the bank plans to automate foreign exchange transactions by December 2024, a move aimed at increasing transparency and reducing distortions in the foreign exchange market.

Conclusion: Nigeria is strengthening its position as a pole of attraction for foreign capital

Through ambitious economic reforms and proactive monetary policy, Nigeria has managed to strengthen its position in the foreign investment market. The increase in foreign capital flows, particularly in the banking sector, demonstrates the renewed confidence of international investors. With the automation of foreign exchange transactions scheduled for the end of 2024, the country continues to modernize its economy and position itself as a key player in the region.