Yesterday, the Nigerian Bureau of Statistics released the capital importation data for the first quarter of 2019. Despite the jitters that trailed the February general election and its eventual conduct in Q1-2019, total capital imported into the country surged 34.6% y/y to settle $8.5bn, the highest since Q3-2013. As cheerful as this sounds, ‘the fleeting nature’ of the rebound is noticed in the details.
A deeper dive into the numbers shows that across the three components of capital imported, Foreign Portfolio Inflows (FPIs) accounted for the bulk of expansion observed, surging 56.5% y/y to $7.1bn. Foreign Direct Investments (FDIs) and Other Investments remained subdued, sliding1.3% y/y and 26.5% y/y to $243.4mn and $1.1bn respectively. A deeper probe into the sections relay that foreign interests in Money Market Instruments surged 67.9% y/y to $5.9bn and single-handedly contributed 69.8% to total capital imported into the country, as carry traders continue to relish the mouth-watering return on government bills.
Needless to say, the concentration of foreign investor’s interest in portfolio investment, more so, money market instruments while much needed FDIs continue to languish says a lot about their level of confidence in the Nigerian economy. Hence, the need for the current administration to double down on efforts to buoy investor’s confidence and address structural challenges in the system among other concerns.
United Capital Plc Research (UCR)
