In 15 months (five quarters), total capital importation into Nigeria stood at $8.28billion. Foreign Direct Investment recorded the lowest number at $853.75 million, an indication that investors are still skeptical about doing long term investment in the country. BAMIDELE FAMOOFO writes.
Portfolio investment has continued to dominate the foreign investment space in Africa’s most populous nation as foreign investors remain averse to long term investment.
A review of performance of capital importation in Nigeria in 15 months (Q1, 2021-Q1, 2022) by The Point Business Unit showed that portfolio investment (short-term foreign investment) accounts for more than 52 percent of total foreign capital inflow into the country in the review period. Portfolio investments by investors are locked up in the capital and money markets (equity, bonds and money market instruments) where they can be much easily repatriated on a short notice.
Other investments which are trade credits, loans, currency deposits and other claims amounted to $3.08billion, representing 37.2 percent of total capital importation in the period, leaving FDI with only about 11 percent.
Unstable political climate, insecurity, inconsistent government policy and dwindling economy are some factors that financial experts have kept foreign investors at bay.
“Unstable political climate, insecurity, inconsistent government policy and dwindling economy are some factors that financial experts have kept foreign investors at bay”
Quarter on Quarter Performance Review
The total value of capital importation into Nigeria in the first quarter of 2022 stood at $1,573.14 million from $2,187.63 million in the preceding quarter showing a decrease of 28.09 percent. When compared to the corresponding quarter of 2021, capital importation decreased by 17.46 percent from $1,905.89 million.
The largest amount of capital importation by type was received through Portfolio Investment, which accounted for 60.87 percent ($957.58 million).
This was followed by Other Investments with 29.28% ($460.59 million) and Foreign Direct Investment accounted for 9.85 percent ($154.97 million) of total capital imported in Q1 2022.
Disaggregated by Sectors, capital importation into banking had the highest inflow of $818.84 million amounting for 52.05 percent of total capital imported in the first quarter of 2022.
This was followed by capital imported into the production sector, valued at $223.67 million (14.22%) and the financing sector with $199.37 million (12.67%).
Capital Importation by Country of Origin reveals that the United Kingdom ranked top as the source of capital imported into Nigeria in the first quarter of 2022 with a value of $1.021.21 million, accounting for 64.92 percent.
This was followed by the Republic of South Africa and the United States of America valued at $117.50 million (7.47%) and $82.07 million (5.22%) respectively.
By Destination of Investment, Lagos State remained the top destination in Q1 2022 with $1,119.44 million accounting for 71.16 percent of total capital investment into Nigeria.
This was followed by investment into Abuja (FCT), valued at $446.81 million (28.40%). Categorization of total capital investment by the Bank shows that Standard Chartered Bank Nigeria ranked highest in Q1 2022 with $543.20 million (34.53%).
This was followed by Citi Bank Nigeria Limited with $439.03 million (27.91%) and Stanbic IBTC Bank Plc with $251.52 (15.99%).
Q1 & Q2, 2021
The total value of capital importation into Nigeria declined to $875.62m in the second quarter of 2021 from $1,905.89m in the first quarter of 2021. This represents a decrease of -54.06 percent compared to Q1 2021 and -32.38 percent decrease compared to the second quarter of 2020.
The largest amount of capital importation by type was received through Portfolio investment, which accounted for 62.97 percent ($551.37m) of total capital importation, followed by Other Investment, which accounted for 28.13 percent ($246.27m) of total capital imported and Foreign Direct Investment, which accounted for 8.90 percent ($77.97m) of total capital imported in Q2 2021.
The United Kingdom emerged as the top source of capital investment in Nigeria in Q2 2021 with $310.26m. This accounted for 35.43% of the total capital inflow in Q2 2021.
By Bank, Stanbic IBTC Bank Plc emerged at the top of capital investment in Nigeria in Q2 2021 with $310.21m. This accounted for 35.43 percent of the total capital inflow in Q2 2021.
