Capital importation into Nigeria dived in the first quarter of 2023, recording a 28% decline to stand at US$1,132.65 million, compared to the US$1,573.14 million recorded in Q1 2022, according to the latest report published by the Nigerian Bureau of Statistics (NBS).
But according to the report, capital importation rose from US$1,060.73 million in Q4 2022, indicating a 6.78% increase when compared to the preceding quarter.
“The largest capital importation during the period was received from Portfolio Investment, which accounted for 57.32% (US$649.28 million) of total capital imported in Q1 2023,” the NBS said.
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Following that, other Investments accounted for 38.31% (US$435.76 million) of the total, while Foreign Direct Investment (FDI) contributed 4.20% (US$47.60 million).
Breaking down the figures by sectors, the banking sector received the highest inflow of capital with US$304.56 million, making up 26.89% of the total capital imported in Q1 2023. The production sector followed with US$256.12 million (22.61%), and IT Services with US$216.06 million (19.08%), the report said.
Analyzing the capital importation by country of origin, the agency said the United Kingdom ranked first in Q1 2023 with US$673.64 million, accounting for 59.47% of the total. The United Arab Emirates and the United States were the next significant contributors with US$108.28 million (9.56%) and US$95.36 million (8.42%) respectively.
In terms of investment destinations, Lagos state retained its position as the top destination in Q1 2023, attracting US$704.87 million, which accounted for 62.23% of the total capital investment in Nigeria. Abuja (FCT) followed with a value of US$410.27 million (36.22%).
Out of the 36 states and the Federal Capital Territory, only Lagos, Abuja, Adamawa, Akwa Ibom, Anambra, Ekiti, Ogun, Ondo, and Niger recorded capital inflows. This means that 28 states did not attract any capital inflows. Adawama attracted $4.50m, Anambra $4m, Ogun $2.09m, Niger $1.50m, Ondo $0.20m, and Ekiti $0.01m.
Examining the categorization of capital importation by banks, Citibank Nigeria Limited claimed the top spot in Q1 2023 with US$424.13 million (37.45%). Standard Chartered Bank Nigeria Limited followed with US$360.33 million (31.81%) and Stanbic IBTC Bank with US$151.85 million (13.41%).
The drop in capital importation has been attributed to the global trend of rising inflation, ripping through economies. The Co-Managing Partner and Chief Executive Officer, Comercio Partners Asset Management, Tosin Oshunkoya, noted recently that efforts by the central bank to manage Nigeria’s inflation [which stood at 22.41% as of May], are spooking investors.
“The ravaging trend of inflation across major developed economies has triggered hawkish policy responses such as interest rate hikes, which tend to spur capital repatriation from frontier economies such as Nigeria while discouraging foreign capital inflows into the local economy, particularly through foreign portfolio investments,’ he said.