Economy
Nigeria Grows Foreign Capital Inflows by 594% to $6.3b in Three Months
By Dipo Olowookere
Data released on Friday by the National Bureau of Statistics (NBS) has revealed that the total value of capital imported into Nigeria in the first quarter of this year stood at $6.3 billion.
This, the stats office noted indicated a continuous growth in total Capital Importation into Nigeria in the fourth consecutive quarterly increase since Q2 2017.
NBS disclosed that $6.3 billion worth of the foreign capital attracted by the Africa’s largest market represented a year-on-year increase of 594.03 percent and a 17.11 percent growth over the figure reported in the previous quarter.
Business Post reports that this increase in capital inflow in the first three months of 2018 was driven mainly by Portfolio Investment, which grew from $3.5 billion in the previous quarter to $4.6 billion, accounting for 72.42 percent of the total Capital Importation during the quarter.
The strong growth of Portfolio Investment was mainly due to the increase in Money Market Instruments which recorded a figure of $3.5 billion, accounting for 77.27 percent of total Portfolio Investments in the first quarter.
This sub-category (Money Market Instruments) has grown quite significantly in the past three quarters, recording quarterly growth rates of 603 percent in Q3, 2017, 203 percent in Q4, 2017 and in 62 percent in Q1 2018.
The data showed that Portfolio Investment in the form of Equity and Bonds only recorded $701.61 million and $335.88 million respectively in the quarter under review.
In the report, Business Post gathered that Foreign Direct Investment stood at $246.62 million, falling by 34.83 percent from the figure reported in the previous quarter, and growing by 16.67 percent on a year-on-year basis.
Foreign Direct Investment in Nigeria was still weak when compared to Portfolio Investment and Other Investment, representing only 3.9 percent of total capital imported.
Equity Investment, a sub-category under FDI contributed ($246.61 million) or 99.9 percent of FDI during the quarter, while Other Capital under FDI contributed less than 0.001 percent.
Further check on the data showed that Other Investment recorded $1.49 billion in the first quarter of 2018, declining by 2.29 percent from the previous quarter, however, growing by 289.25 percent compared to the corresponding period of 2017.
This category accounted for 23.67 percent of total Capital Importation in the first quarter of 2018.
As in previous periods, Other Investment was dominated by Loans ($1.27 billion), which accounted for 85.02 percent of Other Investments.
This was followed by Other Claims ($223.49 million), which accounted for 14.98 percent of the category of Capital Importation. Trade Credits and Currency Deposits posted no inflow in the quarter.
The United Kingdom kept its leading role in capital investment in Nigeria in the first quarter of 2018, with $2.25 billion capital invested in Nigeria. This inflow accounted for 35.73 percent of the total of capital inflow in Q1,2018, it was also a 39.89 percent increase from the previous quarter and a growth of 644.55 percent over the corresponding period of last year.
As well as the existence of a historical relationship between the UK and Nigeria, London (the capital of the UK) is also a principal financial center, which explains the high value of foreign capital from the UK.
Since 2010, the UK has accounted for the highest value of capital importation in all but two quarters (both in the second half of 2015).
The country to account for the second most significant value of capital importation was the United States. The US accounted for $1.26 billion in the first quarter of 2018 or 19.99 percent of the total quarterly capital importation.
The US has also been one of the most important investors in Nigeria, usually either the largest or second largest investor country.
The next two largest investors in the first quarter of 2018 were South Africa and Ghana, which recorded $493.22 million and $380.14 million capital inflow into Nigeria in the first quarter respectively.
These two country’s capital investment accounted for 7.82 percent and 6.03 percent of the total quarterly capital importation in Q1 2018.
Capital Importation from South Africa increased by 79.29 percent from the previous quarter and by 673.19 percent relative to the first quarter in 2017.
The first quarter in 2018 was the first time since 2013 that Ghana made a significant capital investment in Nigeria, which made Ghana the fourth largest Capital Importation source country for Nigeria in this quarter.
By Adedapo Adesanya
Market bellwethers, Central Securities Clearing System (CSCS) Plc and FrieslandCampina Wamco Nigeria Plc, lifted the NASD Over-the-Counter (OTC) Securities Exchange by 2.08 per cent on Monday, August 3.
CSCS Plc, the Nigerian securities depository company, gained N10.00 to close at N112.00 per share compared with the previous session’s N102.00 per share, and FrieslandCampina Wamco Nigeria Plc advanced by N4.71 to quote at N152.64 per unit versus last Friday’s N147.93 per unit.
As a result, the NASD Security Index (NSI) added 92.14 points to finish at 4,523.85 points compared with the preceding session’s 4,431.71 points, and the market capitalisation appreciated by N55.31 billion to N2.715 trillion from N2.659 trillion.
Business Post reports that the price of MRS Oil Plc crashed during the trading day by N12.00 to N120.00 per share from N132.00 per share, and UBN Property Plc dipped by 3 Kobo to N1.90 per unit from N1.93 per unit.
