Foreign Capital Importation Fell to $1.54bn in Q2

*Lagos accounted for 68.66% of inflows 

*PwC: Insecurity biggest impediment to Nigeria’s economic growth 

*Says foreign education, health tourism putting pressure on FX

James Emejo and Emmanuel Addeh in Abuja

The total value of capital importation into the country declined by 2.40 per cent to $1.54 billion in the second quarter of the year (Q2 2022) compared to $1,57 billion in the preceding quarter, the National Bureau of Statistics (NBS) said yesterday.
However, when compared to the corresponding quarter of 2021, when capital importation was recorded at $875.62 million, it represented an increase of 75.34 per cent.

According to the Nigerian Capital Importation Q2 2022, which was posted on the NBS website yesterday, Lagos State topped the destination for foreign capital inflows with $1.05 billion, accounting for 68.66 per cent of total inflows into the country.
This was followed by investment into Abuja (FCT), valued at $453.95 million (29.57 per cent).

Anambra attracted $24.71 million, Kogi $2 million and Ekiti 40.50 million during the quarter.
However, portfolio investment accounted for 49.33 per cent ($757.32 million), representing the largest capital importation in the review period. It was followed by other investment category which was valued at $630.87 million or 41.09 per cent of total inflows while Foreign Direct Investment (FDI) accounted for $147.16 million or 9.58 per cent of total capital imported in Q2.

Disaggregated by sectors, capital importation into banking had the highest inflow of $646.36 million amounting to 42.10 per cent of total capital imported during the period. It was also followed by capital imported into the production sector, which stood at $233.99 million or 15.24 per cent.
Furthermore, the financing sector attracted $197.31 million or 12.85 per cent inflows.

According to the statistical agency, capital importation by country of origin revealed that the United Kingdom (UK) ranked top as the major source of capital imported into the country with 781.05 million, accounting for 50.87 per cent. This was followed by Singapore and the Republic of South Africa valued at $138.58 million (9.03 per cent) and $122.26 million (7.96 per cent) respectively.

Categorised by banks, Citibank Nigeria Limited ranked highest in with $450.94 million (29.37 per cent).
This was followed by Standard Chartered Bank Nigeria Limited which attracted $323.24 million (21.05 per cent) and Stanbic IBTC Bank Plc with US$163.92 (10.68 per cent).

PwC: Insecurity Biggest Impediment to Nigeria’s Economic Development

Meanwhile, Advisory Partner and Chief Economist, PricewaterhouseCoopers (Pwc), Dr Andrew Nevin, yesterday posited that the current biggest challenge to Nigeria’s economic development remains the pervasive insecurity in the country.
Speaking on Arise News Channel, THISDAY’s broadcast arm, Nevin said insecurity was having a knock-on effect on all sectors of the Nigerian economy and driving up inflation, especially the prices of food.

“I firmly believe the biggest economic problem we’re having right now is (in)security. And  the reason for this is that insecurity is having incredible knock-on effects around the country, in addition to the great losses, which are just terrible.

“It creates a real problem for example, in the agricultural space and that’s why  we are having such rapid inflation. We know there are various forces in the Ukraine war, supply chain problems, but the biggest thing driving inflation in agriculture is the fact that when farmers are insecure, they change their planting patterns,” he argued.

Stressing that there had been various calls for oil subsidies removal, especially when prices were low, he lamented that the impact was currently hurting the Nigerian economy.

He argued that for Nigeria’s quest to diversify its economy not to take decades, the country must look beyond the traditional way, adding that the path being advocated for Nigeria was to begin to export high value-added services in the global value chain.
Noting that the world has changed technologically in the last number of years and particularly with COVID-19, Nevin opined that Nigeria can unleash its population to begin to do remote work.

“So we are advocating that the quickest way to prosperity is actually by putting over two million remote workers out there and to have 2 million remote workers participate in global value chains in the next seven to 10 years and that would address the problem,” he said.
He pointed out that the traditional route like manufacturing or mining would have extremely long lead times, and will take a long time to turn around the economy.

“So we really think it’s the quickest path, in fact, the best path for prosperity in this country,” he added.
The PwC official argued that Nigeria cannot drive prosperity from the centre, maintaining that the current practice of sharing monies from the federation account on a monthly basis was unsustainable.
“You can’t have one centralised place trying to drive prosperity throughout the country. You need people all over the country driving prosperity.  I think they (states) recognise that the whole federation account approach where they just collect money, is no longer viable,” he noted.

He listed Kaduna, Ogun and Nasarawa states as some of the sub-nationals doing well, explaining that they give real cause for optimism.
“I’ll repeat, it’s not possible for this large country for the prosperity to be driven from the centre. It can only be done in a distributed and decentralised way,” he insisted.

He explained that India, for example, has the same nominal Gross Domestic Product (GDP) per capita as Nigeria, but that prices in that country are lesser because India has better infrastructure and a more efficient supply chain.
“Fifty per cent of the people in Nigeria spend more than 50 per cent of their income on food. So what really matters for the wellbeing of Nigerians is food inflation,” he said.

Nevin urged Nigeria to harvest its low hanging fruits like building its education and health systems which would help cut down the foreign exchange spent on schooling abroad as well as health tourism.

“The most important is health and education. So this country spends at least $3 billion to import education? That means Nigerians going abroad to get their education somewhere else. Every time you go abroad and pay for education or healthcare abroad, that’s an import for Nigeria of $3 billion,” he posited.
“If you can get more people to become educated in Nigeria and more people have their healthcare here, it’s going to make a big difference,” he argued.