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FDI declines 52.4% driven by equity capital drop

Foreign capital inflow in Q1 dips most in 5 years

Foreign direct investment (FDI) inflow, which comprised equity capital, re-invested earnings and other capital inflow, declined by 52.4 percent to N258.33 billion in the first half of 2014 from the level in the corresponding period of 2013, according to the Central Bank of Nigeria (CBN).

This was largely due to the 74.4 percent decline in equity capital to N85.43 billion in the review period. Similarly, reinvested earnings and other capital declined by 16.6 and 42.4 percent from their respective levels in the corresponding period of 2013.

According to the CBN’s 2014 half year report, direct investment abroad also declined by 84.3 percent below the level recorded in the first half of 2013.

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The report shows that portfolio investment inflow decreased by 45.3 percent to N890.47 billion below the level recorded in the corresponding half of 2013. The divestment was attributed to improved conditions in other financial centres. Despite the development, the inflow of portfolio investment accounted for 48.1 percent.

The total value of new capital imported into the economy amounted to US$9.73 billion in the review period. A sectoral analysis indicated that the inflow was mainly directed at the capital market (shares), which accounted for 77.0 percent, while financing, servicing and trading were 14.4 percent, 3.3 percent and 2.0 percent, respectively. ‘Others’ sector accounted for the balance.

On the other hand, capital outflow amounted to US$4.24 billion, of which, capital transfers stood at US$2.43 billion or 57.7 percent of the total.