Trading data showed that the volume of securities exchanged rose by 113.1 per cent to 1.5 million units from 690,990 units, and the number of deals climbed by 19.2 per cent to 31 deals from 26 deals, while the value of securities slid by 13.1 per cent to N65.2 million from N75.0 million.
Great Nigeria Insurance (GNI) Plc remained the most traded stock by value on a year-to-date basis, with 3.4 billion units valued at N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units sold for N6.5 billion, and CSCS Plc with 76.8 million units traded for N5.5 billion.
GNI Plc also closed the session as the most traded stock by volume on a year-to-date basis, with 3.4 billion units worth N8.4 billion, followed by Infracredit Plc with 2.3 billion units exchanged for N6.5 billion, and Resourcery Plc with 1.1 billion units transacted for N415.7 million.
By Adedapo Adesanya
The Nigeria Revenue Service (NRS) has introduced a 1.5 per cent stamp duty on eligible virtual asset transactions, with the tax deducted directly from the cryptocurrency purchased before it is credited to the buyer’s wallet.
According to the new guidelines issued on Monday, anyone buying Bitcoin (BTC), USDT or other cryptocurrencies in Nigeria will receive fewer digital assets due to the deduction.
This requires registered crypto exchanges and other Virtual Asset Service Providers (VASPs) to withhold the levy in the digital asset being traded and remit it to the government, marking Nigeria’s most comprehensive move yet to bring cryptocurrency transactions into the country’s tax net.
Unlike traditional taxes deducted from a customer’s bank account, the 1.5 per cent charge will be taken from the cryptocurrency itself, meaning buyers will receive less Bitcoin, USDT or other tokens than they paid for.
The tax body stated that “income tax deducted at source and stamp duty shall be remitted to the service in the originating token of the transaction.”
Besides the new stamp duty, the guidelines also clarify how income tax, Value Added Tax (VAT) and other tax obligations will apply to virtual asset activities such as trading, staking, mining and other crypto-related transactions.
To illustrate the new rule, the tax authority said a buyer who pays N1 million for one Bitcoin will receive only 0.985 BTC after 0.015 BTC is deducted as stamp duty and remitted to the government. When that Bitcoin is later sold, the next buyer will also have 1.5 per cent deducted from the cryptocurrency credited to their wallet.
The NRS said the guidelines are intended to provide clarity for taxpayers, crypto exchanges, peer-to-peer (P2P) marketplace operators, financial institutions, tax consultants and all participants in Nigeria’s virtual asset ecosystem.
According to the guidelines, the 1.5 per cent duty applies to eligible virtual asset transactions facilitated through registered exchanges and other recognised intermediaries. Where a cryptocurrency is used to complete a transaction that already attracts stamp duty under the law, the applicable duty on the underlying instrument will also be payable.
For crypto users, the implication is higher transaction costs, as eligible purchases will attract the 1.5 per cent stamp duty, while VAT on exchange service fees and income tax on taxable gains may also apply, depending on the nature of the transaction.
By Adedapo Adesanya
The Naira opened the week on a positive note, as it appreciated against the US Dollar by N3.39 or 0.25 per cent in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Monday, August 3, to N1,364.83/$1 from N1,368.22/$1 last Friday.
However, it suffered a marginal decline against the Pound Sterling in the official market during the session by 10 Kobo to close at N1,837.89/£1 compared with the preceding session’s N1,837.79/£1, and lost 6 Kobo on the Euro to sell at N1,573.93/€1, in contrast to the previous trading day’s N1,573.87/€1.
At the black market segment, the Nigerian currency traded flat against the Dollar yesterday at N1,405/$1, and at the GTBank forex counter, it was unchanged at N1,374/$1.
Interbank FX transactions increased sharply as market makers’ activities raised total Dollar volume exchanged to $137.048 million, more than 132 per cent above $58.990 million in turnover at the previous close. The surge in turnover was driven by increased deals at the NFEM window. The central bank reported that deal count at the interbank FX window rose to 138 from 67 on Friday.
As for the cryptocurrency market, major tokens advanced despite ongoing uncertainty around unresolved Coldcard wallet sweeps that have drained hundreds of Bitcoin (BTC), while traders are watching whether bitcoin can hold above $63,000 through the US session. BTC rose by 1.70 per cent to $63,765.88.
Bitcoin treasury firm Strategy disclosed Monday it sold 1,638 bitcoin for about $105 million between July 27 and Aug. 2, its third sale of 2026, per an SEC filing.
Also, an attacker has moved about 1,816 bitcoins, or roughly $114 million, from more than 5,200 addresses since July 30 in a fourth wave of sweeps targeting BTC in Coldcard-generated addresses.
Cardano (ADA) appreciated by 6.7 per cent to $0.1959, Binance Coin (BNB) gained 1.5 per cent to sell for $590.82, Solana (SOL) jumped by 1.3 per cent to $73.72, TRON (TRX) soared by 0.9 per cent to $0.3286, Dogecoin (DOGE) also grew by 0.9 per cent to $0.0703, Ripple (XRP) advanced by 0.5 per cent to $1.07, and Ethereum (ETH) rose by 0.4 per cent to $1,863.33, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 apiece.
