Nigeria’s capital import tumbles down 74.03% y/y to $1.46bn in Q3’20  

By Charles Abuede

• But up 12.86% from $1.29bn in Q2’20

Nigeria, Africa’s largest economy, saw its capital importation tumble by a high 74.03 per cent year-on-year in the third quarter of 2020, showing how the country has been badly hit by a global economy that has fought most of the year in distress as the coronavirus pandemic took hold.

The total value of capital importation into the country was just $1.46 billion in the quarter of 2020 compared to $5.63 billion posted in the same quarter a year ago.

But the performance was a feeble 12.86 per cent rise over the $1.29 billion that was recorded in the second quarter of 2020, according to data released by the country’s official statistics office, the National Bureau of Statistics (NBS).

Capital importation by investment types

According to the Abuja based statistics bureau, the largest amount of capital importation by type of investment was received through ‘other investment’, which accounted for 43.75 per cent ($639.44 million) of total capital imported. In this category, loans accounted for $624.45 million while trade credits and currency deposits received no investments; and other claims got $14.99 million.

Also, Foreign Direct Investment (FDI), which accounted for 28.38 per cent of the total capital imported, canvassed $414.79 million out of which equity accounted for the complete amount and ‘other capital’ got nothing during the period under review. Thus, this type of investment showed a 179.15 per cent rise from the preceding quarter and 100.79 per cent increase from last year.

The portfolio investment category followed on the log with a 5.69 per cent increase from the last quarter to $407.25 million, accounting for 27.87 per cent of the total investment in Q3 2020 but declined by 86.55 per cent from last year. Under this category, the money market instrument and equities saw an inflow of $363.15 million and $44.10 million respectively, while there was no investment in bonds.

Investors rush into shares, production, banking, but see hotels, drilling, weaving, training sectors as fleas

A further breakdown of the data shows that on a sector by sector basis, capital importation by production dominated the log with $400.09 million, while the banking sector got $384.40 million and capital import that went into shares fell to $283.22 million of the total capital importation in Q3 2020.

Accordingly, financing, telecoms, agriculture, trading and oil and gas sectors joined the party with $134.27 million, $101.18 million, $54.24 million $51.71 million and $25.03 million, respectively, during the period under review. Investors held a very long pole in looking at hotels, drilling, training and weaving sectors and decided they were not going to direct any investment flows to them during the quarter.

Europe leads top, lowest countries of origin

According to the NBS data, the inflow of investment into Nigeria from different origins has European countries leading the rank for the highest and lowest countries by origin for capital import. The United Kingdom emerged as the top source of capital investment into Nigeria in Q3 2020 with $594.65 million. This was followed by the Netherlands with $179.28 million, while Ireland, Singapore and the United States exported $130 million, $113.74 million and $112.66 million to Nigeria respectively.

Also, investments flowed lowest from Oman, Romania, Philippines and Malta respectively with $0.01 while within the African continent, Mauritius ($60.53 million), South Africa ($26.42 million), Togo ($25 million), Kenya ($0.11 million) and Antigua and Barbuda all pushed in $0.20 million during the period under review.

By ‘Destination of Investment’, Lagos state emerged as the top destination of capital investment in Nigeria in Q3 2020 with $1.21 billion; followed by Abuja Federal Capital Territory, with $195.57 million; Abia State, with $56.07 million; Niger State, with $0.51 million. Other states, such as Ogun ($0.29 million); Kano ($0.25 million); and Kaduna ($0.05 million), also joined the list of total capital inflow recipients in Q3 2020.

Nigeria’s FUGAZ joins party of top receivers in banking sector

By bank, Standard Chartered Bank emerged at the top of capital investment inflow through banks in Q3 2020, with $438.98 million. This was followed by Stanbic IBTC Bank, with $279.68 million; and Citibank Nigeria Limited with $380.74 million during the period.

On the other hand, the Nigerian FUGAZ family of banks, comprising First Bank ($55.79 million), United Bank for Africa ($12 million), Guaranty Trust Bank ($9.93 million), Access Bank ($10.55 million) and Zenith Bank ($51.33 million) all received capital inflows through the sector during the period under review.

Meanwhile, Fidelity bank received $1.6 million, First City Monument Bank recorded $40.82 million, Sterling Bank and Union Bank recorded $8.87 million and $23.33 million respectively, while Ecobank ($49.43 million), Wema Bank ($7.03 million), Rand Merchant ($62.61 million) and FSDH Merchant Bank ($28.78 million) recorded capital investments through the sector respectively.