Economy
Nigeria’s Q1 Capital Inflows Drop 28% as FDI, Other Investments Shrink
By Adedapo Adesanya
The total capital importation into Nigeria in the first three months of 2023 stood at $1.13 billion, as it dropped 28 per cent compared to $1.57 3 billion recorded in the same period of last year.
Capital importation refers to the movement of money into Nigeria from other countries for the purpose of investment, trade, or business operations. They are divided into three main investment types: Foreign Direct Investment (FDI), Portfolio Investment, and Other Investments, each comprising various sub-categories.
According to the National Bureau of Statistics (NBS) in its Nigerian Capital Importation -Q1 2023 report, at $1.13 billion, the country’s capital importation, when compared to the preceding quarter, rose by 6.78 per cent from $1.06 billion in Q4 2022.
Of the three investment types, the largest capital inflows during the period were from Portfolio Investment, which stood for $649.28 million and accounted for 57.32 per cent of capital imported in Q1 2023. This saw a 127.6 per cent jump compared to $285.26 million in Q4 2022.
This was followed by Other Investments, which amounted to $435.76 million and was 38.31 per cent of the total capital injected into the country. This dropped 34.5 per cent compared to $665.61 million in the last three months of last year.
Also, Foreign Direct Investment (FDI) continued to struggle, contributing just $47.60 million or 4.2 per cent in the first quarter. This represented a 41.8 per cent slide versus $81.72 million on record in Q4 2022.
The NBS showed that Lagos state remained the top destination in Q1 2023 with $704.87 million, accounting for 62.2 per cent of total capital investment in Nigeria. This was followed by Abuja (FCT), valued at $410.27 million (36.2 per cent).
Others include Akwa Ibom at $5.21 million, and Adamawa at $4.50 million, while Anambra raked in $4.00 million in the period under review.
Disaggregated by sectors, capital importation into the banking sector recorded the highest inflow of $304.56 million, representing 26.9 per of the total capital imported. This was followed by capital imported into the production sector, valued at $256.12 million (22.61%), and IT Services with $216.06 million (19.1 per cent). Financing and trading joined with $118.66 million and $91.53 million, respectively.
Capital Importation by Country of Origin revealed that capital from the United Kingdom ranked top in Q1 2023 with $673.64 million, accounting for 59.5 per cent. This was followed by the United Arab Emirates (UAE) and the United States, valued at $108.28 million (9.6 per cent) and $95.36 million (8.4 per cent), respectively.
South Africa was the only African trade partner as it saw $91.14 million enter into the country, while Singapore followed with $69.84 million.
By Destination of Investment, Categorization of Capital Importation by Banks shows that Citibank Nigeria Limited ranked top in Q1 2023 with $424.13 million (37.4 per cent). This was followed by Standard Chartered Bank Nigeria Limited with $360.33 million (31.8 per cent) and Stanbic IBTC Bank with $151.85 (13.41 per cent).
By Adedapo Adesanya
The Nigerian Exchange (NGX) Limited is seeking review of the controversial Capital Gains Tax increase, fearing it will chase away foreign investors from the country’s capital market.
Nigeria’s new tax regime, which takes effect from January 1, 2026, represents one of the most significant changes to Nigeria’s tax system in recent years.
Under the new rules, the flat 10 per cent Capital Gains Tax rate has been replaced by progressive income tax rates ranging from zero to 30 per cent, depending on an investor’s overall income or profit level while large corporate investors will see the top rate reduced to 25 per cent as part of a wider corporate tax reform.
The chief executive of NGX, Mr Jude Chiemeka, said in a Bloomberg interview in Kigali, Rwanda that there should be a “removal of the capital gains tax completely, or perhaps deferring it for five years.”
According to him, Nigeria, having a higher Capital Gains Tax, will make investors redirect asset allocation to frontier markets and “countries that have less tax.”
“From a capital flow perspective, we should be concerned because all these international portfolio managers that invest across frontier markets will certainly go to where the cost of investing is not so burdensome,” the CEO said, as per Bloomberg. “That is really the angle one will look at it from.”
Meanwhile, the policy has been defended by the chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr Taiwo Oyedele, who noted that the new tax will make investing in the capital market more attractive by reducing risks, promoting fairness, and simplifying compliance.
