Connect with us
deals book
Polaris bank
Access bank


Nigeria’s Foreign Portfolio investment to crash by $11.4 billion in 2020- IMF

The liquidity based indicators of the nation remain a concern, as they make Nigeria’s low debt-to-GDP ratio highly vulnerable to shocks.



Nigeria's Portfolio investment

Nigeria’s portfolio investment is expected to decline by at least $11.4 billion, as the coronavirus disease eats deep into the fabric of the most populous black nation’s economy. This was disclosed in the International Monetary Fund report seen by Nairametrics.

In the report, the global lender stated that the nation’s portfolio investment would drop from the $9 billion recorded in 2019 to a deficit of $2.4 billion by the end of 2020.

Portfolio investments are in the form of a group of assets, including transactions in equity, securities, such as common stock, and debt securities, such as banknotes, bonds, and debentures. They are passive investments, as they do not entail active management or control of the issuing company. Unlike, Foreign Direct Investment (FDI), foreign investors here have a relatively short-term interest in the ownership of these passive investments.

portfolio investment, Nigeria's balance of payment

On Tuesday, IMF had approved a sum of $3.4 billion via a Rapid Financial Instrument to Nigeria. The loans come at a period when countries across the world are battling with the Covid-19 pandemic and the crash in crude oil prices.

READ MORE: CBN considers interest rate cut as trade, economy decline over Coronavirus

Shedding more light on what the future holds for the Nigerian economy, IMF explained that the liquidity based indicators of the nation remain a concern, as they make Nigeria’s low debt-to-GDP ratio highly vulnerable to shocks. Some of the liquidity based indicators that remain a concern for IMF are the Cash Reserve Ratio (CRR), which several Nigerian banks had frowned at, Loan Deposit Ratio (LDR), and money supply (M2). It stated:

Public debt is projected to remain sustainable under a variety of shocks, albeit liquidity based indicators remain a concern and make Nigeria’s low debt-to-GDP ratio highly vulnerable to shocks. Under staff’s baseline, public debt will increase to 34.8% of GDP in 2020 (including the RFI purchases), would reach 37.4% in 2022 and come down to 36.3% in 2025, significantly below most emerging market peers’ debt levels.


“These risks are partially mitigated after accounting for extra-budgetary revenue (as the authorities currently plan to stop some of the earmarked funds for certain activities, such as the Road Fund or Tobacco Fund) and state and local government revenue; access to these resources in the case of an emergency would allow the ratio to remain high but manageable at between 20 to 30%.”

READ ALSO: Nigerian Stocks record worst quarterly drop since 2009

Also, the global lender added that the nation’s oil and gas exports are expected to decline by at least $26.5 billion, as it warned that Nigeria remained exposed to rising risks, particularly in oil markets. “Rising unsold cargoes could also impact oil production, which could decline further through OPEC agreed cuts or if prices persist below production costs,” the IMF said.

In its request letter to the IMF, Nigeria included its plans to implement a “more unified and flexible exchange rate regime.” This, according to the country, would increase its revenue to 15% of GDP and move to cost-reflective electricity tariffs by 2021.

The letter, which was signed by the Minister of Finance and the Central Bank of Nigeria’s Governor, also stated that a new fuel price regime, outlined in March, would permanently eliminate costly fuel subsidies. The subsidies cost an estimated 10 trillion naira ($27.78 billion) from 2006 to 2018.

With uncertainties in economic indices and parameters, a Council Member, Nigerian Stock Exchange, (NSE), Adebayo Ajayi, agree with IMF that the nation would witness dearth of FPI in 2020.

READ ALSO: IMF approves $3.4 billion for Nigeria, largest emergency support so far

Jaiz bank

In an interview with Nairametrics, he explained that the state of the nation’s foreign reserve and the value of crude oil are major attractions of foreign investors to the country. He said,

With the depleting reserve and ridiculous crude oil price, there is no way Nigeria would not lose foreign investors in 2020, except the government, introduced capital controls, which no one prays for, as investors prefer free entry and free exit. Without any micro change, no FPI for us. The equity market felt the impact a few weeks back when several foreign investors sold their stakes and left the bourse the bourse. 

“The way out for the nation is to come up with an international commodity that would be in high demand across the globe immediately after COVID-19, as that would attract FPIs to the country. Anything out of that, 2020 will be a year of no FPIs.”

In all, Nigerians and observers can’t wait to see the defence of the Federal Government or the CBN, and their assurances that the nation would be out of the woods sooner than expected.

Abiola has spent about 14 years in journalism. His career has covered some top local print media like TELL Magazine, Broad Street Journal, The Point Newspaper.The Bloomberg MEI alumni has interviewed some of the most influential figures of the IMF, G-20 Summit, Pre-G20 Central Bank Governors and Finance Ministers, Critical Communication World Conference.The multiple award winner is variously trained in business and markets journalism at Lagos Business School, and Pan-Atlantic University. You may contact him via email - [email protected]

Click to comment

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Business News

COVID-19 Update in Nigeria

On the 7th of May 2021, 39 new confirmed cases were recorded in Nigeria



Covid 19 update symptops

The spread of novel Corona Virus Disease (COVID-19) in Nigeria continues to record significant increases as the latest statistics provided by the Nigeria Centre for Disease Control reveal Nigeria now has 165,340 confirmed cases.

On the 7th of May 2021, 39 new confirmed cases were recorded in Nigeria.

To date, 165,340, cases have been confirmed, 155,454 cases have been discharged and 2,065 deaths have been recorded in 36 states and the Federal Capital Territory

A total of 1.94 million tests have been carried out as of 7th May 2021 compared to 1.91 million tests a day earlier.

