Foreign investment inflow into Nigeria fell from $9.6 billion about $4.52 billion, to $5.12 billion, between 2015 and 2016, according to data Obtained from the National Bureau of Statistics, NBS.
Specifically, the NBS stated that in the year 2016, capital importation into Nigeria fell by 46.86 per cent, from $9.64 billion in 2015 to $5.12 billion.
The NBS, in its Nigerian Capital Importation Report for the Fourth Quarter of 2016, disclosed that the amount recorded in 2016 was the lowest since 2007 and was a reflection of the numerous economic challenges that affected Nigeria in 2016.
According to the NBS, the weakening of the naira may have had an impact, adding that a weaker naira means more can be purchased with each dollar, and therefore investment projects requiring naira payments cost less in dollar terms.
It stated that portfolio investment fell the most, dropping by 69.81 per cent, explaining that this investment type, whereby investors seek quick returns rather than control of management in companies, is most likely to be affected by current market conditions.
The NBS declared that Foreign Direct Investors take a longer-term view, and therefore Nigeria’s recession and currency problems may carry less weight in investment decisions.
It added that FDI fell by 27.83 per cent between 2015 and 2016, considerably less than portfolio investment, while it stated that by contrast, ‘other investment’ increased between 2015 and 2016, by 3.48 per cent, entirely due to an increase in loans.
In its analysis of the figures, the NBS stated that in the final quarter of 2016, the value of share capital imported was $228.24 million, which represented a decrease of 64.68 per cent relative to the third quarter of 2016.
The NBS disclosed that the banking was the sector to import the largest value of capital in the third quarter of 2016, but following a quarterly fall of $394.22 million, or 70.96 per cent, became only the third largest, and imported $161.30 million in the final quarter of 2016.
It said, “By contrast, the Telecommunications sector recorded an increase of $309.45 million, which more than doubled the amount of capital imported in the previous quarter to reach $554.25 million. This was the largest value of capital imported by any sector in this quarter.
“The Oil and Gas sector also recorded a large increase, of $155.67 million or 90.7 per cent, to reach $327.30 million and became the second largest.
“Comparing the value of capital imported by these sectors to the value in the final quarter of 2015 reveals even larger increases. Telecommunications and Oil and Gas sectors imported capital worth only $13.22 million and $93.37 million respectively in this period.”
The NBS disclosed that Lagos state recorded the most capital inflow in the final quarter of 2016, as in all previous quarters, and accounted for more than 90 per cent of capital importation in 2016.
This, according to the NBS, was especially as Lagos is the commercial and financial capital of Nigeria, and home to Nigerian Stock Exchange where shares are traded.
Furthermore, the NBS stated that Abuja imported to import the second largest quantity of capital, and this was the case for 2016 as a whole.
Continuing, the NBS said, “The country from which Nigeria imported by far the most capital was the United Kingdom, which accounted for $482.89 million, or 31.18 per cent of the total.
“This was despite a fall of 56 per cent relative to the previous quarter. As well as the existence of an historical relationship between the UK and Nigeria. London is also a key financial centre, which could help to explain the high value of capital importation accounted for by the UK.
“Since 2010, the UK has accounted for the highest value of capital importation in all but two quarters, both in the second half of 2015.”
