A welcome surge in capital imports
The NBS recently released its latest report on Nigerian Capital Importation, which covers Q3 2017. The data was obtained from the CBN and compiled using information on banking transactions from all registered financial institutions in Nigeria. The total value of capital imported in Q3 was estimated at US$4.15bn, representing a surge of 132% q/q. There has been no inflow of this magnitude since Q1 2015. The increase was driven by portfolio investment. The data are gross, and not adjusted for capital exports.
- Portfolio investment more than tripled on a q/q basis as US$2.8bn was recorded for Q3, representing 67% of total capital importation. Equities accounted for 70% of the investment, and money market instruments a further 26%.
- We attribute the pick-up to the improved and stable fx environment as well as the more positive outlook on the macroeconomic environment. Foreign players have warmed to the investors and exporters’ window (NAFEX) in good numbers.
- In stark contrast, foreign direct investment (FDI) was the lowest contributor to capital importation in Q3 with inflows worth US$118m. An improved business environment could spur increased inflows from this category. We applaud the authorities for their continuing efforts in this area.