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Capital importation into Nigeria hits $8.4 billion, rose by 216% in Q1 2019

The total value of capital importation into Nigeria in the first quarter of 2019 was estimated at a whopping $8.48 billion. This is revealed in the latest capital importation data released by the National Bureau of Statistics (NBS). 

According to the NBS data, the $8.48 billion capital importation in the first quarter represents an increase of 216.03% compared to Q4 2018 (quarter-on-quarter). Also, capital importation year-on-year into Nigeria rose by 34.61% when compared to the first quarter of 2018.

Capital Importation by type: Basically, Nigeria’s capital importation is categorized into three investment types, and these include Foreign direct investment, Portfolio investment and other investment.

The Portfolio Investment in Nigeria is made up of three items which include Equity, Bonds and Money Market instruments. During the period under review, the largest amount of capital importation by type was received through Portfolio investment, which accounted for 84.21% ($7,145.98 ) of total capital importation.

  • Money Market instruments account for 82% total portfolio investments, amounting to $5.92 billion, representing a 376.9% rise within the quarter.
  • Equity ranks second with $656.19 million or 9%, recording a 110% growth within the quarter.
  • Bonds received the lowest portfolio investment with $565.6 million or 7% of total capital. However, in terms of growth, portfolio investment into bonds rose by 173% within the quarter.

Othe Investment is broken-down into four categories which include Trade credits, Loans, Currency deposits and Other claims. However, the bureau only provided data for loans and currency deposits. In the first quarter of 2019, other investments recorded the second biggest capital importation, accounting for 12.91%  or $1.09 billion of total capital importation.

  • Loans investment was estimated at $752.2 million, rose by 2.62% within the quarter.
  • Other claims within the quarter stood at $343.8 million, indicating a 2,025% growth when compared to
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Foreign Direct Investment investments in Nigeria has just two components and this includes Equity and other capital. Specifically, FDI accounted for the least of total capital importation in the first quarter with $243.36 million or 2.86% of total capital imported in 2019.

  • Equity FDI inflow in the first quarter was estimated at $242.67 million, rose by 39.97%. Equity constitutes almost 100% of the entire FDI.
  • Other Capital stood at $700,000, less than 1% of the FDI inflow.

Capital Importation by Sector: Further analysis of the capital importation shows that five of the fifteen sectors recorded a decline in capital importation. Sectors with positive growth include Banking, Financing, Production / Manufacturing, Servicing, Agriculture, Electrical, I.T Services and Consultancy. On the other hand, five sectors recorded negative growth within the quarter, the sectors include Shares, Telecomms, Oil and Gas, Construction, Brewing, Drilling and Marketing.

  • Nigerian banking sector received the biggest share of capital importation in the first quarter with $2.85 billion or 33.6% of the total capital. Also, capital importation into the banking sector grew by 141.45% within the quarter.
  • Despite negative growth in capital importation of shares, the sector record the second biggest capital inflow, with $2.40 billion or 28.32% of total capital importation.
  • Three other sectors that made the top five sectors with the biggest share of capital importation include Financing ($2.13 billion) production and manufacturing ($418 million) and Servicing ($409 million).

Capital Importation by origin: The United Kingdom emerged as the top source of capital investment in Nigeria in Q1 2019 with $4.53.22 billion. This accounted for 53.40% of the total capital inflow in Q1 2019.

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Also, by the destination of Investment, Lagos state emerged as the top destination of capital investment in Nigeria in Q1 2019 with $4,773.26 million. This accounted for 56.25% of the total capital inflow in Q1 2019.

By Bank, Stanbic IBTC Bank Plc emerged at the top of capital investment in Nigeria in Q1 2019 with $3,606.09 million. This accounted for 42.50% of the total capital inflow in Q1 2019.

Nigeria’s economy is gathering growth momentum: With over 216.03% increase in the value of capital importation into the economy, it suggests Nigeria’s economy is gathering the much need momentum for sustained growth in the second half of 2019. This is a good boost for the Central Bank’s aim to achieving double-digit growth by 2020.

Basically, capital importation refers to the movement of capital into Nigeria in the form of investments in assets, bonds, shares and so on. FDI is an investment in form of a controlling ownership in a business in one country by an entity based in another country while FPI is the entry of funds into a country where foreigners deposit money in a country’s bank or make purchases in the country’s stock and bond markets, sometimes for speculative purposes.

Analysts have stressed that capital inflows into Nigeria’s economy will improve after the general election. It is evident that portfolio investment accounts for the biggest share of capital importation, this could be largely attributed to the attractive yields in the fixed income market.

Source: Nairametrics

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