Nigeria’s Capital Importation Declines By 76%

Latest data from the National Bureau of Statistics, NBS shows that capital importation into Nigeria’s economy fell by 75.7% from 2015 to 2016.

Capital Importation can be divided into three main investment types: Foreign Direct Investment (FDI), Portfolio Investment and Other Investments, each comprising various subsectors.

In the second quarter of 2016, Other investment was the largest component of imported capital and accounted for $268.77 million, or 41.53%. This was despite only one type of Other investment being carried out during the quarter: Other Investment Loans.

The second largest component was Portfolio investment, which accounted for $245.32 million, or 37.91%. As in all previous quarters, Portfolio investment was dominated by Equity, which accounted for 83.18% of this type of capital; a slightly lower share than a year previous (when the share was 84.56%) but higher than in the previous quarter when it accounted for 74.41%.

Despite the overall fall in Portfolio investment of 9.49%, Portfolio Equity investment increased by 1.18%. The majority of the fall was accounted for Portfolio Money investment, which fell by $26.60 million, or 39.20%, although investment in bonds fell to zero from $1.50 million in the previous quarter, and from $50.54 million in the second quarter of 2015.

Capital importation
Source: NBS, 2016

The decline to zero in capital imported in the form of Bonds is particularly striking when compared to the high of $1000.28 million recorded in the third quarter of 2014, at which time Nigeria was included in the JP Morgan Emerging Markets Bond Index.

As in each quarter over the past two years, Foreign Direct investment accounted for the smallest share of imported capital. A total of $133.02 million was imported as Foreign Direct investment, representing 20.56% of the total. For the first time since the series began, Equity accounted for the entirety of this investment type, as no capital was imported in the form of Cther Capital.

This implies that there were five different investment types (across all three categories) to not record any capital importation; this is the first quarter that the number has been that high on record.

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