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).