Capital Importation: Nigeria’s Economy Attracted $12.2bn Investments In 2017 – NBS

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The total capital imported in the fourth quarter of 2017 was $5,382.9 million, this was an annual growth of 247.5%, and quarterly growth of 29.9%. As at the end of 2017, total capital imported into Nigeria was $12,228.6 million, an increase of $7,104.4 million or 138.7% from the figure recorded in 2016. 

The National Bureau of Statistics (NBS) said this in a report on “Nigerian Capital Importation for fourth quarter’’ posted on Wednesday for the 2017 fiscal year with the economy attracting a total investment inflow of $12.2bn. The $12.2bn investment inflow, when compared with the $5.38bn in 2016, represents an increase of $6.82bn or 56 percent.

The Bureau stated that the growth in Capital Importation in 2017 was mainly driven by an increase in Portfolio Investment, which went up by $5,516.2 million from the previous year to reach $7,329.1 million in 201 and accounting for 60% of capital imported. During the reference quarter total capital imported when compared to the previous quarter increased by $1,237.8 million.

Capital Importation is divided into three main investment types: Foreign Direct Investment (FDI), Portfolio Investment and Other Investments, each comprising various sub-categories. Portfolio Investment, which recorded $3,477.5 million in fourth quarter of 2017, remained the largest component of capital imported and contributed 64.6% of the total amount ($5,382.86).

According to the report, it increased significantly year on year, recording a rise of 1,123.5 % or $3,193.3 million (from $284.2 million to $3,477.5 million), expanding faster than the two other components of capital importation.  Foreign Direct Investment recorded $378.4 million in quarter 4, which is a year on year increase of 9.8%, while Other Investment recorded $1,526.9, growing by 66% when compared to quarter 4 of 2016.

The reports noted foreign Direct Investment hit $378.4 million for the first time since Q4 2015 when it reported $123.2 million. This figure in q4 2017 was a substantial increase of 221.8% when compared to the 3rd quarter, and a 9.8% increase compared to Q42017. The growth in FDI was mainly driven by Equity Investments, which contributed 99.8%, while Other Capital Investment contributed 0.2%.

Meanwhile, the report stated that the Portfolio Investment was the main driver of Capital Importation in the fourth quarter of 2017, with an amount of $3,477.5 million, representing a quarter on quarter growth of 25.7%. Year on year, it increased by 1,123.5%, which is over twelve times the figure recorded in Q4 2016($284.2 million). The increase in Portfolio Investment was driven by a strong growth in Money Market Instruments, which recorded $2,178.8 million, the first time since Q3 2013. Money Market Instruments contributed 63% to Portfolio investments. Equity which had been the main driver of Portfolio investments in previous quarters dropped by $942.9 million, from $1,932.1 million in Q3 to $989.2 million in Q4 2017. On the other hand, Bonds recorded an increase of $194.1 million, from $115.4 million in Q3 to $309.5 million in Q4 of the same year.

It, however, stated that other Investment accounted for 28.4% of total capital importation in the fourth quarter of 2017. This category of capital importation grew 65.96% year on year, and by 21.2% when compared to the previous quarter. The $1,526.9 million recorded by Other Investment was mainly in the form of Loans, which was $1,091.2 million in the fourth quarter, followed by Other Claims which recorded $425.7 million, and then Trade credits which reported $10million, having posted no inflows since Q4 2016.

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) was largely responsible for huge increase in capital importation during the quarter. The component of shares has been on the increase since the first quarter of 2017 and by the fourth quarter, it accounted for 68.4% of total capital importation. In the fourth quarter of 2017, of the $5,382.9 million capital imported, $3,680.3 million was invested as shares, representing a growth of 1,512.5% year on year. The proportion of Shares compared to total value of capital importation over the previous quarters.

In the fourth quarter of 2017, Banking became the second leading sector to attract the highest amount of capital inflow, attracting $543.4 million or 10.1% of total capital, an increase of 5.8% from the previous quarter.  Next to Banking was Production, which had 5.9% to total capital investment.  Capital Importation to Servicing dropped from $586.97 million in the previous quarter to $216.45 million in the fourth quarter, while $99.4 million flowed to Fishing sector. Capital Importation to Telecommunications, Financing and Construction sectors also increased strongly compared to the previous quarter. 

According to the figures for the 4th quarter of 2017, Abuja attracted the highest amount of foreign capital, accounting for $2,680.3 million or 49.8%. This was an increase of 227.8% from the figure recorded in the third quarter of 2017 ($817.6million). Lagos which has always had the highest share of capital importation, had its share drop from 79.5% of total share in q3 2017, to a share of 47.4% in q4, 2017. Other states including Akwa Ibom, Ogun, Oyo and Delta also attracted foreign capital investments.

The country from which Nigeria imported the most capital from was the United Kingdom, which accounted for $1,609.9. million, or 30% of the total of capital inflow in Q4,2017. This value was a decline of 7.3% relative to the figure in the previous quarter and a 233.4% growth over the corresponding period of last year. As well as the existence of a historical relationship between the UK and Nigeria, London (the capital of the UK) is also a key financial centre, which explains the high value of foreign capital from the UK. Since 2010, the UK has accounted for the highest value of capital importation in all but two quarters (both in the second half of 2015).

The country accounting for the second largest value of capital importation was the United States. The US accounted for $1,001.4 million in the fourth quarter of 2017 or 18.6%.  The US has also been one of the most important investors in Nigeria, usually either the largest or second largest investor country. It has also been historically the largest economy in the world and is active in foreign investment globally. The next two largest investors in the fourth quarter of 2017 were Belgium accounted for 10.2% and Singapore (7.7%).

Capital is imported from financial institutions into the country. In the fourth quarter of 2017, the bank through which the highest share of capital was imported was Stanbic IBTC Bank Plc, which accounted for 50.7% ($2,730.5 million) of the total share, up from the 40.2% share recorded in the third quarter of 2017. This was followed by Standard Chartered Bank, which accounted for 15.1% share or ($811 million) of capital importation. The top five banks through which capital was imported in the 4th quarter were Stanbic IBTC bank, Standard Chartered Bank, Zenith Bank, and Citibank Nigeria Limited, and Access bank plc, all accounting for 87% of capital importation in the fourth quarter.

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