The National Bureau of Statistic has released its Q3 and Q4 2015 report on Capital Importation in Nigeria. The report showed that the total value of Capital imported into Nigeria in the Third Quarter of 2015 was $2.74 billion, up 3.07% from the preceding quarter. This was followed by a total of $1.55 billion in the fourth quarter, a decline of 43.34% from levels recorded in the previous quarter.
Total capital importation into Nigeria stood at $9.64 billion representing 53.53% drop compared to the $20.75 billion received in 2014. The report also reveals that each consecutive quarter of 2015 saw a larger annual fall than the previous.
Source: NBS Data
Reason for the decline
JP Morgan – The Bureau cites the removal of Nigeria from the emerging market bond index as one of the major reasons for decline in portfolio investments. With the decline, foreign investors who rely on the index to invest into Nigeria mostly pulled out their funds.
US FED – Another reason attributed for the fall was the much-anticipated increase in the US Fed rate (similar to Nigeria’s MPR). As it became clear that the US was going to raise its rates most foreign investors pulled out billions of dollars from emerging markets including Nigeria
Third Quarter Performance
According to the Bureau, the third quarter also saw a large change in the composition of Capital imported. In every preceding quarter since 2009, Portfolio Investment has been the largest component, however as a result of a large quarterly decline in the third quarter (53.73%) and large quarterly increases in Foreign Direct and Other Investment (239.93% and 275.36% respectively), Other Investment became the largest component and accounted for $1,021.26 million, or 37.16%. This compares with Portfolio Investment worth $1,009.13 million and Foreign Direct Investment worth $717.71 million accounting for 36.72%, and 26.12% respectively.
Fourth Quarter Performance
Portfolio Investment fell by 5.61% between the third and final quarters while Other Investment fell by 52.87% and Foreign Direct investment also fell by 82.84%. Portfolio Investment thus accounted for 61.18%, Other investment accounted for 30.91%, and Foreign Direct investment accounted for 7.91%.
Full year
For the year as a whole, Portfolio investment recorded the largest year on year percentage drop of 59.74%. However it still had the largest component and accounted for 62.28%, compared to 15.00% for Foreign Direct and 22.72% for Other Investment.
Get the full Capital Importation report here