2 March 2018

Nigeria: Foreign Investments Rise 138.7 Percent to $12bn

Photo: The Guardian
President Muhammadu Buhari.

The total capital importation into the country, comprising of both Foreign Direct Investments (FDI) and Foreign Portfolio Investments (FPI), more than doubled in 2017, surging by 138.7 percent year-on-year (YoY) to $12.2 billion from $5.1 billion recorded in 2016, a pointer to the soaring confidence of foreign investors in the Nigerian economy.

National Bureau of Statistics, NBS, disclosed this yesterday in its Capital Importation report for fourth quarter 2017 (Q4'17) and Full Year 2017 (FY'17), noting that the increase was buoyed by the growing appetite of portfolio investors in Nigerian Securities.

The report stated: "As at the end of 2017, total capital imported into Nigeria was $12.2 billion, an increase of $7.1billion or 138.7 percent from the figure recorded in 2016. The growth in Capital Importation in 2017 was mainly driven by increase in Portfolio Investment, which went up by $5.5 billion from the previous year to reach $7.3 billion in 2017, and accounting for 60 percent of capital imported."

In the Q4'17, foreign investment stood at $5.3 billion indicating 247.5 percent (YoY) growth and 29.9 percent quarterly growth.

The report noted that the main driver of capital importation in Q4'17 was FPI, otherwise called Hot Money. The FPI grew by 1,123.5 percent, that is 12 times, over the figure recorded in Q4'16, which was largely fostered by Money Market Instruments.

NBS reported: "Foreign Portfolio Investments (FPI) stood at $3.5 billion, representing a quarter-on-quarter (QoQ) growth of 25.7 percent.

"Year-on-year, FPI increased by 1,123.5 percent from $284.2 million in Q4'16. The increase was driven by a strong growth in Money Market Instruments, which recorded $2.2 billion, the first time since Q3'13.

"Money Market Instruments contributed 63 percent to FPIs. Equity which had been the main driver of Portfolio investments in previous quarters dropped by $942.9 million, from $1.9 billion in Q3'17 to $989.2 million in Q4'17.

"On the other hand, bonds recorded an increase of $194.1 million, from $115.4 million in Q3'17 to $309.5 million in Q4'17 of the same year."

Meanwhile, the NBS also noted that FDI, it refers as 'Cold Money', recorded growth in Q4'17.

"In Q4'17, Foreign Direct Investment hit $378.4 million for the first time since Q4 2015 when it reported $123.2 million. This was a substantial increase of 221.8 percent (QoQ) when compared to the Q3'17, and a 9.8 percent (YoY) increase compared to Q4'16. The growth in FDI was mainly driven by Equity Investments, which contributed 99.8 percent, while Other Capital Investment contributed 0.2 percent.

"Other Investment accounted for 28.4 percent of total capital importation in Q4'17. This category of capital importation grew 65.96 percent (YoY), and by 21.2 percent when compared to the previous quarter. The $1.5 billion recorded by Other Investment was mainly in the form of Loans, which was $1.1 billion in the fourth quarter (Q4'17), followed by Other Claims which recorded $425.7 million, and then Trade credits which reported $10million, having posted no inflows since Q4'16," NBS stated.

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