FDI still lagging behind


Friday, November 11, 2016 9:17 AM / FBNQuest Research

The NBS recently released its latest Capital Importation Report which covers Q3 2016. The data was obtained from the CBN and compiled using information on banking transactions.

The total value of capital imported into Nigeria in Q3 2016 was estimated at US$1.8bn; this represents an increase of 75% on a q/q basis but a 33% decline when compared with the corresponding period in 2015. Within the quarter, August recorded the highest level of capital imported at US$894m. This happens to be the highest level since July 2015.

In Q3 2016, portfolio investments accounted for the largest component of imported capital at US$920.32m (51% of the total). Although portfolio equity declined by 28% relative to the previous quarter, this was outweighed by large increases in other types of portfolio investments.

Just like in each of the past eight quarters, FDI accounted for the smallest share of imported capital in Q3 with a total of US$340.64m.

On a sectorial basis, the banking sector imported the largest value of capital at US$555m. This accounted for 30% of the total, followed by telecommunications at US$245m (see chart below).

The data also captured capital importation by country source. Nigeria imported the most capital from the United Kingdom, which accounted for 60% of the total. The United States was the second largest investor into Nigeria, accounting for 23% of the total.

Generally, foreign portfolio investors continue to remain on the sidelines. Relatively better participation was observed in fixed income compared with the equity market. As for direct investment, participation is still low primarily due to fx volatility and Nigeria’s weak macroeconomic outlook.

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