Fakoyejo OlalekanIn the first quarters between 2019 and 2022, Nigeria’s capital importation has dropped by $6.92 billion, with companies attracting less foreign equipment and capital inflow into the country.
According to the Nigerian Bureau of Statistics (NBS), foreign investment inflow depreciated from $8.49 billion in Q1 2019 to $1.57 billion in the first three months of this year, reflecting a -81.5% decline.
The remaining quarters within the period reported capital importation for Q1 2020 was $5.85 billion, while that of 2021 is $1.91 billion, data from the Nigerian Bureau of Statistics shows.
Nigeria’s capital importation comprises of foreign direct investment, portfolio investment, and other investments. It was gathered that the portfolio investment accounted for majority of the inflows.
The country of origin of the inflow was United Kingdom, while the banks received most of the foreign investment.
Recall that the World Bank had projected that Nigeria will experience more capital outflows than inflow due to the rising interest rates induced by the soaring inflation rate across the world.
In its June 2022 report for ‘Nigeria Development Update: The Continuing Urgency of Business Unusual’, the World Bank had said that outflows will reach $3.6 billion, “With rising global interest rates, Nigeria will likely experience net portfolio outflows in 2022. FPI inflows grew significantly in 2021, exceeding $6bn (1.4 per cent of GDP).
“This followed a significant decline in 2020 in the wake of the COVID-19 pandemic when net outflows reached $3.6bn (0.8 per cent of GDP).” The World Bank explained in its monthly report for last month.
“However, with the continued hiking of interest rates in the US and other advanced economies due to rising inflation, net portfolio inflows to Nigeria are expected to drop under 1 per cent of GDP in 2022.
“The pre-election environment is also likely to add to the hesitance of portfolio investors, keeping net inflows low.” the global creditor had stated in its report analysing Nigeria’s future business environment.
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