He noted that the framework allows investors to deduct legitimate costs such as brokerage fees, regulatory charges, realised capital losses, margin interest, and foreign exchange losses directly tied to investments, thereby ensuring that they are not taxed when operating at a loss.
Mr Oyedele also said the reforms introduced a more inclusive approach to taxation by exempting several categories of investors and transactions.
By Adedapo Adesanya
Food Concepts Plc neutralized the gains recorded by three securities, returning the NASD Over-the-Counter (OTC) Securities Exchange into the negative territory with a 0.27 per cent loss on Thursday, December 4.
Yesterday, the share price of the parent company of Chicken Republic and PieXpress declined by 34 Kobo to sell at N3.15 per unit compared with the previous day’s N3.49 per unit.
This shrank the market capitalisation of the OTC bourse by N5.72 billion to N2.136 billion from N2.142 trillion and weakened the NASD Unlisted Security Index (NSI) by 9.57 points to 3,571.53 points from 3,581.10 points.
Business Post reports that Central Securities Clearing System (CSCS) Plc went down by 50 Kobo to N38.50 per share from N38.00 per share, FrieslandCampina Wamco Nigeria Plc gained 29 Kobo to sell at N55.79 per unit versus N55.50 per unit, and Geo-Fluids Plc added 5 Kobo to close at N4.60 per share compared with Wednesday’s closing price of N4.55 per share.
Trading data indicated that the volume of securities recorded at the session surged by 6,885.3 per cent to 4.3 million units from the 61,570 units posted a day earlier, the value of securities increased by 10,301.7 per cent to N947.2 million from N3.3 million, and the number of deals went up by 146.7 per cent to 37 deals from the 15 deals achieved in the previous trading session.
At the close of business, Infrastructure Credit Guarantee Company (InfraCredit) Plc was the most traded stock by value on a year-to-date basis with the sale of 5.8 billion units for N16.4 billion, trailed by Okitipupa Plc with 170.4 million units worth N8.0 billion, and Air Liquide Plc with 507.5 million units valued at N4.2 billion.
InfraCredit Plc also finished the session as the most traded stock by volume on a year-to-date basis with 5.8 billion units transacted for N16.4 billion, followed by Industrial and General Insurance (IGI) Plc with 1.2 billion units sold for N420.2 million, and Impresit Bakolori Plc with 536.9 million units traded for N524.9 million.
By Dipo Olowookere
The upward trend witnessed at the Nigerian Exchange (NGX) Limited in recent sessions continued on Thursday as it further improved by 0.10 per cent.
This was despite investor sentiment turning bearish after the local equity market ended with 23 price gainers and 28 price gainers, indicating a negative market breadth index.
UAC Nigeria gained 10.00 per cent to finish at N88.00, Morison Industries appreciated by 9.94 per cent to N3.54, Ecobank rose by 8.53 per cent to N36.90, and Coronation Insurance grew by 8.47 per cent to N2.56.
On the flip side, Ellah Lakes depreciated by 10.00 per cent to N13.14, Eunisell Nigeria also shed 10.00 per cent to finish at N72.90, Transcorp Hotels slipped by 9.95 per cent to N157.50, Omatek shrank by 9.23 per cent to N1.18, and Guinea Insurance dipped by 8.46 per cent to N1.19.
Yesterday, the All-Share Index (ASI) went up by 152.28 points to 145,476.15 points from 145,323.87 points and the market capitalisation chalked up N97 billion to finish at N92.726 trillion compared with the previous day’s N92.629 trillion.
Customs Street was bubbling with activities on Thursday, though the trading volume and value slightly went down, according to data.
A total of 1.9 billion stocks worth N19.2 billion exchanged hands in 23,369 deals during the session versus the N2.3 billion valued at N21.0 billion traded in 21,513 deals a day earlier.
This showed that the number of deals increased by 8.63 per cent, the volume of transactions depleted by 17.39 per cent, and the value of trades decreased by 8.57 per cent.
For another trading day, eTranzact led the activity chart with 1.6 billion units sold for N6.4 billion, Fidelity Bank traded 31.0 million units worth N589.3 million, GTCO exchanged 28.3 million units valued at N2.5 billion, Zenith Bank transacted 27.1 million units for N1.6 billion, and Ecobank traded 21.9 million units worth N744.3 million.
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