Capital importation into Africa’s most populous nation received a boost during the first quarter of 2024, as it hit $3.38 billion representing an increase of 198 percent on a year-on-year basis. As of Q1 2023, the total capital importation amounted to $1.13 billion.
“In Q1 2024, total capital importation into Nigeria stood at US$3,376.01 million, higher than US$1,132.65 million recorded in Q1 2023, indicating an increase of 198.06%. In comparison to the preceding quarter, capital importation rose by 210.16% from US$1,088.48 million in Q4 2023,” NBS, the nation’s data agency, announced last week.
Capital importation into any country indicates the level of confidence foreign investors have in such an economy. For Nigeria in particular, it provides a platform to stabilise the naira in the sense that foreign inflows augment the domestic forex availability.
When analysed the inflows according to the types of investments, foreign direct investments attracted $119.18 million. Under this investment type, equity FDI received $119.17 million while other capital received $0.01 million.
Portfolio investment received the bulk of the inflows during the quarter. Equity portfolio investment received $49.37 million; bonds portfolio investment got $420.81 million while money market instruments under portfolio investment received $1.61 billion.
Other investments attracted $$1.18 billion. This is broken down into loans, $1.15 billion and other claims, $30.07 million.
In terms of growth, FDI grew by 150 percent when rated against inflows during the first quarter of 2023. Portfolio investment grew by 220 percent. This is despite the fact the equity portfolio investment declined by 78 percent. Money market instruments, with an annual growth of 1,175 percent, were the outperformer during the period.
Other investments grew by 165 percent. It should be noted that for the whole 2023, Nigeria recorded $3.391 billion as the total inflows through capital importation.
With the leading deposit money banks stepping out now to recapitalise, our prediction is that Nigeria will at least sustain the current level of capital importation in the subsequent quarters of 2024.
