Nigeria’s Petroleum Sector Attracts Just $5 Million in Foreign Investment for First Half of 2024
Despite government efforts to boost investment in Nigeria’s oil and gas sector, foreign capital inflows remain critically low. According to a recent report from the National Bureau of Statistics (NBS), the petroleum sector only attracted $5 million in foreign investment during the second quarter (Q2) of 2024. This marks a slight improvement from the first quarter (Q1) of the year, which saw no investments in the sector.
The NBS report, which focuses on capital importation for Q2 2024, reveals that out of the $2.6 billion total capital importation into Nigeria between April and June, the oil sector accounted for just 0.19%. In comparison, the banking sector led the way, pulling in $1.12 billion or 43.15% of the total.
Declining Investment Over the Years
Foreign investments in Nigeria’s petroleum sector have seen a dramatic decline over the last decade. The report highlighted that foreign capital investment in the sector dropped from a peak of $720 million in 2016 to just $3.64 million in 2023. This ongoing downward trend is evident in the comparison with previous years:
• 2023: The sector recorded a total of $3.64 million in capital importation.
• 2022: Foreign investments totaled $6.37 million, a slight increase but still far below earlier years.
• 2021: The sector received $101 million, the highest amount recorded in the last few years, but concentrated mostly in Q1 and Q4.
The significant decline from earlier periods is linked to investor concerns about Nigeria’s business environment, even following the enactment of the Petroleum Industry Act (PIA), which was intended to revamp the industry. Experts attribute the drop in foreign investments to a lack of confidence in the regulatory and operational changes brought by the PIA.
Historical Perspective
Investment in Nigeria’s oil and gas sector was much higher in the past. In 2016, the sector peaked at $720 million. However, since then, the inflows have sharply decreased:
• 2017: $331.36 million.
• 2018: $133.51 million.
• 2019: $216.23 million.
• 2020: $53.51 million.
In comparison, 2014 saw $208 million, and 2015 recorded $29.76 million. The significant drop from the early 2010s reflects increasing challenges in attracting foreign capital to the sector.
Conclusion
The recent report underscores the persistent struggle to attract substantial foreign investment into Nigeria’s petroleum sector. While the $5 million recorded in Q2 2024 is a marginal improvement, it pales in comparison to the country’s historical figures. Industry experts caution that sustained reforms and clearer regulatory frameworks will be crucial to reigniting foreign investor interest in the sector.
Despite government efforts to boost investment in Nigeria’s oil and gas sector, foreign capital inflows remain critically low. According to a recent report from the National Bureau of Statistics (NBS), the petroleum sector only attracted $5 million in foreign investment during the second quarter (Q2) of 2024. This marks a slight improvement from the first quarter (Q1) of the year, which saw no investments in the sector.
The NBS report, which focuses on capital importation for Q2 2024, reveals that out of the $2.6 billion total capital importation into Nigeria between April and June, the oil sector accounted for just 0.19%. In comparison, the banking sector led the way, pulling in $1.12 billion or 43.15% of the total.
Declining Investment Over the Years
Foreign investments in Nigeria’s petroleum sector have seen a dramatic decline over the last decade. The report highlighted that foreign capital investment in the sector dropped from a peak of $720 million in 2016 to just $3.64 million in 2023. This ongoing downward trend is evident in the comparison with previous years:
• 2023: The sector recorded a total of $3.64 million in capital importation.
• 2022: Foreign investments totaled $6.37 million, a slight increase but still far below earlier years.
• 2021: The sector received $101 million, the highest amount recorded in the last few years, but concentrated mostly in Q1 and Q4.
The significant decline from earlier periods is linked to investor concerns about Nigeria’s business environment, even following the enactment of the Petroleum Industry Act (PIA), which was intended to revamp the industry. Experts attribute the drop in foreign investments to a lack of confidence in the regulatory and operational changes brought by the PIA.
Historical Perspective
Investment in Nigeria’s oil and gas sector was much higher in the past. In 2016, the sector peaked at $720 million. However, since then, the inflows have sharply decreased:
• 2017: $331.36 million.
• 2018: $133.51 million.
• 2019: $216.23 million.
• 2020: $53.51 million.
In comparison, 2014 saw $208 million, and 2015 recorded $29.76 million. The significant drop from the early 2010s reflects increasing challenges in attracting foreign capital to the sector.
Conclusion
The recent report underscores the persistent struggle to attract substantial foreign investment into Nigeria’s petroleum sector. While the $5 million recorded in Q2 2024 is a marginal improvement, it pales in comparison to the country’s historical figures. Industry experts caution that sustained reforms and clearer regulatory frameworks will be crucial to reigniting foreign investor interest in the sector.