Nigeria’s capital importation rises 95% to $1.79bn in Q2 as portfolio investors make bold return to bourse

Data from the Nigeria Bureau of Statistics released Tuesday, August 22, 2017, indicate that total value of capital imported into Nigeria in the second quarter of 2017 was estimated at $1.792 billion, representing a 95 percent growth from $884.1 million recorded in Q1 2017. The remarkable growth was fueled by a bold return of foreign portfolio investors to the country’s capital market owing to stable central bank foreign exchange management.

The remarkable growth was fueled by a bold return of foreign portfolio investors to the country’s capital market owing to stable central bank foreign exchange management.

However, year-on-year growth moderated to 43.6 percent from the $1.042 billion recorded in q2 of 2016.

Specifically, the NBS noted that the main driver of the growth in capital importation in the review period was portfolio investments, which increased by 145.7 percent, followed by other investments growing by 95.02 percent, and then foreign direct investment (FDI) increasing by 29.8 percent over the previous quarter.

A month on month analysis of capital importation in the second quarter shows that the month of May recorded the highest of amount of capital importation ($616.5 million), followed by June with $612.6million and May with $563.3 million.

“Portfolio Investment was the largest component of imported capital in the second quarter of 2017, accounting for $770.5 million, or 43.0 percent of the total. It was closely followed by other investments, which accounted for $747.5 million, or 41.7 percent, and then FDI, which accounted for $274.4 or 15.3 percent during the quarter,” the NBS noted.

However, a year on year comparison of the three investment types indicate that portfolio Investments increased by 128.4 percent, from the $337.3 million recorded in second quarter of 2016.

Other Investments also increased by 43.6 percent, from the $520.6 million reported in the same quarter of 2016, while FDI grew by 48.9 percent, from $184.3 million.

On sectoral allocation of the imported capital, the NBS said the value of share capital imported in the period under review was $932.58 million, which represents an increase of 548.5 percent relative to the previous quarter, and an increase of 168.0 percent relative to the second quarter of 2016.

“This was by far the sector to attract the largest amount of capital in the second quarter of the year. This was a significant increase relative to recent quarters, the highest amount since the third quarter of 2015, when it declined significantly from $1.74 billion to $831.88 million in the fourth quarter of 2015,” the NBS stated.

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 sector to attract the second largest value of capital imported during the reference quarter was the oil and gas sector, accounting for 10.6 percent, or ($190.39 million) of total imported capital, representing an increase of 88.4 percent over the previous quarter, but a 5.0 percent decline when compared to the same period of last year.

The servicing and production/manufacturing sectors also attracted significant levels of capital importation in the second quarter, accounting for shares of 8.1 percent ($145.56 million) and 7.9 percent ($141.42 million) respectively.

The state to import the most capital into Nigeria in the second quarter of 2017 was Lagos, as in all previous quarters. Lagos is the commercial and financial capital of Nigeria and home to Nigeria’s Stock Exchange where shares are traded. As such, it accounts for most of the capital imported into the country.

Specifically, Lagos accounted for 97.07 percent ($1.739 billion) of capital importation, which represents a slight increase in its share relative to the previous quarter, when it was 95.32 percent.

Akwa Ibom as in the previous quarter recorded the second highest level of capital importation, accounting for 1.92 percent ($34.08 million) of the total share and an increase of 85.6 percent over the amount it recorded in the previous quarter.

Abuja recorded the third highest amount, with a share of 0.93 percent ($16.64 million) of the total, followed by Oyo state with a share of 0.1 percent ($1.83 million).

The country from which Nigeria imported the most capital was the United Kingdom, which accounted for $696.7 million, or 38.87 percent of the total. This value represents a 130.3 percent increase relative to the previous quarter, and 107.9 percent increase over the same period of last year.

The country to account for the second largest value of capital importation was the United States. The US accounted for $287.82 million in the second quarter of 2017 or 16.06 percent. The US has also been one of the most important investors in Nigeria, usually either the largest or second largest investor country.

The next two largest investors in the second quarter of 2017 were Belgium (accounting for 15.7%) and Singapore (8.67%).

On capital imported through financial institutions into the country in the review period second quarter of 2017, Stanbic IBTC led, accounted for 32.91 percent or ($589.84 million) of the total share, up from the 9.12 percent share it recorded in the first quarter of the year.

It was followed by Citi Bank Nigeria, which accounted for 19.12 percent share or ($342.7 million) of capital importation, also up from a share of 5.12 percent in recorded in the first quarter of the year.

The financial institution to account the third largest capital import share was Standard Chartered Bank, which recorded a share of 18.7 percent, down from the 25.4 percent share it reported in the first quarter, however in absolute terms, it was $103.7 million more than the amount it reported in the first quarter of the year.

Altogether, the three banks (Stanbic IBTC, Citi Bank Nigeria and Standard Chartered Bank) accounted for 70.7 percent or $1.27 billion of total capital importation during the quarter, while the other 22 banks accounted for the balanc