The total value of capital importation into Nigeria stood at $5,367.56 million in the third quarter of 2019. This represents a decrease of -7.78% compared to Q2 2019 and 87.99% increase compared to the third quarter of 2018. The Nigerian for Bureau Statistics released the Q3 2019 capital importation report this week .
According to the report, the largest amount of capital importation by type was received through Portfolio investment, which accounted for 55.88% ($2,999.50m) of total capital importation. This figure is -30.13% drop from the $4,292.89m that flowed into the country in Q2 2019. Next to Portfolio investment is Other Investment, which accounted for 40.39% ($2,167.98m) of total capital representing a rise by 39.83 compared to last quarter Other Investment of $1,304.43m. Foreign Direct Investment FDI accounted for 3.73% ($200.08m) of total capital imported in Q3 2019, a 10.20 decrease from the $222.8m of FDI in the last quarter.
By sector, Capital importation by banking dominated Q3 2019 reaching $1,756.83 million of the total capital importation in Q3 2019.
The United Kingdom emerged as the top source of capital investment in Nigeria in Q3 2019 with $2,011.14 million. This accounted for 37.47% of the total capital inflow in Q3 2019.
By Destination of Investment, Lagos state maintained its position as the top destination of capital investment in Nigeria in Q3 2019 with $4,976.40 million. This accounted for 92.71% of the total capital inflow in Q3 2019.
By Bank, Stanbic IBTC Bank Plc emerged at the top of capital investment in Nigeria in Q3 2019 with $1,630.91 million. This accounted for 30.38% of the total capital inflow in Q3 2019.
The fall Q3 2019 capital importation can be explained by policy scare which has putting a further restrain on investment behavior. Every policy has direct or side effect, investors’ reactions is one of those side implication. The recent border closure aimed at checking smuggling of rice and tomato seems to have truncated the line of analysis that followed the signing of the AFCTA which plans to establish the world’s largest free trading bloc by opening the borders.
CNBC reported in October the conversation with Marshall Stocker, vice president and head of country research at investment firm Eaton Vance where he described Nigeria as “low economic freedom country”. In this stance, any policy move is sure to have some effect on vital variables of the nation’s economy.
The government need to steady the ship and drive towards attracting investment into the country at the onset of 2020 as the fourth quarter of 2019 comes to a gradual close.