12.53 Percent Decline In Capital Importation Hits Nigeria, NBS Q2 Report

Yemi Kale, Statistician General of Nigeria

By CLEMENT NWOJI, Abuja

Statistics Report released by the National Bureau of Statistics (NBS) showed that Capital importation into Nigeria declined by 12.53 percent in the second quarter of the year, 2018, even as the total valued amounted to $ 5,513.55 million.

The report showed that although a decrease of 12.53% was recorded compared to Q1 2018, but it recorded a 207.62% increase compared to the second quarter of 2017.

The Bureau attributed the decline recorded in the second quarter to a decline in Portfolio and Other Investments, which declined by 9.76% and 24.07% respectively.

NBS explained that the data on Capital Importation used in the report was obtained from the Central Bank of Nigeria (CBN) and the data was compiled using information on
Banking transactions, gathered through Electronic Financial Analysis and Surveillance System (e-FASS) software, which enables the automatic reporting of all banking transactions to CBN.

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

The Capital Importation is divided into three main investment types: Foreign Direct Investment (FDI), Portfolio Investment and Other Investments, each comprising various sub-categories.

NBS noted that since 2017 Q2, Portfolio Investment has been expanding faster than the other two categories.

It said although the absolute value of Portfolio Investment declined in Q2 on a quarterly basis, falling from $4,565.09 million in Q1, 2018 to $4,119.46 million 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.

It said in the second quarter of 2018, total Foreign Direct Investment stood at $261.35m, growing by 5.97% from the first quarter of the same year, but falling by 4.75% when compared to the corresponding quarter of last year.

According to the report, “FDI represented only 5% of the total capital import. Equity Investment dominated FDI in the second quarter, accounting for 97.85% 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 1000 percent 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% over the previous quarter.

“The total value of Portfolio Investment in Q2 recorded was $4,119.46 million, which was a 434.64% growth compared to Q2, 2017 ($770.51 million).

“The 9.76% 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% decrease over the previous quarter.”

The Bureau noted that investments in both Equity and Bonds (under Portfolio Investments) reported steady quarter-on-quarter growth, with 49.43% and 19.13%
respectively.

However, the Bureau stated that It is worthy of note that investments in Bonds under this Capital Importation type has been steadily increasing since Q2, 2017, and in Q2, 2018, accounting for 9.71% of total Portfolio Investment.

Other Investments amounted to $1,132.75 million in the second quarter of 2018 and this category continued its decline since the beginning of 2017, from $1,526.9m in Q4, 2017 down to $1,491.9 in Q1, 2018, and further falling by 24.07% in Q2, 2018, the Bureau noted.

“This category accounted for 20.5% 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% 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,” it said.