Portfolio Investors Crowd Nigeria as Capital Importation Slumps by 22.85%

•Lagos attracted $1.37 billion, FCT $1.24 billion

Emmanuel Addeh and James Emejo in Abuja

Portfolio investors continued to throng Nigeria in Q2 this year, rising by over 1,200 per cent Y-o-Y, dominated mainly by investment in money market instrument, even as total capital importation declined by 22.85 per cent during the period under review compared to Q1, 2024.

Latest data from the National Bureau of Statistics (NBS) indicated that compared with the previous quarter, total capital importation slumped from $3.37 billion in Q1 to $2.60 billion in Q2.

Generally speaking, capital importation is the net purchases, that is the difference between purchases and sales of domestic assets by non-residents,  either as equity or debt; cash or goods. It’s divided into three main types: Foreign Direct Investment (FDI), Portfolio Investment and Other Investments.

But according to the data, when compared to the same period of last year, Nigeria’s capital importation rose by 152.8 per cent from $1.03 billion when put side by side the extant figure of $3.37 billion.

In all, portfolio investment led with $1.40 billion, representing 53.93 per cent of total capital importation, followed by other investments at $1.169 billion, which made up 44.92 per cent.

In terms of other investment categories,  this was dominated by loans and other claims, which stood at $1.15 billion representing 98.6 per cent of other investments as foreign capital imports, while other claims as foreign capital received a meagre $16 million during the period.

Foreign capital imports into money market instruments stood at $1.07 billion representing 76.6 per cent of total foreign portfolio investment in Q2, while foreign capital inflow to bonds represented 12.6 per cent of foreign portfolio investment in the period under consideration at $177.79 million.

Also, there was a Q-o-Q decline in capital imports into bonds and money market instruments in the period, with foreign capital inflow into bonds slumping considerably by 57.75 per cent while that of money market instruments dropped by 32.92 per cent.

A further analysis showed that Foreign Direct Investment (FDI) was the lowest type of capital import, contributing just $29.83 million or 1.15 per cent in Q2 2024.

“In Q2 2024, total capital importation into Nigeria stood at $2,604.50 million, higher than S$1,030.21 million recorded in Q2 2023, indicating an increase of 152.81 per cent. In comparison to the preceding quarter, capital importation declined by 22.85 per cent from $3,376.01 million in Q1, 2024.

“Portfolio investment ranked top with $1,404.70 million, accounting for 53.93 per cent, followed by Other Investment with $1,169.97 million, accounting for 44.92 per cent . Foreign Direct Investment recorded the least with $29.83 million (1.15 per cent) of total capital importation in Q2 2024,” the NBS data showed.

The banking sector recorded the highest capital inflow in Q2 of 2024, with $1.12 billion, accounting for 43.15 per cent of total capital importation, followed by the production/manufacturing sector at $624.71 million (23.99 per cent) and the trading sector with $569.22 million or 21.86 per cent.

Besides, the majority of capital importation came from the United Kingdom, contributing $1,120.15 million (43.01 per cent), followed by the Netherlands with $577.82 million or 22.19 per cent and the Republic of South Africa with $255.98 million or 9.83 per cent.

“The banking sector recorded the highest inflow with $1,123.95 million, representing 43.15 per cent of total capital imported in Q2 2024, followed by the production/manufacturing sector, valued at $624.71 million (23.99 per cent), and trading sector with $569.22 million or 21.86 per cent.

“Capital importation during the reference period originated largely from the United Kingdom with $1,120.15 million, showing 43.01 per cent of the total capital imported. This was followed by the Netherlands with $577.82 million (22.19 per cent) and the Republic of South Africa with $255.98 million (9.83 per cent).

“Out of the three states that recorded capital importation during the quarter, Lagos state remained the top destination with $1,367.84 million, accounting for 52.52 per cent of the total capital imported. Abuja (FCT) followed with $1,236.64 million (47.48 per cent), and Ekiti state with $0.0003 million,” it added.

According to the report, Citibank Nigeria Limited received the highest capital importation into Nigeria in Q2 2024 with $818.46 million (31.43 per cent), followed by Standard Chartered Bank Nigeria Limited with $654.79 million (25.14 per cent) and Rand Merchant Bank Plc with $488.59 (18.76 per cent).