Despite government initiatives to attract foreign investment into Nigeria’s oil and gas sector, results have been disappointing. The sector only drew $5 million in foreign investment in the second quarter of the year, following no investments in the first quarter, according to a report from the National Bureau of Statistics (NBS).
The report shows that out of the $2.6 billion in total capital imported between April and June, the oil sector accounted for just 0.19%. In contrast, the banking sector led with $1.12 billion, or 43.15% of the total.
Foreign capital investments in the oil and gas sector have sharply declined, dropping from $720 million in 2016 to just $3.64 million for the entire year of 2023.
Capital importation refers to the inflow of foreign capital into a country, which can include investments, loans, or other financial resources. This encompasses Foreign Direct Investment and portfolio investments in financial assets such as stocks and bonds, as well as short-term loans and deposits.
The recent $5 million investment in Q2 2024 marks a slight improvement from the zero investment reported in the previous quarter. However, the trend over the years shows a consistent decline in foreign capital investments in the petroleum sector.
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For example, in Q1 2023, the sector attracted $750,000, but this dropped to zero in Q2, rose to $850,000 in Q3, and increased to $2.04 million in Q4. In total, the sector managed to attract only $3.64 million throughout 2023.
In 2022, the petroleum sector saw $6.37 million in capital importation, which was lower than the amount recorded in a single quarter of 2021. That year, capital importation peaked at $101 million, including $57.25 million in Q1.
Historically, the sector recorded $208 million in capital importation in 2014 and $29.76 million in 2015, reaching a peak of $720 million in 2016. Following that, the sector saw $331.36 million in 2017, $133.51 million in 2018, $216.23 million in 2019, and $53.51 million in 2020.
Experts suggest that the sharp decline in foreign investment is largely due to investor skepticism about whether the Petroleum Industry Act has genuinely improved the business climate in the country.
