The United Kingdom emerged as the number 1 country where Nigeria imported the most capital. This is according to data from the National Bureau of Statistics. The NBS reported that Nigeria attracted slightly over N1.09 billion in foreign investments from a country everyone thought would have issues investing in Nigeria due to Brexit. Total capital imported into Nigeria in the second quarter of the year was $1.8 billion with the UK representing over 60% of that figure.
According to the data, the United Kingdom remained a major source of Capital for Nigeria due to its location as the financial capital of Europe. Available data also reveals that the UK has accounted for the highest value of capital importation in all but two quarters (both in the second half of 2015).
Analysts believe most of the foreign capital that came in was for the purchase of government securities which are currently at double digits. As long as portfolio inflows continue to constitute a large chunk of our forex inflows, then it is conceivable for the UK to be the country with the highest import of capital in Nigeria.
Earlier in the year, when the UK voted to exit the EU, analysts had expressed fears that Nigeria could be severely affected due to the strategic position of the UK as a financial hub in Europe. For example, most Eurobonds, and foreign capital listings take place in the London Stock Exchange which attracts inflows across the globe. But with Brexit on the cards, the fear is that most investors will pull the plug on the UK and perhaps choose another country (some suggest France or Belgium) as the new financial hub.
Nigeria has imported about $1.7 billion from the UK in the first quarter of 2016, the lowest in over three years. Capital importation from the UK for the first three-quarters of 2015 and 2014 was about $3.3 billion and $8.8 billion in 2015 and 2014 respectively. This represents a 48% and 81% drop from 2015 and 2014 respectively. However, we did record a double-digit growth on a QoQ basis in 2016.
The data does not confirm if this drop is related to Brexit fears or attributed to the capital controls imposed by the Central Bank of Nigeria. However, the fact that capital importation has more than tripled between the second quarter and third quarter of 2016 suggest that the floating of the Naira may have attracted a lot more foreign capital.