Regardless of the anxiety that greeted the 2019 general elections, the Nigerian economy was able to attract $8.49 billion as capital importation in the first three months of this year. When compared with $6.30 billion that came in the first quarter of 2018, then, we can assume that investors might have concluded that the worst was over for Nigeria as investment inflows into the country, measured by capital importation, improved by 35 percent over corresponding period in 2018.
Capital importation in the first quarter of 2019 amounted to 49 percent of the $17.44 billion brought in as capital importation for the entire 2018 fiscal year. Given that there is some stability in the system, particularly with the retention of the governor of the Central Bank of Nigeria (CBN), and because some ministers and appointees that served in the first term of President Muhammadu Buhari’s term might come back, hope brightens on the horizon that the Nigerian economy will do better in the remaining three quarters of this year.
If this tempo is maintained for the remaining quarters, the economy could attract about $34 billion by year end, a significant leap over what was brought in the last six years.
Which sectors benefited the most in Q1 2019?
Investors were mostly interested in shares, banking, financing which attracted $2.4 billion or 28.32 percent; $2.85 billion or 33.60 percent as well as $2.14 billion or 25.21 percent of the capital imported during the first quarter respectively. These sectors accounted for 87.13 percent of the whole capital importation into Nigeria during the reference period.
Other sectors are at the fringes. Production and manufacturing got $418.44 million which amounted to 4.93 percent of the capital importation in the first quarter. Servicing attracted $409.48 million translating to 4.83 percent; agric got $124.26 million which amounted to 1.46 percent during the first quarter.
Investors spread their risks across three major sectors in the first quarter of 2019 as against two sectors in the corresponding period in 2018. Last year, 60 percent of the capital importation went into shares while 18.73 percent went into banking the first quarter. Financing which was third on the scale of priority of investors only attracted 7.7 percent while servicing got 5.21 percent of entire capital importation in the first quarter of 2018. In Q1 2019, shares, financing and banking were the epicentre of capital importation.
Destinations of capital importation: what did we learn?
In the first quarter of 2019, investors bet on 21 states of the federation and Abuja, the Federal Capital Territory (FCT), whereas in the first quarter of 2018, the states of interest to investors were just fourteen and Abuja. To governors and their cabinet members, the states of preference to investors as shown by their ranking on capital importation should be a signal of the extent of the ease of doing business in each state, the amount of investment opportunities available, security provisions and how much collaboration investors could get from local businesses in the forms of partnership, equity contributions, among others.
Lagos and Abuja led other states as the two economic blocs got 98 percent of the entire capital importation in Nigeria in the first quarter of 2019. Lagos got $4.77 billion representing 56.29 percent while Abuja attracted $3.58 billion representing 42.26 percent. Rivers attracted $41.4 million; Adamawa, Benue and Cross River, got $25 million each; Imo, $3 million; Ogun, $2.21 million; Kaduna, $2.16 million and Kano, $1million.
Others are Borno, $576,796; Oyo, $249,968; Kwara, $200,000; Bauchi, $99,980; Niger, $67,156; Akwa Ibom, $55,035; Anambra, $50,000; Delta, $40,000 and Ondo, $26,000.
When appraised by the monthly trend, capital importation in January 2019 stood at $1.83 billion or 22 percent of the value imported. It was $2.02 billion in February or 24 percent, and $4.64 billion in March or 55 percent. The gradual increase shows that confidence in the Nigerian economy got boosted as the general election approached when investors might have re-evaluated their risk for Nigeria before and after the elections.
The same trend was not exhibited in the first quarter of 2018. January 2018 recorded the highest capital importation of $2.61 billion or 41 percent; it was 26 percent or $1.63 billion in February while in March 2018, capital importation stood at $2.06 billion or 33 percent.
Abuja topped the table in the first quarter of 2018, as it attracted $3.54 billion representing 56 percent. Lagos, the nation’s commercial centre, pooled $2.66 billion which translated to 42 percent. Akwa Ibom, $43.62 million; Ogun, $24.81 million and Oyo, $8.63 million completed the top five capital importation destinations in Q1 2018.
Anambra, Adamawa, Bauchi, Benue, Borno, Kano, Delta, Rivers, Cross River and Enugu were the other states of interest to investors in Q1 2018 when measured by capital importation.
Capital importation: which bank is the market leader?
Most of the capital importation in the first quarter of this year came in through Stanbic IBTC Bank, Standard Chartered and Rand Merchant Bank. With $3.61 billion, Stanbic IBTC Bank controlled 42 percent of the capital importation market in the first quarter. It was trailed by Rand Merchant Bank through which investors brought in $1.37 billion representing 16 percent of the whole transactions. Standard Chartered Bank controlled 13 percent of the market with $1.07 billion. Citi Bank controlled 9 percent with $770.65 million while Access Bank claimed 8 percent of the market share with $649.51million.
First Bank attracted $299.2 million representing just 4 percent of the market. Union Bank controlled 3 percent while United Bank for Africa, Zenith Bank, Ecobank Bank and Guaranty Trust Bank attracted just between 1 and 2 percent of the capital importation market in the first quarter of 2019.
Incentives needed to attract significant interest into the agric sector
With agricultural sector not yet a priority sector to investors as measured by capital importation, there is need for the federal and state governments to come up with initiatives that will make the sector attractive to foreign investors.
In the first quarter of 2018, the agric sector got just 2.08 percent of the total capital imported into the country. Again, in the first quarter of 2019, only 1.46 percent of the total capital importation went into the agric sector. This is a sector the offers endless opportunities to local and foreign investors particularly as the country has the biggest market with young population in Africa. It also has the potential to help reduce the level of unemployment as well as poverty in the country.
TELIAT SULE
