BUHARINOMICS |Nigeria Records Lowest Investment Inflow Since 2007

by on May 6, 2016
The National Bureau of Statistics (NBS) on Thursday released the capital importation report for the first quarter of 2016 indicating that Nige­ria recorded its lowest investment inflow since 2007.
The breakdown revealed that the economy attracted a total investment of $710.97m (N140.07bn) representing a de­cline of 54.34 per cent since the first quar­ter of 2015.
According to the report, both the quar­terly and year-on-year declines were also the lowest recorded since the series began in 2007.
“The total value of capital imported into Nigeria in the first quarter of 2016 was $710.97m, the lowest level since the series began in 2007. This represents a de­cline of 54.34 per cent in the final quar­ter of 2015, and a year-on-year decline of 73.79 per cent.
“Both the quarterly and year-on-year declines were also the lowest recorded since the series began. As a result of these changes, total capital importation has fall­en by 89.13 per cent since its peak level in the third quarter of 2014.”
The report attributed the huge decline in capital importation in the first quarter of 2016 to “symptomatic of the challeng­ing period that the Nigerian economy is going through following the fall in crude oil prices.
“Investors may be concerned about whether or not they will be able to re­patriate the earnings from their invest­ments, given the current controls on the exchange rate. In addition, as growth has slowed in recent quarters, there may be concerns about the profitability of such investments.”
The report noted that in terms of the composition of the investment inflows, the largest component of capital im­portation in the first quarter was portfolio investment which ac­counted for $271.03m, or 38.12 per cent of all capital imported.
The largest subcomponent of portfolio investment was equity, which accounted for $201.69m, representing 74.41 per cent of portfolio investment and 28.37 per cent of total capital imported.
Equity, it noted, has been the largest part of portfolio invest­ment in every quarter since 2007.
“The first quarter of 2016 also saw a large change in the com­position of capital imported. Following a quarterly decline in portfolio investment of 71.55 per cent (also the largest quarterly fall on record)
portfolio investment account­ed for 38.12 per cent of total cap­ital imported, compared to 61.18 per cent in the previous quarter.
“However, it remained the largest component, as Other In­vestment also recorded a sharp quarterly decline, of 44.84 per cent which prevented its share from rising higher than that of portfolio investment. Whereas Other Investment accounted for 30.91 per cent in the final quar­ter of 2015, this share had risen to 37.34 per cent in the first quar­ter of 2016.”

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