THE banking sector has been adjudged the first on the list of sector recipients of capital importation, receiving about 42 per cent of all capital inflow into the country in the second quarter (Q2) of 2022.
Information from the Central Bank of Nigeria (CBN’s) latest data series on capital importation shows that the manufacturing, finance and telecommunications sectors also received 15 per cent, 13 per cent, and 10 per cent of the overall capital inflow, respectively.
Meanwhile, the value of total capital imported into the country in Q2 ’22 declined marginally by -2 per cent quarter-on-quarter (q/q) to $1.5 billion. However, on a year-on-year (y/y) basis, it was up 75 per cent.
The data was compiled by the CBN, using information on banking transactions from all registered financial institutions in Nigeria.
According to the Central Bank, the data are gross and not adjusted for capital exports.
Despite the y/y increase, the value of capital imported into the country has not recovered to the pre-COVID-19 pandemic levels, it stated.
To put things in context, the $1.5 billion worth of capital imported into the country in Q2’22 pales in comparison to the $5.1 billion average quarterly run rate for the eighth quarters leading to Q1’20 which marked the start of the pandemic, the CBN noted.
Portfolio investments which declined by -21 per cent q/q (+37 per cent y/y) to $757 million accounted for 49 per cent of the total capital import. It consisted mostly of investments in money market funds and bonds valued at $423 million and $322 million, respectively.
According to the CBN data, portfolio investments in equity accounted for a paltry $12.7million, largely because of offshore investors’ apathy towards Nigerian equities following foreign exchange (FX) liquidity constraints and difficulties repatriating funds out of Nigeria.
Other investment inflow grew by about 37 per cent q/q to $631million and was the second largest component of capital import. Its growth was mainly driven by loans of $596 million.
The balance of $147 million was from foreign direct investment (FDI) inflow, of which about $142 million was FDI inflow into equity investments.
Only three states and the Federal Capital Territory (FCT) managed to attract capital inflow during the quarter. Lagos State attracted c.69 per cent of total. Abuja also had a 30 per cent share. The tiny balance was split among Anambra, Kogi, and Imo states.
The UK was the leading source of capital into the country at $781 million. Singapore and South Africa were next with $139 million, and $122 million, respectively.
Given the pace of monetary tightening by top Central Banks globally and challenges with FX domestically, analysts do not anticipate a significant increase in capital imports in the near term.
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