Investment Inflow Drops 12.5% In Q2 2018

By Ben Abraham

Nigeria recorded a decline of $790 million in foreign investment in the second quarter of 2018 (Q2 2018) as a total of $5.51 billion was received during the period compared to $6.3 in the preceding quarter.

This represents a drop of 12.5 per cent (q-on-q) against the preceding quarter (Q1 2018), but a whopping 207.62 per cent increase compared to the corresponding quarter of 2017 (Q2 2017) when $1.79 billion was recorded.

According to a report by the National Bureau of Statistics (NBS) Tuesday, the drop in investment inflow in Q2 2018 occurred as a result of a decline in Portfolio and Other Investment categories which dropped by 9.76 per cent and 24.07 per cent respectively.

Portfolio inflow represents investment in stock and shares which accounts for the highest figure among other categories or types.

Specifically, capital inflow received through Portfolio investment was $4.11 billion representing 74.7 per cent of total investment inflow during the period. (Q2 2017 was $770.51 million.)

This is followed by $1.13 billion in the other investment category accounting for 20.5 per cent of total Q2 2018 capital inflow. ($747.47 million was received in Q2 2017.)

Inflow recorded in the Foreign Direct Investment (FDI) category (mainly equities, equipment, machinery) was $261.4 million or 4.7 per cent of total inflow for the quarter under review. (Q2 2017 figure was $274.37 million.)

“Capital Importation in the form of Money Market Instrument stood at $2,670.93 million in the second quarter, which was a 24.29% decrease over the previous quarter.

“Investments in both Equity and Bonds (under Portfolio Investments) reported steady quarter-on-quarter growth, with 49.43% and 19.13% respectively.

“It is worth noting that investments in Bonds under this Capital Importation type has been steadily increasing since Q2, 2017, and in Q2 2018, it accounted for 9.71% of total Portfolio Investment,” the report explained.

By destination among the states, the NBS said Abuja, again, surpassed Lagos in Q2 2018 with $2.54 billion – a trend in fourth quarter of 2017.

This represents 46.21 per cent of the total capital importation recorded in the economy during the review period.

This is followed by Lagos which received the second largest capital inflow of $1.26 billion or 30.08 per cent of the total quarterly inflow.

“When compared to the preceding quarter, however, the capital inflow into Abuja and Lagos, declined by 28.13% and 37.80% respectively,” the report said.

Abia surpassed Akwa Ibom and Ogun  with capital inflow of $1.26 billion representing 22.9 per cent of Q2 2018 total receipt.

The report states that Abuja, Lagos and Abia together account for over 99 per cent of the total capital importation in the review period.

Akwa Ibom and Ogun recorded 16.1 million and $12.74 million respectively – a decline of 63.09 per cent and 48.05 per cent over the previous quarter.

Enugu joined the league of top 10 states in capital importation during the reporting quarter.

“Enugu, which only had marginal foreign inflow previously, recorded $1.31 million in the second quarter and became the eighth top destination in Nigeria to attract foreign capital investment”, said NBS in the report.

Analyzing the report by country of origin, the United Kingdom (UK) maintained its topmost position with $1.77 billion or 32.15 per cent of the total capital inflow in Q2 2018.

This represents 21.29 per cent decline from the previous quarter.

The UK has maintained the topmost position among originating countries of Nigeria’s capital importation except in Q1 and Q2 of 2015.

With capital importation of $1.22 billion, the United States came second. The figure represents 2.85 per cent drop from the first quarter of 2018.

Capital inflows from The United Arab Emirates and Switzerland were $535.98 million and $297.32 million respectively.

Investment inflow from Ghana recorded $156.30 million during the review quarter – a decline of 58.88 per cent from Q1 2018.

The highest investment inflow totalling  $3.027 billion  or 54.9 per cent of total came through Stanbic-IBTC among Nigeria’s deposit money banks.

A total investment of $2.98 billion passed through First City Monument Bank.

Standard Chartered Bank and Citibank recorded $817.23 million and $722.76 million investment inflows respectively; while Access Bank received $198.8 million.

The overall decline in Q2 2018 investment inflow reflects the trend in Nigeria’s capital market which has maintained a downward trajectory since January 2018, following mounting uncertainties in the political and economic space.

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