Examining Capital Inflow

Firstbank promotes diaspora remittances, rewards customers with extra N5 for every dollar received. Ugo Aliogo examines.

First Bank of Nigeria Limited, Nigeria’s leading financial inclusion services provider is rewarding customers with N5 for every dollar received through foreign remittances. The N5 for a dollar incentive is paid to FirstBank’s customers regardless of their preference to collect the USD as cash across the counter in any of the Bank’s over 750 branches nationwide or as transfer into the customers domiciliary accounts.

The reward to customers is in line with the Central Bank of Nigeria (CBN) ‘Naira 4 Dollar scheme’, driven to promote diaspora remittances into the country. For instance, a customer that receives 10,000 USD, gets N50, 000 as reward. The scheme runs from Monday, 8 March – Saturday, 8 May 2021.

FirstBank pioneered international funds transfer and remittances over 25 years ago and has been at the forefront of promoting cross border payments in the country, having started the journey with Western Union Money Transfer. The Bank’s wealth of experience and operation in over 750 locations nationwide gives it the edge in the market.

Only recently, the Bank launched the First Global Transfer (FGT) product to promote international transfer of funds across its subsidiaries in sub-Saharan Africa. The Bank’s subsidiaries in Africa include FBNBank DRC, FBNBank Ghana, FBNBank Gambia, FBNBank Guinea, FBNBank Sierra-Leone, FBNBank Senegal.

Nigeria’s capital inflow is categorized into three investment types: Portfolio Investment, Foreign Direct Investment (FDI), and Other Investment.

Report shows that Nigeria capital inflows for 2020 has not been be encouraging, a report from the Nigeria Bureau of Statistics (NBS) stated that the country received a sum of $9.68 billion from capital inflows in 2020, as against $23.99 billion received in 2019.

According to the report, the inflows of $9.68 billion represent 59.6% decline when compared to $23.99 billion recorded in 2019 and 42.4% reduction compared to $16.81 billion recorded in 2018.

Findings by THISDAY disclosed that Nigeria recorded its lowest capital inflows in the past four years in 2020. The last time Nigeria recorded inflows less than $9 billion was 2016 when it received $5.12 billion in foreign capital inflows.

It was discovered that the largest amount of capital inflows by type was received through portfolio investment ($5.14 billion), which accounted for 53.1% of the total capital imported in 2020. While other investments followed with a total of $3.51 billion, representing 36.3% of the total.

However, foreign direct investment in the period under review was $1.03 billion. But the banking sector received the giant share of $3.75 billion, which accounted for 38.75% of the total inflows.

THISDAY findings explained that portfolio investment formed the highest type of capital investment into Nigeria with a total inflow of $5.14 billion, representing 53.1% of the total inflows.

The breakdown shows that $4.15 billion was received through Money market instruments, $755.1 million in form of equity while $231 million was received in form of bond investments.

In the year 2020, $3.51 billion was received in form of other investments, accounting for 36.3% of the total inflows. A cursory look at the breakdown shows that $2.58 billion was received through loans, $934.6 million from other claims, $820,000 as currency deposits while $50,000 from trade credits.

FDI is an investment in the form of a controlling ownership in a business in one country by an entity based in another country. The report shows that 10.6% of the total inflow was in form of foreign direct investment.

The breakdown shows that $1.03 billion was in form of equity while $2.95 million was received in form of other capital.