Nigeria’s Capital Importation Suffers 12.53% Drop In Q2 2018

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Nigeria’s Capital Importation Suffers 12.53% Drop In Q2 2018 – Nigeria’s total capital importation in the second quarter of 2018 went down by 12.53 percent month-on-month from what was recorded in the first quarter of the year.

According to the Bureau of Statistics (NBS), in its 2018 Second Quarter Report on Nigeria Capital Importation, the decline recorded in the second quarter was as a result of a decline in Portfolio and Other Investments, which declined by 9.76 per cent and 24.07 percent respectively.

The total value of capital importation into Nigeria stood at $ 5.513 billion in the second quarter of 2018 from $6.3 billion recorded in the first quarter of the year.

Year-on-year, this was an increase of 207.62 percent compared to the second quarter of 2017.

The largest amount of capital importation by type was received through Portfolio investment, which accounted for 74.7 per cent ($4,119.5m) of total capital importation, followed by Other Investment, which accounted for 20.5 per cent ($1,132.8m) of total capital, and then Foreign Direct Investment (FDI), which accounted for 4.7 per cent ($261.4m) of total capital imported in the second quarter.

Portfolio Investment has been expanding faster than the FDI and other investments.

Although the absolute value of Portfolio Investment declined in Q2 on a quarterly basis, falling from $4.565 billion in Q1, 2018 to $4.119 billion in Q2, 2018, it remained the largest component of the total Capital Importation in the quarter under review, followed by Other Investments, and then FDI.

In the second quarter of 2018, total Foreign Direct Investment stood at $261.35 million, growing by 5.97 per cent from the first quarter of the same year, but falling by 4.75 per cent when compared to the corresponding quarter of last year.

FDI represented only 5 per cent of the total capital import. Equity Investment dominated FDI in the second quarter, accounting for 97.85 per cent of total FDI received in the second quarter. Capital Importation in the form of Other Capital saw significant expansion, from only $5,000 as recorded in Q1 to $5.63 million in Q2, an increase of over 1000percent compared to the same period of last year.

Portfolio Investment remained the most significant component of total capital inflow into Nigeria in the second quarter of 2018, although it contracted by 9.76 per cent over the previous quarter.

The total value of Portfolio Investment in Q2 recorded was $4.119 billion, which was a 434.64 per cent growth compared to Q2, 2017 ($770.51 million). The 9.76 per cent Q-on-Q decrease was due to a fall in the largest sub-component– Money Market Instruments.

Capital Importation in the form of Money Market Instrument stood at $2,670.93 million in the second quarter, which was a 24.29 per cent decrease over the previous quarter. Investments in both Equity and Bonds (under Portfolio Investments) reported steady quarter-on-quarter growth, with 49.43 per cent and 19.13 per cent respectively.

It is worth noting that investments in Bonds under this Capital Importation type has been steadily increasing since Q2, 2017, and in Q2 2018, it accounted for 9.71 per cent of total Portfolio Investment.

Other Investments amounted to $1.132.75 billion in the second quarter of 2018. This category continued its decline since the beginning of 2017, from $1.526 billion in Q4, 2017 down to $1.491 billion Q1, 2018, and further falling by 24.07 per cent in Q2, 2018.

This category accounted for 20.5 per cent of total Capital Importation in the second quarter of 2018. As in previous periods, Other Investment was dominated by Loans ($1,121.66 million), which accounted for over 99 per cent of Other Investments in the reviewing quarter. Other Claims fell sharply, from $223.49 million in Q1 to $11.08 million in Q2. Trade Credits and Currency Deposits posted no inflow in the second quarter of 2018.

The United Kingdom maintained its top position as source of capital investment in Nigeria in the second quarter of 2018, with $1.772 billion. This accounted for 32.15 per cent of the total capital inflow in Q2, 2018, but was a 21.29 per cent decline from the previous quarter.

Since 2010, the UK has accounted for the highest amount of capital importation in all but two quarters (both in the second half of 2015). The US recorded $1.224 billion total Capital Importation into Nigeria in the second quarter of 2018, which was a 2.85 per cent decline from the amount recorded in the first quarter of 2018.

The US has also been one of the most important origins in Nigeria, usually either the largest or second largest investor country. Capital imports from the United Arab Emirates stood at $535.98 million while $297.32 million was imported from Switzerland. Capital inflow from Ghana in the second quarter of 2018 was $156.30, which was a 58.88 per cent decline from the previous quarter.

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