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
The NASD Over-the-Counter (OTC) Securities Exchange extended its stay in the south for the fourth consecutive session after it shed 1.18 per cent on Friday, March 13.
The unlisted securities market recorded a loss despite closing without a price decliner, and ending with two price gainers led by Geo Fluids Plc, which gained 1o Kobo to sell at N3.10 per share compared with the previous day’s N3.00 per share. Industrial and General Insurance (IGI) Plc appreciated during the session by 2 Kobo to trade at 54 Kobo per unit versus Thursday’s closing price of 52 Kobo per unit.
When the market closed for the day, the market capitalisation lost N29.83 billion to close at N2.489 trillion compared with the N2.519 trillion it finished a day earlier, and the NASD Unlisted Security Index (NSI) crashed by 49.84 points to 4,160.46 points from 4,210.31 points.
Market activity improved yesterday, as the volume of transactions rose 179.5 per cent to 10.4 million units from 3.7 million units, but the value of trades declined by 68.4 per cent to N29.9 million from N95.0 million, while the number of deals weakened by 11.5 per cent to 46 deals from 52 deals.
Central Securities Clearing Systems (CSCS) Plc remained the most active stock by value on a year-to-date basis with 38.4 million units worth N2.4 billion, Okitipupa Plc followed with 6.4 million units traded at N1.1 billion, and FrieslandCampina Wamco Nigeria Plc transacted 6.3 million units for N584.3 million.
Resourcery Plc ended the trading session as the most traded stock by volume on a year-to-date basis with 1.1 billion units valued at N415.6 million, trailed by Geo-Fluids Plc with 130.8 million units valued at N504.5 million, and CSCS Plc with 38.4 million units worth N2.4 billion.
By Adedapo Adesanya
The Naira continued to claw back some gains against the Dollar in the different segments of the foreign exchange (FX) market, as its value was strengthened on Friday.
In the black market, it gained N10 against the United States Dollar yesterday to close at N1,400/$1 compared with the preceding day’s rate of N1,410/$1, and at the GTBank forex counter, it chalked up N6 to close at N1,385/$1, in contrast to the N1,391/$1 it was traded a day earlier.
Similarly, in the Nigerian Autonomous Foreign Exchange Market (NAFEX), it appreciated against the greenback during the session by N5.28 or 0.38 per cent to quote at N1,366.23/$1 versus Thursday’s closing price of N1,371.51/$1.
It also improved its value against the Pound Sterling in the official market on Friday by N21.81 to settle at N1,812.99/£1 compared with the previous day’s N1,834.80/£1, and gained N13.86 against the Euro to sell at N1,568.03/€1 versus N1,581.89/€1.
Pressure eased further on the FX market as the Central Bank of Nigeria (CBN) continued interventionist operations this week, selling Dollars to banks to boost liquidity after a $500 million boost last week.
This was complemented by inflows from foreign investors, exporters and non-bank corporates, among others, while Nigeria’s gross external reserves remained above $50 billion, the highest since 2009.
The Governor of the apex bank, Mr Yemi Cardoso, also eased fears of a Naira devaluation, saying the country’s financial system has been strengthened by reforms.
Regardless, external pressure looms as the US Dollar strengthened globally due to its war with Iran, now ongoing for three weeks.
Meanwhile, the cryptocurrency market was largely down as traders and investors continue to align with current realities.
The market is adapting to the conflict in real time. Early in the war, every headline produced an outsized reaction because nobody could price the tail risk. Now, traders have a framework where strikes happen, oil spikes and bitcoin dips only to recover again.
Cardano (ADA) depreciated by 3.8 per cent to $0.2623, Dogecoin (DOGE) lost 1.7 per cent to finish at $0.0948, Ripple (XRP) slumped 1.5 per cent to $1.39, Solana (SOL) dropped 1.4 per cent to sell for $87.33, Binance Coin (BNB) went down by 1.3 per cent to $653.58, Bitcoin (BTC) declined by 1.1 per cent to $70,670.63, and Ethereum (ETH) decreased by 0.9 per cent to $2,078.78.
However, TRON (TRX) appreciated by 1.7 per cent to $0.2941, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 apiece.
By Adedapo Adesanya
The price of the major crude oil grade, Brent crude oil, closed above $100 on Friday for the second consecutive session, as the Iran war heads toward its third week, with oil tanker traffic through the Strait of Hormuz still effectively at a standstill.
It gained 2.67 per cent or $2.68 during the trading day to close at $103.14 per barrel, while the US West Texas Intermediate (WTI) crude oil grade appreciated by 3.11 per cent or $2.98 to settle at $98.71 per barrel.
Brent futures were up about 10 per cent for the week following the 27 per cent rise seen last week, which marked the biggest weekly gain in oil prices since the COVID-19 pandemic in 2020. WTI futures, which saw their best week since 1983 last week, ended the week more than 8 per cent higher.
US President Donald Trump said American forces launched a major bombing raid on Iran’s strategic Kharg Island, targeting military facilities on the key Persian Gulf outpost while warning Iran that its vital oil infrastructure could be destroyed if shipping in the Strait of Hormuz is disrupted.
The terminal accounts for roughly 90 per cent of Iranian crude shipments, loading millions of barrels per day onto tankers bound largely for Asian markets.
The US and Israel’s strikes in the conflict have largely targeted Iranian military and nuclear infrastructure. Oil facilities elsewhere in Iran have been hit, but Kharg’s massive storage tanks, jetties, and pipelines had remained untouched until the latest strike.
Iran’s new supreme leader, Mojtaba Khamenei, vowed to keep fighting in a message delivered via state television.
There have been a number of attacks on foreign ships in or near the Strait, feeding into concerns that a prolonged war could translate to a global economic shock.
Prices are rising despite the US and its allies rolling out some measures to keep a lid on energy costs.
The International Energy Agency (IEA) has agreed to release 400 million stockpiled barrels, the largest such action in history.
The US has issued a 30-day waiver for India to purchase sanctioned oil from Russia. President Donald Trump is considering loosening rules under the Jones Act that require American ships to transport goods between domestic ports, including oil and gas, in an effort to lower costs.
Traders are continuing to monitor developments in the Middle East.
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