TOTAL capital imported to Nigeria in the third quarter of 2017 was $4,145.1 million, more than double the inflow in the second quarter (Q2), representing an increased value of 147.5 per cent on a year-on-year basis.
The agency attributed this development to continued recovering of the economy from recession, which it exited in second quarter of the year.
According to NBS, “The boom in capital importation in Q3 2017 was mainly driven by significant growth in both Portfolio Investment and Other Investment.
“Capital Importation can be divided into three main investment types: Foreign Direct Investment (FDI), Portfolio Investment and Other Investments, each comprising various sub-categories.
“Portfolio Investment, which was recorded at $2,767.4 million in the third quarter of 2017, remained the largest component of capital import and contributed to 67 per cent of the total amount.
“This component expanded faster than the other two main categories with a year on year growth rate of 200.7 per cent.”
Foreign Direct Investment (FDI) recorded $117.6 million which fell by 65.5 per cent year-on-year while Other Investment increased by 124.55 per cent compared to 2016 Q3.
Although Other Investment in 2017 Q3 more than doubled the value in the third quarter of 2016 from $516.2 million to $1,260.1 million, it remained about 30 per cent of the total capital importation.
The total amount of FDI during the quarter was recorded at $117.6 million, which declined by 57.14 per cent compared to the previous quarter and 65.48 per cent compared to 2016 Q3 due to the fall in both Equity and Other Capital investment.
Capital import in the form of Equity recorded $117.5 million and remained the majority of total FDI in the third quarter of 2017 while Other Capital fell from 0.3 to 0.13 million dollars from the second to the third quarter.
Portfolio Investment in the third quarter more than tripled the figure of the second quarter of the same year, hitting $2,767.3 million.
This figure was 200.7 per cent higher than the same quarter in 2016 which was recorded $920.32 million.
The boom of Portfolio Investment was driven by strong growth of Equity and Bonds and a dramatic capital investment increase in the form of Money Market Instruments.
Other Investment accounted for 30 per cent of the total capital importation in the third quarter of 2017.
This category of capital import also grew substantially by 124.55 per cent year on year and by 68.58 per cent quarter on quarter, although not as fast as Portfolio Investment.
The $1,260.1 million Other Investment was mainly in the form of loans, which hit $956.7 million in the third quarter. Other Claims also increased notably to $302.9 million.
Capital is either imported in the form of Shares, or directly imported by different sectors of the economy.
Share capital investment, which is closely related to Equity investment (FDI and Portfolio) was largely responsible for huge increase in capital importation during the quarter.
The percentage of shares kept increasing since the first quarter of 2017 and by the third quarter it accounted for 66.24 per cent of the total capital importation.
In the third quarter of 2017, among the $4,145.1 million capital investment, $2,745 million was invested as shares.
The amount of Shares investment grew by 324.86 per cent year-on-year, largely exceeding the already impressive total capital importation growth rate (147.5 per cent).
Lagos remained the state attracting most foreign capital in the third quarter of 2017.
Lagos is the commercial and financial capital of Nigeria, and home to Nigeria’s Stock Exchange where shares are traded.
As such, it accounted for most of the capital imported into the country ($3,297.0 million in Q3). The percentage dropped from 97.07 per cent in the second quarter to 79.54 per cent in the third quarter although the absolute amount was increasing substantially.
This was because capital flow to Abuja (FCT) increased even faster and other states including Akwa Ibom, Edo, Ogun which also started attracting foreign capital investments.
The country from which Nigeria imported the most capital was the United Kingdom, which accounted for $1736.58 million, or 41.89 per cent of the total of capital inflow in 2017 Q3.
This value represented a 149.26 per cent increase in capital importation relative to the figure in the previous quarter, and a 58.22 per cent growth over the same period in last year.
As well as the existence of a historical relationship between the UK and Nigeria, London (the capital of the UK) is also a key financial centre, which explains the high value of foreign capital was invested 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).
The country accounting for the second largest value of capital importation was the United States.
