Nigeria attracted $1.73 billion in capital inflows in Q3 2021, up 98% from previous quarter

Nigeria’s capital imports increased by 98 percent to $1.73 billion in the third quarter of 2021, compared to $875.6 million in the previous quarter (Q2 2021). The National Bureau of Statistics recently released a report on capital importation (NBS).

The rise was attributed to a 120.8 percent increase in the country’s portfolio investment. During the review period, foreign portfolio investments increased from $551.37 in Q2 2021 to $1.2 billion.

According to the statistical bureau’s report, FPI (foreign portfolio investments) accounted for 70% of total inflows during the period, FDI (foreign direct investments) accounted for only 6.2 percent ($107.8 million), and other investments accounted for 23.5 percent of total foreign investment ($406.4 million).

Despite the increase over the review period, Nigerian capital imports remain significantly lower than pre-pandemic levels, averaging $1.5 billion in 2021, compared to $5.99 billion in 2019 and $4.2 billion in 2018.

Capital imports increased by 97.7% and 18.5 percent, respectively, from $875.6 million and $1.46 million in Q2 2021 and Q3 2020.

Direct investments increased by 38.3% quarter on quarter to $107.81 million in Q3 2021 from $77.97 million in Q2 2021 but fell by 74% from $414.8 million in the same period of 2020.

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Similarly, other investments attracted $406.4 million in the review period, which is 65 percent higher and 36.5 percent lower than $246.3 million and $639.4 million in Q2 2021 and Q3 2020, respectively.

Nigeria imported $4.51 billion in total between January and September 2021, a 47.6 percent decrease from $8.6 billion in the same period of 2020.

Capital importation into the financing sector had the highest inflow of $469.17 million in the third quarter of 2021, accounting for 27.1 percent of total capital imported. The banking sector, which received $460.39 million (26.59 percent), and the manufacturing sector, which received $323.83 million, came in second and third, respectively (18.70 percent ).

Capital Importation by Country of Origin revealed that the United Kingdom was the most important source of capital imported into Nigeria in the third quarter of 2021, accounting for $709.8 million, or 40.99 percent of total capital imported during the period under consideration. Capital imports from South Africa and the United States of America came in second and third, with $389.54 million (22.50 percent) and $257.12 million (14.85 percent) respectively.

Lagos State remains the top destination of capital investment in Nigeria in Q3 2021, accounting for $1.48 billion, or 85.57 percent of total capital investment in the country during the period under review. This was followed by a $249.19 million investment in Abuja (FCT) (14.39 percent ).

With $537.92 million (31.07 percent) of total capital investment in Nigeria in Q3 2021, Stanbic IBTC Bank Plc ranked first by bank. Standard Chartered Bank (18.83 percent) and Citibank Nigeria Limited came in second and third, respectively (14.34 percent ).

Nigeria continues to face a lack of foreign investment, which can be attributed in part to the covid-19 outbreak, which impacted most economies around the world due to travel restrictions and a halt in business activities.

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As the CBN continues to intervene in the FOREX market, Nigeria’s low foreign inflow continues to affect the supply of forex in the country, putting more pressure on the exchange rate.

Nigeria will attempt to turn things around by increasing foreign inflows, particularly direct investments, in order to spur economic growth.