Capital Inflows Into Nigeria Fall by 46.86%

• Capital Inflows Into Nigeria Fall by 46.86%

The total capital importation into Nigeria declined by 46.86 per cent (year-on-year) from $9.6bn in 2015 to $5.1bn in 2016.

The total capital importation for Q4 2016 was estimated at $1.55bn, compared to $1.82bn in Q3 2016.

Loans (other investments), according to a report by Meristem Research, constituted majority (44 per cent) of capital inflows during the period ($2.24bn in 2016 as against $1.66bn in 2015), while Foreign Direct Investment and Foreign Portfolio Investment into equities amounted to 20 per cent ($1.04bn) and 17 per cent ($859.05m) of inflows accordingly.

On the other hand, currency deposits, trade credits and other claims contributed the minimum to inflows.

“We also note the reduced participation in the equities space (37 per cent in 2016 versus 63 per cent in 2015),” the report stated.

The fixed income market recorded more inflows in Q3 2016 compared to the equities market due to the hike in Monetary Policy Rate (14 per cent) in July 2016.

Although the total inflows into the fixed income space in 2016 declined by 29.24 per cent year-on-year, the analysts observed the increased participation in the space compared to other segments during the period (19 per cent in 2016 against 13 per cent in 2015).

Notwithstanding, there were no inflows into bonds and money market in December, the report noted.

According to the report, on sectoral levels, telecommunications, banking, oil/gas production/manufacturing and services sectors contributed 18 per cent, 14 per cent, six per cent and six per cent, respectively. These sectors were said to have contributed the most to the capital inflows during the period under review.

The United Kingdom maintained its position as the leading source of capital inflows, accounting for 40 per cent of the total inflows.

It was trailed by the United a States of America (18 per cent) and The Netherlands (10 per cent).

Noteworthy also were Singapore and Switzerland whose inflows increased by 215 per cent and 322.3 per cent, respectively.

New inflows also came in from Puerto Rico, Gibraltar, Mauritania, Czech Republic, Ukraine, Marshall Islands, Bulgaria, Seychelles, Tanzania and Austria during the period under review, according to the report.

Based on location of investments, Lagos had the highest inflows with capital importation of 97 per cent, distantly followed by Abuja, Cross river, and Ogun states, which had one per cent each, it added.