December 31, (THEWILL) – While Nigerian leaders comb the nooks and crannies of the world persuading foreign investors to troop in and invest in Nigeria, the National Bureau of Statistics (NBS) says Foreign Direct Investment (FDI) has shrunk to a paltry $59,77 million in the third quarter of the year (Q3 2023). This represents a decline of 30.52 percent compared with the previous quarter and a decrease of 26.86 percent against the corresponding period of 2022.
The NBS in its latest report titled “Nigeria Capital Importation Q3 2023” revealed that mere $59,77 million representing 9.13 percent of the total capital importation was received.
‘Other Investment’ ranked top accounting for 77.56 percent (US$507.77 million) of total capital importation in Q3 2023, followed by ‘Portfolio Investment’ with 13.31 percent (US$87.11 million).
“In Q3 2023, total capital importation into Nigeria stood at US$654.65 million, lower than US$1,159.67 million recorded in Q3 2022, indicating a decline of 43.55 percent. In comparison to the preceding quarter, capital importation fell by 36.45 percent from US$1,030.21 million in Q2 2023”, the NBS said.
The report further showed that the production/manufacturing sector recorded the highest inflow with US$279.51 million, representing 42.70 percent of total capital imported in Q3 2023, followed by the financing sector, valued at US$127.93 million (19.54 percent), and Shares with US$85.49 million (13.06 percent).
Unlike the past when the United Kingdom topped the originating source, Capital Importation during the reference period originated largely from the Netherlands with US$175.62 million, and recorded 26.83 percent share. This was followed by Singapore with US$79.15 million (12.09 percent) and the United States with US$67.04 million (10.24 percent).
For investment destinations, Lagos state remained the top destination in Q3 2023 with US$308.83 million, accounting for 47.18 percent of total capital importation, followed by Abuja (FCT) with US$194.66 million (29.73 percent) and Abia state with US$150.09 million (22.93 percent).
For financial institutions used to channel the investment, Stanbic IBTC Bank Plc displaced First Bank of Nigeria which topped the chart in the previous quarter. Stanbic IBTC Bank received the highest capital importation into Nigeria in Q3 2023 with US$222.84 million (34.04 percent), followed by Citibank Nigeria Limited with US$190.03 million (29.03 percent) and Zenith Bank Plc with US$83.04 (12.68%).
Foreign direct investment (FDI) is a category of cross-border investment in which an investor resident in one economy establishes a lasting interest in and a significant degree of influence over an enterprise resident in another economy. Ownership of 10 percent or more of the voting power in an enterprise in one economy by an investor in another economy is evidence of such a relationship.
FDI is a key element in international economic integration because it creates stable and long-lasting links between economies. FDI is an important channel for the transfer of technology between countries, promotes international trade through access to foreign markets, and can be an important vehicle for economic development.
The indicators covered in this group are inward and outward values for stocks, flows and income, by partner country and by industry and FDI restrictiveness. Examples of FDI in Nigeria include the telecommunication firms, oil firms, supermarkets and hotels.
It differs from Foreign Portfolio Investment (FPI) which consists of securities and other financial assets held by investors in another country. It does not provide the investor with direct ownership of a company’s assets and is relatively liquid depending on the volatility of the market. Along with FDI, FPI is one of the common ways to invest in an overseas economy. FDI and FPI are both important sources of funding for most economies
Despite the headwinds that characterised the operating environment when the economy slipped into a recession, equity market rallied amid buying interest from domestic investors, especially in bellwether stocks. Domestic investors also stepped up their listings on the local bourse at a time no foreign investor looked towards Nigeria.
Investigation showed that, besides buying pressure, no less than N8 trillion was added to the capital market capitalisation through new listings by eight indigenous firms during the last two year period.
The companies include Access Corporation (N562 billion), BAPlc (N62.5 million), Bua Cement (N3.31 trillion) and Bua Foods (N3.44 trillion).
Others are Geregu (N750 billion), GTCO (N1.030 trillion), Ronchess Global (N223.6 billion) and Sterling Financial Holdings (N74.3 billion).
The impressive performance dazzled market watchers who wondered how domestic investors that had played a minority role in the market dominated by foreign investors, could lift and reposition the local bourse at a very challenging time.
