Data from the National Bureau of Statistics shows total value of capital importation into Nigeria stood at $16,812.47 million in 2018 compared to $12,228.57 million capital imported in 2017. This represents 37.49% growth year on year.
Here are key points from the Capital Importation report
- The total value of capital importation into Nigeria stood at $2,140.08 million in the fourth quarter of 2018. This represents a decrease of 25.05% compared to Q3 2018 and 60.24% decrease compared to the fourth quarter of 2017.
- The total value of capital importation into Nigeria stood at $16,812.47 million in 2018 compared to $12,228.57 million capital imported in 2017. This represents 37.49% growth year.
- The largest amount of capital importation by type was received through Portfolio investment, which accounted for 70.20% ($11.8 billion) of total capital imported.
- Other Investment, accounted for 22.69% ($3.8 billion) of total capital imported.
- Foreign Direct Investment FDI, which accounted for 7.11% ($1.1 billion) of total capital imported in 2018.
- Capital importation by shares, which is closely related to Equity investment (FDI and Portfolio Investment) dominated 2018 reaching $10.4 billion of the total capital imported in 2018.
- The United Kingdom emerged as the top source of capital investment in Nigeria in 2018 with $6 billion. This accounted for 35.74% of the total capital inflow in 2018.
What this means for the capital markets
Having a large proportion of foreign exchange going into portfolio investments leaves the country susceptible to swings in hot money. The Central Bank of Nigeria (CBN) in a bid to keep the funds within the country, will continue to leave rates on money market securities high.
The equities market will also be susceptible to hard falls, whenever there is an FX shock. Foreign investors, tend to exit the market at the slightest sign of an FX shock or any form of instability.
The NSE domestic and FPI report for the twelve months ended December 2018, shows foreign investors accounted for N1.2 trillion or 50.87% of all transactions that occurred on the exchange last year.