Oil Rich S’South, Conflict Ridden N’East Attract $0 into Nigeria in Q2 2020

September 19, 2020
Capital Importation Q2'20

By Adedapo Adesanya

Nigeria’s capital importation dropped 78 per cent year-on-year in the second quarter of the year as $1.3 billion was received as FX inflow in the period under review.

However, out of this amount, it was observed that only four of the six geo-political zones of the country made contribution to the inflow, while two provided nothing.

Nigeria is divided into six geo-political zones; South-West, South-East, South-South, North-West, North East and North-Central.

In the Nigerian Capital Importation Q2 2020 report released by the National Bureau of Statistics (NBS) recently, only South-South and North East regions of the country did not attract external funds between April and June 2020.

In the report by the stats office, the decline in capital inflows of $1.3 billion in the second quarter of this was attributed to the effect of COVID-19 pandemic, which halted economic activities in most parts of the world.

In Q2 2020, none of the six states in the South-South region of Nigeria; Akwa-Ibom, Bayelsa, Cross-River, Delta, Edo, and Rivers attracted any form of foreign capital into the country just like the six states in the North-Eastern territory; Adamawa, Bauchi, Borno, Gombe, Taraba, and Yobe.

The South-South, otherwise known as the Niger Delta, is where crude oil, which brings in the lion share of the country’s foreign exchange is sourced from. Equally, three of the four government-owned refineries are located in the region but they have become unproductive and are shut down, according to the Group Managing Director of the Nigerian National Petroleum Corporation, Mr Mele Kyari.

The North East is faced by conflicts imposed by the Boko Haram terrorists and bandits, with many inhabitants of the region displaced from their homes, making it difficult to attract any foreign investments or businesses.

If this analysis was to be done by states, only six out of the 36 states of the federation and the Federal Capital Territory (FCT) attracted foreign investment into Africa’s largest economy in the period under review.

Two states in the South West raked in $1.14 billion led by Lagos State responsible for the chunk of $1.13 billion while its neighbour, Ogun State, recorded $11 million for the period. Meaning that states like Oyo, Osun, Ondo, and Ekiti were blank in terms of FX inflows.

In the South-East, the NBS data showed that only Anambra made a contribution of $1.16 million in the period while counterpart states like Abia, Ebonyi, Enugu, and Imo did not attract foreign investment.

In the North-Central, the input of the FCT ($145.30 million) and Niger State ($6.9 million) totalling $152.2 million was the investment that came from the region, while states such as Benue, Kogi, Kwara, Nasarawa, and Plateau had no foreign investment in the period under review, according to the stats office.

Kano was the only state located in North West region which brought capital importation to the country as it saw an investment of $130,000 while Kaduna, Sokoto, Jigawa, Kebbi, Zamfara, and Katsina had no inflow.

The NBS showed that the largest amount of capital importation by type in Q2 2020 was received through other investments, which accounted for 58.8 per cent ($761.03 million) of total capital imported during the quarter. Inflows from other investments declined by 42.8 per cent as against $1.33 billion received in the previous quarter and a further 48.6 per cent reduction compared to $1.48 billion recorded in the corresponding quarter of 2019.

The United Kingdom emerged as the biggest source of capital investment in Nigeria. In Q2 2020, investment from the UK amounted to $428.8 million, a decline of 85.3 per cent compared to $2.91 billion recorded in the previous quarter and 87.1 per cent compared to $3.33 billion in Q2 2019.

Other countries that accounted for the biggest share of capital inflows into Nigeria during the period were South Africa ($149.3 million), UAE ($145.2 million), Netherlands ($141.3 million) and Singapore (134.4 million).

Adedapo Adesanya

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

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