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Capital Importation Declines by Whooping 9% in Q2’23

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Capital inflows, BDC, customs duty rate

CEM REPORT, TRADE | Nigeria’s total capital importation for the second quarter of the year (Q2’23) stood at $1.03 billion from $1.13 billion in the preceding quarter, indicating a 9.04 per cent decline.

On a year-on-year basis, the country’s capital importation declined by 32.9 per cent from 1.53 billion recorded in Q2’22.

According to the National Bureau of Statistics (NBS) recently released report on Nigerian Capital Importation Q2 2023, other investments ranked top, accounting for 81.28 per cent ($837.34 million) of total capital importation in Q2’23.

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This was followed by Portfolio Investment with 10.37 per cent ($106.85 million) and Foreign Direct Investment (FDI) with 8.35 per cent ($86.03 million).

According to the Nigeria Capital Importation Q2’23 report, the production sector recorded the highest inflow with $605.04 million, representing 58.73 per cent of total capital imported.

This was followed by the banking sector, which recorded 18.89 per cent ($194.58 million), as well as shares which accounted for 6.66 per cent ($68.63 million).

United States accounted for the largest source of inflows with $271.92 million, accounting for 26.39 per cent, followed by Singapore and the Republic of South Africa with $177.44 million or 17.22 per cent and $136.95 million or 13.29 per cent respectively.

The report added that Lagos State remained the top destination for capital inflows in Q2’23 with $778.06 million, accounting for 75.52 per cent followed by Abuja (FCT), $194.28 million or 18.86 per cent.

First Bank of Nigeria Limited received the highest capital inflow into the country accounting for $323.13 million amounting to 18.23 per cent followed by Citibank Nigeria Limited $187.77 million representing 12.23 per cent and Rand Merchant Bank which accounted for $126.03 translating to 6.47 per cent.

In comparison with the previous quarter’s portfolio investment which top capital importation for Q1’23 dipped to $106.85 million from $649.28 million contributing 57.32 per cent of total capital imported in Q1’23 to contributing 10.37 per cent.

Other Investments which top Q2’23 capital importation with $837.34 million, an 81.28 per cent contribution, accounted for $435.76 million or 38.31 per cent of total inflows in the previous quarter.

Foreign Direct Investment (FDI), however, recorded an increase from $47.60 million or 4.20 to 8.35 per cent ($86.03 million) in Q2’23.

In Q2’23 the production sector recorded the highest inflow with $605.04 million, representing 58.73 per cent of total capital imported while in Q1’23 the production sector came in second with a value of $256.12 million or 22.61 per cent of capital importation.

The banking sector which recorded the highest in Q1’23 with $304.56 million, representing 26.89 per cent of total capital imported during the period, came in second in Q2’23 with $194.58 million, representing 18.89 per cent.

Capital Importation in reference to country, originated largely from the United Kingdom ranking top with $673.64 million, accounting for 59.47 per cent of total inflows. This was followed by the United Arab Emirates and the United States which accounted for $108.28 million or 9.56 per cent and $95.36 million or 8.42 per cent, respectively in Q1’23.

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While in Q2’23 United States ranked top with $271.92 million, accounting for 26.39 per cent, followed by Singapore and South Africa with $177.44 million (17.22 per cent) and $136.95 million (13.29 per cent) respectively.

It is worth noting that capital inflows into the first half of 2023 rose to $861.16 million or 88.16 per cent, compared to $457.67 million in the first half of 2022. Although experts have said the inflows are largely in the form of loans and bonds, reflecting the challenges facing the manufacturers and the need to meet short-term obligations and slowing business activities.

Capital importation means foreign investments in a country’s economy and is made up of Foreign Direct Investment (FDI), Portfolio Investment, and other investments.

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