Capital Inflow into Nigeria Falls 28% to $1.6bn
Abuja (Business Africa Digest) Amidst the pre-election year uncertainties, capital inflow into Nigeria has reduced by 28.09% to $1.573 billion in the first quarter of the fiscal year 2022 compared with the previous quarter, according to the National Bureau of Statistics (NBS).
Foreign investors are wary of Nigeria’s macroeconomic dynamics, specifically the Central Bank of Nigeria’s (CBN) multi-tiered foreign exchange rate amidst rising FX backlogs. Meanwhile, low foreign currency inflow continues to impact Naira as the local currency faces pressures arising from the demand for dollars and other primary currencies.
When the total inflow in the first quarter of 2022 is compared to the corresponding quarter of 2021, capital importation dropped by 17.46% having reached US$1,905.89 million, according to NBS. It was noted that the largest amount of capital importation by type was received through portfolio investment, which accounted for 60.87% or $957.58 million.
This was followed by Other Investment with 29.28% or US$460.59 million and Foreign Direct Investment (FDI) accounted for 9.85% or $154.97 million of total capital imported in Q1-2022, NBS said.
Nearly two-thirds of the inflows went to Lagos, the country’s commercial capital. Africa’s biggest economy and largest oil producer struggles with dollar shortages, putting pressure on the exchange rate.
Record high oil prices have not eased foreign exchange shortages, as the country contends with theft of crude in the Niger Delta and has to import gasoline because none of its major refineries is operating.
Disaggregated by Sectors, capital importation into banking had the highest inflow of US$818.84 million amounting to 52.05% of total capital imported in the first quarter of 2022. This was followed by capital imported into the production sector, valued at US$223.67 million (14.22%) and the financing sector with US$199.37 million (12.67%)
United Kingdom ranked top as the source of capital imported into Nigeria in the first quarter of 2022 with a value of US$1.021.21 million, accounting for 64.92%. This was followed by the Republic of South Africa and the United States of America valued at US$117.50 million (7.47%) and US$82.07 million (5.22%) respectively.- Marketforces.
