In three months, capital flow hits $6.3bn driven by foreign investors

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NBS

… $1.18bn overseas investment flow to banks

By Kayode Tokede

The National Bureau of Statistics (NBS) has disclosed that total value of capital importation into Nigeria in the first quarter of 2018 (Q1) soared to $6 billion following last year’s liberalisation of the currency by Central Bank of Nigeria (CBN) for foreign investors and steps to tighten liquidity to attract offshore funds.

The bureau explained that the increase in capital inflow in Q1, 2018 was driven mainly by Portfolio Investment, which grew from $3,477.53 million in the previous quarter to $4,565.09 million, accounting for 72.42per cent of the total Capital Importation during the quarter.

The bureau divided capital Importation into three main investment types: Foreign Direct Investment (FDI), Portfolio Investment and Other Investments, each comprising various sub-categories.

The report by NBS stated that since second quarter of 2017, portfolio Investment has been expanding faster than the other two categories, remaining the largest component of capital imported in Q1, 2018 at 35per cent of total capital imported.

According to the report, “Foreign Direct Investment and Other Investment accounted for 3.91per cent and 23.67per cent of total Capital Importation into Nigeria in the quarter under review.

“In the first quarter, Foreign Direct Investment stood at $246.62 million, falling by 34.83per cent from the figure reported in the previous quarter, and growing by 16.67per cent on a year-on-year basis.

“Foreign Direct Investment in Nigeria was still weak when compared to Portfolio Investment and Other Investment, representing only 3.9per cent of total capital imported.

“Equity Investment, a sub-category under FDI contributed ($246.61 million) or 99.9per cent of FDI during the quarter, while Other Capital under FDI contributed less than 0.001per cent.

“Portfolio Investment remained the largest component of total capital inflow into Nigeria in the first quarter of 2018. The total value of Portfolio Investment was $4,565.1 million, which is a 1,355.66per cent growth compared to Q1, 2017 and a 31.27per cent growth compared to the figure reported in Q4, 2017.

“The strong growth of Portfolio Investment was mainly due to the increase in Money Market Instruments which recorded a figure of $3,527.60 million, accounting for 77.27per cent of total Portfolio Investments in the first quarter.

“This sub-category (Money Market Instruments) has grown quite significantly in the past three quarters, recording quarterly growth rates of  603per cent in Q3, 2017, 203per cent in Q4, 2017 and in 62per cent in Q1 2018.

“Portfolio Investment in the form of Equity and Bonds only recorded $701.61 million and $335.88 million respectively in the quarter under review.

“Other Investment recorded $1.49 billion in the first quarter of 2018, declining by 2.29per cent from the previous quarter, however, growing by 289.25per cent compared to the corresponding period of 2017.

“This category accounted for 23.67per cent of total Capital Importation in the first quarter of 2018. As in previous periods, Other Investment was dominated by Loans ($1,27 billion), which accounted for 85.02per cent of Other Investments.

“This was followed by Other Claims ($223.49 million), which accounted for 14.98per cent of the category of Capital Importation. Trade Credits and Currency Deposits posted no inflow in the quarter. Capital is either imported in the form of Shares or directly imported by different sectors of the economy. Share capital investment, which is closely related to Equity investment (FDI and Portfolio Investment) dominated Capital Importation into Nigeria during the quarter.

“Capital inflow in the form of Shares in the first quarter increased by 3.05% from $3.68 billion reported in Q4, 2017 to $3.79 billion in Q1, 2018.

“This component has recorded a steady rise since the first quarter of 2017, with Q1, 2018 being the fifth quarter of its consecutive rise. The percentage share of Shares investments to total Capital Imported however, decreased from 68.37per cent in the previous quarter to 60.17per cent in the first quarter of 2018.

“In the first quarter of 2018, Banking remained the leading sector for foreign capital Inflow which attracted the most considerable amount of capital investment.

NBS in its Nigerian Capital Importation report during the weekend said, $1.18 billion overseas investment flowed to the Banking sector, which accounted for 18.7 per cent of the total Capital Importation.

According to the report, “Financing exceeded Production, Servicing and Telecoms sectors to become the second leading sector to receive capital investment, attracting $485.41 million during the quarter.

“This was followed by the Servicing sector with $328.15 million, Production sector with $144.09 million and Agriculture with $130.90 million.

“These five economic sectors mentioned above together attracted more than 90per cent of foreign capital investment in the first quarter of 2018.

“Telecommunications, which ranked fourth in Q4, 2017, only had a total of $87.25 million foreign capital investment in the first quarter of 2018, declining by 54.32per cent from $191.01 million recorded in the last quarter.”

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