FDI, Portfolio Investment Dip To $1.54bn
The total value of capital importation into Nigeria in the second quarter of this year fell by 2.40 per cent quarter-on-quarter (QoQ) to $1.54bn, from $1.57 billion reported in Q1 2022, data from the National Bureau of Statistics (NBS) has shown.
The data, Nigerian Capital Importation (Q2) report, released by NBS shows that the contributions from Foreign Direct Investment (FDI) and Portfolio Investment dipped in the review quarter.
The World Bank had earlier reported that FDI would be persistently low in 2022, as exchange rate management issues deter investors, and with rising global interest rates, Nigeria would likely experience net portfolio outflows in the year.
The Naira had its worst free fall in July this year when it exchanged at N710 to the dollar at the parallel market, the highest rate in decades. This is even as the external reserves has remained low to $39.024 billion as at August 31, compared to $40.52 billion at December 31, 2021.
The recently released NBS data shows that portfolio investment plunged by 20.91 per cent QoQ to $757.32 million in Q2 2022, relative to $957.58 million contribution to the total capital importation in Q1 2022; though contributed the largest amount received during the quarter under review which accounted for 49.33 per cent of the total capital importation.
While portfolio investment is ownership of a stock, bond, or other financial asset with the expectation that it will earn a return or grow in value over time, or both, FDI represents a purchase of an interest in a company by a company or an investor located outside its borders.
Analysis of the report also shows that FDI dipped by 5.04 per cent QoQ to $147.16 million in Q2 2022 from $154.97 million reported in Q1 2022.
When measured on a year-on-year basis, the total value of capital importation into the country in Q2 2022 rose by 75.34 per cent from $875.62 million in Q1 2021.
A further look at the NBS report on sectoral basis shows the banking sector had the highest inflow of $646.36 million, amounting to 42.10 per cent of the total capital importation into the country in the review quarter.
When categorised, Citibank Nigeria Limited ranked highest with $450.94 million or 29.37 per cent of the total capital importation; followed by Standard Chartered Bank Nigeria Limited, $323.24 million or 21.05 per cent; and Stanbic IBTC Bank Plc, $163.92 or 10.68 per cent.
Following the banking sector contribution was the production sector, which valued at $233.99 million or 15.24 per cent of total capital importation in Q2 2022 while the financing sector contributed $197.31 million or 12.85 per cent in the review quarter.
The United Kingdom ranked top as the source of capital imported into Nigeria in the review quarter with a value of $781.05 million, accounting for 50.87 per cent of total capital importation. Singapore followed and the Republic of South Africa valued at $138.58 million or 9.03 per cent and $122.26 million or 7.96 per cent respectively.
Lagos state remained the top destination of capital importation with $1.054 billion, accounting for 68.66 per cent of total capital investment into the country. This was followed by investment into Abuja (FCT), valued at $453.95 million, representing 29.57 per cent of total capital importation.
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