NIGERIA’s capital importation dropped in the second quarter of 2024, the National Bureau of Statistics (NBS) disclosed on Tuesday, October 8.
The latest figures released by the statistics office show that total capital importation slides to $2.60 billion compared to $3.38 billion in the first quarter of the year, representing a 22.85 per cent decline.
The figure was, however, higher than the $1.03 billion the NBS reported in the second quarter of 2023.
Capital importation comprises inflows from foreign direct investment (FDI), foreign portfolio investment (FPI), and other investments.
The FPI accounted for 53.93 per cent or $1.40 billion of the total capital importation in the quarter, reflecting the Central Bank of Nigeria (CBN) monetary policy on rate hikes.
Other investments were $1.17 billion, representing 44.92 per cent.
The FDI only attracted $29.83 million or 1.15 per cent, reflecting how government policies frustrated businesses in the second quarter.
The FPIs are ‘hot’ money brought by investors to invest in Nigeria’s bonds and stocks, while FDIs are investments made by a firm or individual in one country into business interests located in another country.
Industry analysts decry this type of investment as the investors are likely to take their funds out of the country when they sense economic trouble.
Also, FPIs are easier to dispose of than an FDI, which improves under a business-friendly environment.
The NBS report further revealed that the banking sector recorded the highest inflow, with $1.12 billion, representing 43.15 per cent of the total inflows.
The production/manufacturing sector followed with a $624.71 million inflow, and the trading sector with $569.22 million.
Capital importation came largely from the United Kingdom with $1.12 billion or 43.01 per cent of the total capital imported.
The Netherlands followed with $577.82 million and the Republic of South Africa with $255.98 million.
Again, only three out of Nigeria’s 36 states and the Federal Capital Territory attracted foreign inflows in the review quarter.
Lagos State remained the top destination with $1.37 billion and accounted for 52.52 per cent of the total capital imported.
Abuja (FCT) followed with $1.24 billion or 47.48 per cent, and Ekiti State with $0.0003 million.
Citibank Nigeria Limited received the highest capital importation into Nigeria with $818.46 million, representing 31.43 per cent.
This was followed by Standard Chartered Bank Nigeria Limited with $654.79 million and Rand Merchant Bank Plc with $488.59.
The ICIR, in a report, analysed why Nigeria should attract more FDI as it is crucial for any economy.
It showed that to build a robust economy, Nigeria must implement policies that will encourage businesses that attract higher FDI.
Doing so will strengthen the naira against other currencies and bring about foreign exchange liquidity in the country.