By Destination of Investment, Lagos State emerged as the top destination of capital investment in Nigeria in Q2 2021 with $780.06m. This accounted for 89.09 percent of the total capital inflow in Q2 2021.
By sector, Capital importation by Banking dominated in Q2 2021 reaching $296.51m of the total capital importation in Q2 2021.
Q3, 2021
The total value of capital importation into Nigeria in the third quarter of 2021 stood at $1.731.37 million from $875.62 million in the preceding quarter of 2021 showing an increase of 97.73 percent. When compared to the corresponding quarter of 2020, capital importation as well increased by 18.47 percent from $1,461.49 million
The largest amount of capital importation by type was received through Portfolio investment, which accounted for 70.30 percent ($1,217.21 million) of total capital importation. This was followed by Other Investment which accounted for 23.47% ($406.35 million) and Foreign Direct Investment (FDI) amounted to 6.23% ($107.81 million) of total capital imported in Q3 2021.
By Sectors, capital importation into financing had the highest inflow of $469.17 million amounting to 27.10 percent of total capital imported in the third quarter of 2021. This was closely followed by capital imported into the Banking Sector valued at $460.39 million (26.59%) and Production sector $323.83 million (18.70%)
Capital Importation by country of origin revealed that the United Kingdom ranked top as source of capital imported into Nigeria in the third quarter of 2021 with a value of $709.8 million accounting for 40.99 percent of total capital imported in the period under review. This was followed by capital imports from South Africa and the United States of America valued at $389.54 million (22.50%) and $257.12 million (14.85%) respectively.
By Destination of Investment, Lagos State remains the top destination of capital investment in Nigeria in Q3 2021 with $1,481.58 million accounting for 85.57% of total capital investment in Nigeria in the period under review.
This was followed by investment into Abuja (FCT) valued at $249.19 million (14.39%). By Bank, Stanbic IBTC Bank Plc ranked highest in Q3 2021 with $537.92 million (31.07%) of total capital investment in Nigeria.
This was followed by Standard Chartered Bank (18.83%) and Citibank Nigeria Limited (14.34%).
“Capital Importation by Country of Origin reveals that the United Kingdom ranked top as the source of capital imported into Nigeria in the first quarter of 2022 with a value of $1.021.21 million, accounting for 64.92 percent”
Q4, 2021
The total value of capital importation into Nigeria in the fourth quarter of 2021 stood at $2,187.63 million from $1,731.37 million in the preceding quarter showing an increase of 26.35 percent.
When compared to the corresponding quarter of 2020, capital importation increased by 109.28 percent from $1,045.32 million.
The largest amount of capital importation by type was received through other investment, which accounted for 54.24 percent ($1,186.53 million). This was followed by Portfolio Investment with 29.39 percent ($642.87 million) and Foreign Direct Investment amounted to 16.38 percent ($358.23 million) of total capital imported in Q4 2021.
Disaggregated by Sectors, capital importation into tanning had the highest inflow of $645.59 million amounting to 29.51 percent of total capital imported in the fourth quarter of 2021.
This was followed by capital imported into the Production sector, valued at $360.06 million (16.46%) and the Electricals sector with $325.55 million (14.88%)
Capital Importation by country of origin reveals that Mauritius ranked top as source of capital imported in-to Nigeria in the fourth quarter of 2021 with a value of $611.45 million, accounting for 27.95 percent.
This was followed by the United States of America and the Republic of South Africa valued at $321.03 million (14.67%) and $285.83 million (13.07%) respectively.
By Destination of Investment, Lagos state remained the top destination in Q4 2021 with $1,983.41 million accounting for 90.66 percent of total capital investment in Nigeria.
This was followed by investment into Abuja (FCT), valued at $170.55 million (7.80%). Categorization of total capital investment by the Bank shows that Eco Bank Plc ranked highest in Q4 2021 with $708.58 million (32.39%) . This was followed by Stanbic IBTC Bank with $453.82 million (20.74%) and Union Bank of Nigeria Plc with 284.60 (13.01%).
