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Q3: Nigeria records zero FDI

Earns $1.8bn forex

For the first time ever, Nigerian economy failed to record any foreign direct investment (FDI) in the third quarter of 2016.

And as the economy continues to suffer from the twin evil of low crude prices and devastating activities of Niger Delta militants, value of foreign currency imported into the country declined to $1,822.12 million or $1.822 billion during the same period.

This was the first quarter on record in which no capital was imported in the form of FDI, other capital, even if in previous quarters, the amount was not significant.

However, despite the paltry amount, National Bureau of Statistics described the figure as an increase of 74.84 per cent relative to the second quarter but a fall of 33.70 per cent relative to the third quarter of 2015.

In the three months of July, August and September, highest level of capital imported was in August, when $894.00 million was imported, the highest level since July 2015.

“In September $649.76 million was imported, which was still more than any month in the first and second quarters. In contrast with the previous quarter, where other loans explained the majority of the increase, a number of investment types contributed to the quarterly increase,” NBS disclosed in the Nigerian Capital Importation document released in Abuja on Monday.

Of the total quarterly increase, 85 per cent was accounted for by increases in portfolio investment in bonds and money market instruments, the latter of which comprises short-term funding securities such as treasury bills and commercial bills from Central Bank of Nigeria.

Portfolio investment was the largest component of imported capital during the period under review and accounted for $920.32 million, or 50.51 per cent.

“Although portfolio equity declined by 28.12 per cent relative the previous quarter, this is outweighed by large increases in other types of Portfolio Investment. Bonds increased from zero in the second quarter, to $369.00 million in the third, and Money Market Instruments increased from $57.50 million to $350.20 million over the same period, an increase of 509.03 per cent.

“This is the first quarter since 2007 Q2, in which equity was not the largest part of Portfolio investment at $201.12 million. This type of Portfolio Investment remains considerably subdued relative to previous highs of $4930.55 million in the first quarter of 2013, and $3875.35 million in the second quarter of 2014.

“The second largest component was Other Investment, which accounted for $561.61 million, or 30.80 per cent . As in each quarter in the last year, no capital was imported in the form of Currency or Trade Credits. In addition, other claims decreased further to $0.06 million, which represents only 0.01 per cent of Other.”

As in each quarter over the past two years, FDI accounted for the smallest share of imported capital with a total of $340.64 million imported within this component, or 18.69 per cent of the total.

The report also noted that country from which Nigeria imported by far the most capital was the United Kingdom, which accounted for $1,097.59 million, or 60.24 per cent of the total.

Following the UK, was the United States, which accounted for $426.98 million, or 23.43 per cent of the total.

Both UK and US retained their position as the first and second largest investor into Nigeria in most quarters since 2010.

Netherlands accounted for $94.44 million, or another 5.18 per cent of the total value.

“These three countries together, therefore accounted for roughly nine tenths of total capital imported into Nigeria,” the report stated.