The National Bureau of Statistics on Wednesday reported a decline of 54.34 percent in the value of capital imported into Nigeria in the first quarter of 2016.
The economy attracted a total investment of $710.97 million in the first quarter of the year, making it the lowest level since 2007. This represents a decline of 54.34 percent when compared with the final quarter of 2015.
“The scale of the decline in capital importation in the first quarter of 2016 is symptomatic of the challenging period that the Nigerian economy is going through following the fall in crude oil prices,” the report said.
“Although there a number of reasons why the amount of capital imported in recent years may have been higher than usual (such as the inclusion of Nigerian in the JP Morgan Bond Index, and globally low interest rates triggering a search for higher yields over this period) the fact that the amount of capital imported has dropped to a record low suggests that there are further reasons why Nigeria has attracted less foreign investment in recent quarters.”
Another reason is the current forex scarcity as “investors may be concerned about whether or not they will be able to repatriate the earnings from their investments, given the current controls on the exchange rate”.
“The first quarter of 2016 also saw a large change in the composition of capital imported. Following a quarterly decline in portfolio investment of 71.55% (also the largest quarterly fall on record) portfolio investment accounted for 38.12% of total capital imported, compared to 61.18% in the previous quarter.”
However, portfolio investment takes the largest component of the capital imported into the country as other investments also recorded a sharp quarterly decline of 44.84 percent.