Nigeria’s capital importation reached $2.60bn in the second quarter of 2024, thereby portraying a robust increase of 152.81 per cent year-on-year compared to $1.03bn in Q2 2023.
Gatekeepers News reports that National Bureau of Statistics revealed this in the latest capital importation released on Tuesday.
Though the figure marks a substantial annual growth, there is a decline of 22.85 per cent from the $3.38bn recorded in the first quarter of 2024.
The decrease in quarterly figures highlights ongoing fluctuations in investor sentiment, thereby reflecting global economic uncertainties and domestic challenges.
The report goes, “In Q2 2024, total capital importation into Nigeria stood at US$2,604.50 million, higher than US$1,030.21 million recorded in Q2 2023, indicating an increase of 152.81%. In comparison to the preceding quarter, capital importation declined by 22.85% from US$3,376.01 million in Q1 2024.”
Portfolio investments were revealed to be the primary driver of the capital inflows, contributing $1.40bn, or 53.93 per cent of the total.
Oftentimes, these investments involve foreign investors injecting capital into Nigeria’s stocks, bonds, and other financial instruments, aiming for quick returns.
In addition, other investments like loans, trade credits, and other forms of debt financing, followed by $1.17bn, account for 44.92 per cent of the total inflows.
However, Foreign Direct Investment (FDI) lagged significantly with $29.83m, making up a mere 1.15 per cent of the total.
This trend shows a persistent challenge for Nigeria in attracting long-term capital that can drive sustainable economic growth and job creation.
The banking sector was the largest beneficiary of capital importation, with $1.12bn, representing 43.15 per cent of total inflows in the quarter.
The sector’s dominance highlights crucial role of banks as a source of foreign investments, enabling access to Nigeria’s financial markets.
Next, the production/manufacturing sector attracted $624.71m, which is 23.99 per cent of the total.
The influx into production and manufacturing suggests a positive outlook for industrial activities, potentially signalling a gradual recovery in Nigeria’s manufacturing capacity.
Additionally, the trading sector saw significant capital inflows of 569.22m which is 21.86 per cent of the total. It reflects the resilience of trade activities in the nation.
On a geographic basis, Lagos State stood ground as the leading destination for capital importation, with $1.37bn, which is 52.52 per cent of total inflows.
The state remains the commercial hub of Nigeria, offering a strategic entry point for foreign investors due to its robust infrastructure and dynamic business environment.
Coming next was Abuja, with $1.24bn, which is 47.48 per cent of the total.
Ekiti State, however, recorded minimal capital inflows, with just $0.0003m during the quarter, thereby showing the concentration of investment in more established economic centres.
Also, the report revealed the sources of these capital inflows. United Kingdom emerged as the largest contributor, with investments totalling $1.12bn which is 43.01 per cent of the overall capital importation, reinforcing its position as a key partner in Nigeria’s financial landscape.
Next was Netherlands with $577.82m which is 22.19 per cent, while Republic of South Africa ranked third with $255.98m/ 9.83 per cent of the total.
Among banks, Citibank Nigeria Limited led the charge with $818.46m, which is 31.43 per cent of total inflows.
Standard Chartered Bank Nigeria Limited followed with $654.79m/ 25.14 per cent of the total, while Rand Merchant Bank Plc had $488.59m/ 18.76 per cent.
