Key highlights
- CitiBank Nigeria Limited was the top preferred bank for foreign investment inflow into Nigeria in 2022, increasing its capital importation by about 65%.
- Nigeria’s total capital importation decreased in 2022 to $5.3 billion from $6.7 billion in 2021 due to various factors including COVID-19, foreign exchange scarcity, and insecurity in the country.
- Nigeria needs about $23.9 billion annually in capital importation to maintain stability in the exchange rate, and the decrease in foreign investment inflow is a cause for concern.
CitiBank Nigeria Limited emerged as the top preferred bank for foreign investment inflow into Nigeria in 2022, according to the latest capital importation data from Nigeria’s National Bureau of Statistics (NBS).
Nigeria imported a total of $5.3 billion in capital importation in 2022, compared to $6.7 billion in 2021, according to the data. Out of the $5.3 billion, $2.3 billion was imported from foreign Portfolio Investors, $468 million from Foreign Direct Investors, and $2.4 billion in loans.
The decrease in capital importation has been attributed to various factors, including the COVID-19 pandemic, foreign exchange scarcity, and insecurity in the country.
Citibank topples Standard Chartered as top destination
Despite the decrease in capital importation, CitiBank Nigeria Limited imported a total of $1,472.89 million in foreign capital, up from $892.05 million in 2021, thereby increasing its capital importation by about 65%.
- Standard Chartered Bank Nigeria Limited also recorded a significant inflow of foreign capital in 2022, importing a total of $1,332.22 million. However, this was a slight decrease from the $1,320.05 million imported in 2021.
- Stanbic IBTC Bank Plc, which had the highest capital importation in 2021 with $1,763.55 million, experienced a significant drop in foreign investment inflow in 2022, with a total of $803.36 million.
- Zenith Bank Plc and Ecobank Nigeria Plc also recorded lower capital importation in 2022 than in 2021, with Zenith Bank importing $370.75 million and Ecobank Nigeria Plc importing $299.58 million.
- First Bank Of Nigeria Plc had a total foreign investment inflow of $187.39 million in 2022, a decrease from the $248.13 million imported in 2021.
- Other banks recorded a total foreign investment inflow of $862.68 million in 2022, which is lower than the $1,146.79 million imported in 2021.
The data shows that the Nigerian economy still heavily relies on capital importation to maintain stability in the exchange rate. Nigeria needs about $23.9 billion annually in capital importation to keep the exchange rate stable, according to the data for 2019.
The decrease in capital importation for 2022 is, therefore, a cause for concern and highlights the need for the government to address the various factors affecting foreign investment inflow into the country.
Currency crisis affecting capital importation
Nigeria’s exchange rate has been a major concern for policymakers and investors alike, given the country’s reliance on capital importation to maintain stability. The COVID-19 pandemic, coupled with other factors such as foreign exchange scarcity and insecurity in the country, has put immense pressure on the exchange rate.
The decrease in capital importation in 2022 compared to 2021 has further exacerbated the situation, as a decline in foreign exchange inflows typically results in a depreciation of the local currency.
The Nigerian government has taken several steps to address the exchange rate situation, such as capital controls, implementing various forex policies, and seeking alternative sources of revenue.
However, this has not helped reduce the disparity between the official and parallel market rates. The capital controls is also cited as the main reason for the lack of foreign investment inflow into the country.
