Nigeria received $1.29 billion capital importation (inflows) in the second quarter (Q2) of 2020, representing a decrease of 78.6% compared to the corresponding quarter of 2019. This is according to the latest Nigerian Capital Importation report released by the National Bureau of Statistics (NBS).
According to the report, $1.29 billion represents the lowest inflows recorded since Q1 2017 when capital inflow of $908.3 million was recorded.
Also, the latest figure indicates a decrease of 78.6% compared to $6.05 billion received in the corresponding quarter of 2019 and 77.9% decrease compared to $5.85 billion in Q1 2020.
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Capital Inflow by type
The largest amount of capital importation by type in Q2 2020 was received through other investments, which accounted for 58.77% ($761.03 million) of total capital imported during the quarter. Inflows from other investments, declined by 42.8% as against $1.33 billion received in the previous quarter and a further 48.6% reduction compared to $1.48 billion recorded in the corresponding quarter of 2019.
Portfolio investment followed with $385.32 million, accounting for 29.8% of the total inflows in Q2 2020. Under the portfolio category only Equity ($52.3 million) and money market instruments ($332.1 million) received inflows during the quarter under review.
Foreign Direct Investment (FDI): FDI accounted for only 11.47% ($148.6 million) to the total capital inflows. A decline of 30.6% compared to $214.3 million received in Q1 2020 and 33.41% reduction compared to the corresponding quarter of 2019.
FDI is an investment in the form of a controlling ownership in a business in one country by an entity based in another country. In Q2 2020, FDI came into Nigeria only through equities.
READ: Nigeria received $5.82 billion capital inflows in Q2 2019, down by -31.41%
Capital inflows by Sectors
The report shows that Shares received the highest capital inflows in Q2 2020, accounting for 35.9% ($464.6 million) of the total capital inflows followed by Financing, which contributed 23.9% ($309.5 million to the total inflows.
The banking sector came third on the list as it attracted $140.2 million (10.8%) capital inflows, others on the list include; Production $110.8 million (8.6%), Telecoms $105.6 million (8.2%), Trading $68.2 million (5.3%) and Agriculture $48.8 million (3.8%).
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Capital inflows by origin
The United Kingdom emerged as the biggest source of capital investment in Nigeria. In Q2 2020, investment from the U.K amounted to $428.8 million, a decline of 85.3% compared to $2.91 billion recorded in the previous quarter and 87.1% compared to $3.33 billion in Q2 2019.
Other countries that accounted for the biggest share of capital inflows in Nigeria during the period include, South Africa ($149.3 million), UAE ($145.2 million), Netherlands ($141.3 million) and Singapore (134.4 million).
Capital inflows by destination
In terms of destination, only 6 states received capital inflows in the second quarter of 2020, Lagos State received the giant share with $1.13 billion (87.3%) capital inflows, followed by Abuja with ($145.3 million).
Ogun State received $11 million within the quarter, Niger ($6.86 million), Anambra ($1.16 million) and Kano State, which received $130,000 capital inflows.
Upshot
- The decline in capital inflows recorded during the second quarter of 2020 is attributable to the effect of COVID-19 pandemic, which halted economic activities in most parts of the world.
- Earlier in the week, Nigerian Bureau of Statistics reported that the Nigerian economy contracted by 6.1% as a result of the negative impacts of disruptions caused by the pandemic and the crash in oil price.
- The latest figure reflects a negative trend and how dwindling inflows is a cause for worry to the Nigerian economy.
- It is hoped that subsequent quarters will attract more inflows as the government begin to open most aspects of the economy in phases.