Private Equity investors snub Nigeria as investment falls 63% in one year
Long term foreign investors, investing into other companies by way of Private Equity, made a U-turn in the third quarter of w2019, in a way and manner never seen going by available data.
Equity investments which account for over 98 per cent of the “sticky money” or foreign direct inflows into the country, tanked 62.99 per cent in one year, to $196.38 million in Q3 from $530.63 million the year before, based on latest data released by the National Bureau of Statistics (NBS).
On a quarterly comparison, equity investments slowed 11.89 per cent from $222.89 million in Q2, as investor’s lung for economic reforms that will boost their confidence.
“The investment landscape in the country is looking all gloomy as investors are shelving plans of investing in an economy that is not only growing below its population, but its government lacks the technical know-how or the political will to take up far-reaching policies,” a fund manager tells Businessday.
Total investment into the country by way of portfolio investments, direct investments and other investment, stood at $5.37 billion, an 87 per cent increase and a decrease of 7.78 per cent from the value of $2.86 billion and $5.82 billion reported in Q3 2018 and Q3 2019 respectively.
As usual, “hot money” or foreign portfolio investors, though declined 30.1 per cent, accounted for the larger share of the total investments into the country, occupying about 55.9 per cent of the investments.
Portfolio investment fell to $2.99 billion in the said period from $4.29 billion in the second quarter of the year. The decline was driven by a fall in the equities market space by 9 per cent on an annual basis. Investments into the bond and money market increased year on year by 144.42 per cent and 97 per cent respectively.
This is followed by other Investment, accounting for 40.39 per cent of the total capital importation, attracting about $2.17 billion in the quarter. This is an increase sporadic increase by 260.41 per cent and 66.20 per cent from the $601 million and $1.30 billion reported in Q3 2018 and Q2 2019, respectively.
Foreign Direct Investment FDI, which accounted for 3.73 per cent of the total investment, stood at $200.08 million of total capital imported in Q3 2019.
By sector, capital importation by banking dominated Q3 2019 reaching $1,756.83 million of the total capital importation in Q3 2019.
The United Kingdom emerged as the top source of capital investment in Nigeria in Q3 2019 with $2,011.14 million.
This accounted for 37.47 per cent of the total capital inflow in Q3 2019.
By Destination of Investment, Lagos state emerged as the top destination of capital investment in Nigeria in Q3 2019 with $4,976.40 million. This accounted for 92.71 per cent of the total capital inflow in Q3 2019.
By Bank, Stanbic IBTC Bank Plc emerged at the top of capital investment in Nigeria in Q3 2019 with $1,630.91 million. This accounted for 30.38 per cent of the total capital inflow in Q3 2019