COVID-19 Case Updates- 7th May 2021,

  • Total Number of Cases – 165,340
  • Total Number Discharged – 155,454
  • Total Deaths – 2,065
  • Total Tests Carried out – 1,939,165

According to the NCDC, the 39 new cases are reported from 8 states- Lagos (23), Abuja (4), Kano (4), Zamfara (4), Akwa Ibom (1), Gombe (1), Nasarawa (1), and Plateau(1).

Meanwhile, the latest numbers bring Lagos state total confirmed cases to 58,547, followed by Abuja (19,806), Kaduna (9,064), Plateau (9,060),Rivers (7,130), Oyo (6,852), Edo (4,902), Ogun (4,678), Kano (3,961), Ondo (3,248), Kwara (3,122), Delta (2,623), Osun (2,575), Nasarawa (2,382), Enugu (2,401), Katsina (2,097), Gombe (2,034), Ebonyi (2,030), Anambra (1,909), Akwa Ibom (1,859), and Abia (1,689).

Imo State has recorded 1,657 cases, Bauchi (1,548), Borno (1,337), Benue (1,188), Adamawa (1,103), Taraba (974), Niger (930), Bayelsa (886), Ekiti (870), Sokoto (775), Jigawa (528), Kebbi (450), Cross River (394), Yobe (390), Zamfara (240), while Kogi state has recorded 5 cases only.

READ ALSO: COVID-19: Western diplomats warn of disease explosion, poor handling by government

Lock Down and Curfew

In a move to combat the spread of the pandemic disease, President Muhammadu Buhari directed the cessation of all movements in Lagos and the FCT for an initial period of 14 days, which took effect from 11 pm on Monday, 30th March 2020.

The movement restriction, which was extended by another two weeks period, has been partially put on hold with some businesses commencing operations from May 4. On April 27th, 2020, Nigeria’s President, Muhammadu Buhari declared an overnight curfew from 8 pm to 6 am across the country, as part of new measures to contain the spread of the COVID-19. This comes along with the phased and gradual easing of lockdown measures in FCT, Lagos, and Ogun States, which took effect from Saturday, 2nd May 2020, at 9 am.

On Monday, 29th June 2020 the federal government extended the second phase of the eased lockdown by 4 weeks and approved interstate movement outside curfew hours with effect from July 1, 2020. Also, on Monday 27th July 2020, the federal government extended the second phase of eased lockdown by an additional one week.

On Thursday, 6th August 2020 the federal government through the secretary to the Government of the Federation (SGF) and Chairman of the Presidential Task Force (PTF) on COVID-19 announced the extension of the second phase of eased lockdown by another four (4) weeks.

Governor Babajide Sanwo-Olu of Lagos State announced the closed down of the Eti-Osa Isolation Centre, with effect from Friday, 31st July 2020. He also mentioned that the Agidingbi Isolation Centre would also be closed and the patients relocated to a large capacity centre.

Due to the increased number of covid-19 cases in Nigeria, the Nigerian government ordered the reopening of Isolation and treatment centres in the country on Thursday, 10th December 2020.

On 26th January 2021, the Federal Government announced the extension of the guidelines of phase 3 of the eased lockdown by one month following the rising cases of the coronavirus disease in the country and the expiration of phase 3 of the eased lockdown.

Jaiz bank

On 28th February 2021, the federal government confirmed that the first tranche of Covid-19 vaccines will arrive in Nigeria on Tuesday, March 2nd, 2021.

On Tuesday, 2nd March 2021, the National Primary health Care Development Agency announced the arrival of the expected COVX Astrazeneca/Oxford covid-19 vaccines.

On Saturday, 6th March 2021, President Muhammadu Buhari and his vice, Yemi Osinbajo received vaccination against the covid-19 as the State House in Abuja.

READ ALSO: Bill Gates says Trump’s WHO funding suspension is dangerous





Continue Reading


Covid-19: WHO approves China’s Sinopharm vaccine

WHO has announced the approval of China’s Sinopharm vaccine for Covid-19 vaccination.



Covid-19: First world nations oppose waiving intellectual rights for vaccine development

The World Health Organization (WHO) has announced the approval of China’s Sinopharm vaccine for Covid-19 vaccination.  The vaccine is reported to have 79% efficacy against covid.

This was disclosed today in a report by Reuters. The vaccine would also be the second Chinese-made vaccine after Sinovac vaccine and would be the first developed outside Europe and North America to receive WHO accreditation.

“This expands the list of COVID-19 vaccines that COVAX can buy, and gives countries confidence to expedite their own regulatory approval, and to import and administer a vaccine,” WHO Director-General, Tedros Adhanom Ghebreyesus said.

The WHO added that the easy storage requirements make it highly suitable for low-resource settings.

“Its easy storage requirements make it highly suitable for low-resource settings,” a WHO statement said while also disclosing that the vaccine has been approved for people above the age of 18 to receive two shots.

“On the basis of all available evidence, WHO recommends the vaccine for adults 18 years and older, in a two-dose schedule with a spacing of three to four weeks,” the statement added.

The vaccine was created by Beijing Biological Products Institute, a subsidiary of Sinopharm subsidiary China National Biotec Group, with an efficacy of 79% for all age groups.

The WHO however, admitted that few older adults (over 60 years) were enrolled in clinical trials, so efficacy could not be estimated in this age group.


In case you missed it

The quest for vaccine efficiency got a major boost earlier this week as Nairametrics reported that the United States government announced that it supports the waiver of Intellectual Property Protections on Covid-19 vaccine development, in a bid to boost the fight against the pandemic, and says it will participate in the Okonjo-Iweala-led WTO negotiation to make it happen.

Continue Reading


Nairametrics | Company Earnings

Access our Live Feed portal for the latest company earnings as they drop.