Two successive years of a decline in Nigeria’s foreign investment inflow came to a staggering halt in the first quarter of 2017, the National Bureau of Statistics (NBS) said Wednesday.
The total value of capital imported into Nigeria in the first quarter of 2017 was estimated to be $908.27 million, representing an increase of 27.8 percent compared to the first three months of 2016 and marking the first time foreign inflows have risen since investors fled the country after oil prices fell and acute dollar shortages reined.
Since Q1 2015, foreign investment inflow had consistently declined. In the latter quarter, inflows declined 31 percent to $2.7 billion from $3.9 billion in the same period of 2014. In 2016, it more than halved to $710 million.
The total value was however 41.36% smaller than the capital imported in the previous quarter, and was the second lowest value recorded since 2007, according to the NBS.
“The main driver of the quarterly decline was a fall in Other Investment, although Foreign Direct Investment (FDI) also contributed. Portfolio investment was the only category to record an increase relative to the previous quarter,” the NBS said.
“There was a high-profile sale of (bonds denoted in a non- local currency) during the quarter, but this has not yet appeared in the data; there is a lag between subscription and actual payment, and therefore it is possible that this will show up next quarter,” the state statistics agency added.
Capital importation was particularly low in January, at $187.90 million; this was only the fourth month since 2007 in which capital importation was less than $200 million.
Other investment was the largest component of inflows, as it accounted for $383 million or 42 percent of total inflows.
The second largest component of capital importation in the first quarter of 2017 was Portfolio Investment, which accounted for $313.61 million, or 34.53% of the total.
This represented growth of 10.34% relative to the previous quarter, and 15.71% relative to the same quarter of 2016; this was the only category to record both year on year and quarterly increases, and it was the first year on year increase since the third quarter of 2014.
This was possibly related to recent successes in stabilizing the Naira: during the quarter the Naira halted its continual decline, although it remains to be seen if this lasts. Portfolio investment is likely to be more affected than this than other investment types, due to its short-term nature.
FDI was the smallest component, as has been the case since 2013. It accounted for $211 million or 23 percent.
This represented a quarterly decline of 38.66%, but a year on year increase of 21.17%. Of the two subcategories, both recorded positive investment, but there was only $1.28 million of investment in the form of Other Capital, and so FDI Equity accounted for $210.10 million, or 99.40% of the total.
The Services sector accounted for the most foreign investment at $146 million, closely followed by the Telecommunications with $145 million.
It is the first time on record that the Services Sector attracts the largest capital.
The banking and oil and gas sectors came in as the third and fourth sectors respectively to attract the most inflows, with $126 million or 13.8 percent and $101 million or 11 percent respectively.
The country from which Nigeria imported the most capital was the United Kingdom, which accounted for $302.47 million, or 33.30% of the total. This value represents a decline of 37.36% relative to the previous quarter, a slightly smaller fall than for the total value, which resulted in the share of the UK increasing from 31.18% in the previous quarter.
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 to account for the second largest value of capital importation was the United States. The US accounted for $215.66 million in the first quarter of 2017, or 23.74%.
The next two largest investors in the first quarter of 2017 were Singapore (accounting for 8.09%) and Mauritius (7.86%). The Netherlands is usually one of the largest investors, but became less important this quarter after a quarterly decline of 96.54%.
LOLADE AKINMURELE
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