NBS’s Nigeria Capital Importation Q3 2020 report highlights
According to the Nigeria Capital Importation data released by the Central Bank of Nigeria (CBN) and by the National Bureau of Statistics(NBS) in the third quarter (Q3) of 2020, the total value of capital importation into Nigeria stood at $1.46billion in Q3 2020. This represents an increase of 12.86 per cent compared to the previous quarter(Q2 2020)but plunged by 74.03 per cent from$5.6 billion in the corresponding quarter of 2019.
This radical decline in foreign capital inflows could be attributed to Nigeria’s poor economic performance—the recession in Q3 2020— fuelled by the oil price shocks and the impact of the COVID-19 pandemic among other economic uncertainty since the beginning of the year (2020).
Aside from these, one of the many factors that negatively affected foreign investors’ sentiments in Nigeria is the return on investment (ROI). The real return on investments(including Treasury Bills)in Nigeria has been in the negative territory due to a high inflation rate (14.23 per cent in October 2020).
Further from the data, the largest amount of capital importation by type was received through Other Investment, whichaccounted for 43.75 per cent ( or $639.44million) of total capital importation; followed by Foreign Direct Investment(FDI), which accounted for 28.38 per cent (or $414.79m) of total capital inflow and Portfolio Investment whichaccounted for 27.87 per cent (or $407.25million) of total capital inflow in Q3 2020.
On a month-on-month (MoM) and year-on-year (YoY) comparison, these values represent a decrease of 15.98 per cent MoM and 73.28 per cent YoY in Other Investment, an increase of 179.15 per cent MoM and 100.79 per cent YoY in FDI, and an increase of 5.69 per cent MoM and 86.55 per cent decrease YoY in Portfolio Investment. Within Other Investments, loans alone account for 97.66 per cent of Other investments to the tune of $624.45 million in Q3 2020.
By sector, capital importation through Production ranked top in Q3 2020 as it accounts for 27.38 per cent of the total sectoral capital inflow to the tune of $400.09million of the total capital importation in Q3 2020. It is closely followed by capital importation through banking at $384.40 million as it accounts for 26.30 per cent of the total capital inflow, while capital importation through shares ($283.22 million) which accounts for 19.38 per cent of total capital inflow.
Across continents, capital importation by origin shows that the top 4 sources of capital importation (with inflow exceeding a hundred million dollars each) are the United Kingdom, Netherlands, Ireland, and Singapore. Together these countries account for 69.43 per cent or ($1.01 billion) of total capital importation in Q3 2020.
On the top of the country leader board is the United Kingdom which emerged as the top source of capital investment in Nigeria in Q3 2020 with$594.65million. This accounted for 40.69 per cent of the total capital inflow in Q3 2020.
By destination of Investment, out of the 36 states and the Federal Capital Territory (FCT), only 6 states and the FCT drove foreign inflow in Q3 2020 compared to the previous quarter where only 5 states were destinations for foreign investments. Across the six geopolitical regions, only 4 regions were represented: two in the Southwest, two in the Northcentral, one in the Southeast, and two in the Northwest. The other two regions, Northeast and Southsouth have no capital inflow within the period.
The cultural and economic nerve-centre of Nigeria, Lagos State, emerged as the top destination of capital investment in Nigeria in Q3 2020 with $1.21 billion accounting for 82.71 per cent of the total capital inflow into Nigeria in Q3 2020. The FCT trailed Lagos with a capital inflow worth of $195.57 million (13.38 percent of total capital inflow) and Abia with a $56.07 million inflow within the same period. The remaining 4 states recorded a capital inflow that is less than $600 thousand.
By bank, in the same quarter, only one of the tier-one banks in Nigeria, First Bank of Nigeria (FBN), ranked in the top 5 banks with capital investment in Nigeria. On top of the list is Standard Chartered Bank Nigeria Limited, leading other banks in capital investment in Nigeria inQ3 2020 with $438.98million. This accounted for 30.04 per cent of the total capital inflow in Q3 2020.