…FDI increases by 5 per cent
…Service sector leads as Abuja surpasses Lagos again
The total value of capital importation into Nigeria from foreign countries stood at $5.513million in the second quarter (Q2) of 2018, indicating a decrease of 12.53% compared to Q1 2018, but a 207.62% increase compared to the second quarter of 2017.
The decline recorded in the second quarter was as a result of a decline in portfolio and other investments, which declined by 9.76% and 24.07% respectively.
According to the National Bureau of Statistics (NBS) in its Q2 report released on Tuesday, the largest amount of capital importation was received through portfolio investment, which accounted for 74.7% ($4,119.5m) of total capital importation.
This, the NBS said, followed by other investments, 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.
Since 2017 Q2, portfolio investment has been expanding faster than the other two categories. 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.
In the same period, total Foreign Direct Investment (FDI) 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.
The FDI represented only 5% of the total capital import, but 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 NBS stated.
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.
Investments in both Equity and Bonds (under Portfolio Investments) reported steady quarter-on-quarter growth, with 49.43% and 19.13% respectively.
The report also indicated 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% of total portfolio investment.
Other Investments amounted to $1,132.75 million in the second quarter of 2018. 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.
Also, 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.
Capital importation as shares, which is closely related to Equity investment (FDI and Portfolio Investment) dominated the second quarter of 2018 reaching $4,091.55 million, or 74.21% of the total capital Importation in the quarter.
The Bureau reported that the contribution of share investment increased marginally by 0.03% in the second quarter of 2018.
A total of $1,422.15 million or 25.79% of the total foreign capital was directly invested in different economic sectors in Q2, 2018.
This was a decline of 43.36% from the $2,510.90 million recorded in the previous quarter.
In the second quarter of 2018, the Servicing sector became the leading recipient of foreign capital Inflow into Nigeria, attracting $479.85 million. The banking sector, which followed, recorded $294.96 million in the second quarter of the year, a considerable reduction from the $1,180.01 million realised in Q1, 2018.
Production, Financing and Agriculture sectors received $479.9 million, $150.32 million and $104.97 million in foreign capital investment respectively in the second quarter.
These five economic sectors together accounted for over 87% of the total capital investment (excluding Shares). The Trading sector attracted $60.35 million in Q2, 2018 which was a significant growth from the $27.33 million recorded in previous quarter.
The IT Service sector also had substantial improvement in foreign capital inflow in the quarter under review, recording a value of $48.04 million in Q2, 2018, up from the $1.10 million recorded in the first quarter.
Capital importation by state
Meanwhile, the Federal Capital Territory, Abuja, at $2,547.73 million, maintained its lead among recipients of capital import in the second quarter of 2018 after surpassing Lagos in the fourth quarter of 2017.
This represented 46.21% of the total capital importation into Nigeria in the quarter under review, and was followed by Lagos which received the second largest amount of capital inflow, $1,267.65 million or 30.08% of the total.
When compared to the preceding quarter, however, the capital inflow into Abuja and Lagos, declined by 28.13% and 37.80% respectively.
Abia State received $1,267.65 million, accounting for 22.99% of the total capital importation in the quarter. Abuja, Lagos, and Abia together represented more than 99% of the total capital import in the second quarter.
Foreign capital investment in Akwa Ibom and Ogun states recorded $16.10 million and $12.74 million respectively, a decline of 63.09% and 48.05%, over the previous quarter.
Enugu, which only had marginal foreign inflow previously, recorded $1.31 million in the second quarter and became the eighth top destination in Nigeria to attract foreign capital investment.
Capital Importation by Country of Origin has shown that the United Kingdom maintained its top position as source of capital investment in Nigeria in the second quarter of 2018, with $1,772.53 million.
“This accounted for 32.15% of the total capital inflow in Q2, 2018, but was a 21.29% 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 $1,224.09 million total Capital Importation into Nigeria in the second quarter of 2018, which was a 2.85% 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 was $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% decline from the previous quarter,” the report added.