With $12.2bn, Capital Inflows Rise by 138.7% in 2017

  •  Buhari excited as Qatar announces plan to invest in Nigeria

Ndubuisi Francis and Omololu Ogunmade in Abuja

The National Bureau of Statistics (NBS) has disclosed that the total capital imported into the country in 2017 stood at $12.23 billion, signposting an increase of $7.104 billion or 138.7 per cent from the figure recorded in 2016.

Also, in the fourth quarter of 2017, capital inflows stood at $5.38 billion, representing an annual growth of 247.5 per cent, and a quarterly growth of 29.9 per cent, the statistical agency revealed Thursday in its fourth (Q4) 2017 and full year 2017 capital importation report.

A breakdown of the figures indicated that capital importation in 2017 was mainly driven by an increase in portfolio investment, which went up by $5.52 billion from the previous year to reach $7.33 billion in 2017, and accounting for 60 per cent of capital imported.
In the fourth quarter, total capital imported when compared to the previous quarter increased by $1.29 billion.

Capital Importation is broken into three main investment types: Foreign Direct Investment (FDI), Portfolio Investment and Other Investments, each comprising various sub-categories.

Portfolio investments, which recorded $3.48 billion in the fourth quarter of 2017, remained the largest component of capital imported, contributing 64.6 per cent or $5.38 billion of the total.
It increased significantly year-on-year, posting a rise of 1,123.5 per cent or $3.19 billion, expanding faster than the two other components of capital importation.

FDI stood at $378.4 million in Q4, indicating a year-on-year increase of 9.8 per cent and a substantial increase of 221.8 per cent over the preceding quarter, while Other Investment stood at $1.53 billion, growing by 66 per cent when compared to Q4 of 2016.

The growth in FDI was mainly driven by equity investments, which contributed 99.8 per cent, while other capital investments contributed 0.2 per cent.

“Portfolio Investments were the main driver of capital importation in the fourth quarter of 2017, with $3.48 billion, representing a quarter-on-quarter growth of 25.7 per cent. Year-on-year, it increased by 1,123.5 per cent, which is over twelve times the figure recorded in Q4 2016 ($284.2 million).

“The increase in Portfolio Investments was driven by a strong growth in money market instruments, which rose to $2.18 billion, the first time since Q3 2013.

“Money market instruments contributed 63 per cent to Portfolio Investments. Equities which had been the main driver of Portfolio Investments in previous quarters, dropped by $942.9 million, from $1,932.1 million in Q3 to $989.2 million in Q4 2017.

“On the other hand, bonds recorded an increase of $194.1 million, from $115.4 million in Q3 to $309.5 million in Q4 of the same year,” the NBS said.

The statistical agency disclosed that Other Investments accounted for 28.4 per cent of total capital importation in the fourth quarter of 2017.

This category of capital importation, it pointed out, grew 65.96 per cent year-on-year, and by 21.2 per cent when compared to the previous quarter.

The $1.53 billion recorded by Other Investments was mainly in the form of loans, which stood at $1.09 billion in the fourth quarter, followed by other claims at $425.7 million, and trade credits, which reported $10 million, having posted no inflows since Q4 2016.

Going by the proportion of shares to total capital importation between the first quarter 2015 and Q4 2017, banking shares became the second leading sector to attract the highest amount of capital inflows, attracting $543.4 million or 10.1 per cent of total capital, an increase of 5.8 per cent from the previous quarter.

Next to banking was production, which accounted 5.9 per cent for total capital investments. Capital Importation to servicing dropped from $586.97 million in the previous quarter to $216.45 million in the fourth quarter, while $99.4 million flowed to the fishing sector.

Capital Importation to the telecommunications, financing and construction sectors also increased strongly compared to the previous quarter.

Capital is either imported in the form of shares, or directly imported to different sectors of the economy.

Share capital investment, which is closely related to equity investment (FDI and portfolio) was largely responsible for the huge increase in capital importation in the fourth quarter of 2017.
The component of shares has been on the increase since the first quarter of 2017 and by the fourth quarter it accounted for 68.4 per cent of total capital importation.

In the fourth quarter of 2017, of the $5.38 billion capital imported, $3.680 billion was invested in shares, representing a growth of 1,512.5 per cent year-on-year.

State by state, capital importation for the fourth quarter of 2017 showed that Abuja attracted the highest amount of foreign capital, accounting for $2.68 billion or 49.8 per cent.
This was an increase of 227.8 per cent from the figure recorded in the third quarter of 2017 ($817.6 million).

Lagos, which has always had the highest share of capital importation, had its share drop from 79.5 per cent of the total share in Q3 2017, to 47.4 per cent in Q4, 2017.
Other states including Akwa Ibom, Ogun, Oyo and Delta also attracted foreign capital investments.

The data also showed that the country from which Nigeria imported the most capital was the United Kingdom, accounting for $1.61 billion, or 30 per cent of the total of capital inflows in Q4 2017.

This value was a decline of 7.3 per cent relative to the figure in the previous quarter, but a 233.4 percentage growth over the corresponding period of last year.

“As well as the existence of an historical relationship between the UK and Nigeria, London (the capital of the UK) is also a key financial centre, 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 that accounted for the second largest value of capital importation was the United States. The U.S. accounted for $1 billion in the fourth quarter of 2017, or 18.6 per cent. The U.S. has also been one of the most important investors in Nigeria, usually either the largest or second largest investor country.

“It has also been historically the largest economy in the world and is active in foreign investments globally. The next two largest investors in the fourth quarter of 2017 were Belgium, accounting for 10.2 per cent and Singapore (7.7 per cent),” said the NBS.

A further breakdown of the figures showed that in the fourth quarter of 2017, the bank through which the highest share of capital was imported was Stanbic IBTC Bank, which accounted for 50.7 per cent ($2.7305 billion) of the total, up from the 40.2 per cent recorded in the third quarter of 2017.

This was followed by Standard Chartered Bank, which accounted for 15.1 per cent share or ($811 million) of capital importation.

The top five banks through which capital was imported in the fourth quarter were Stanbic IBTC Bank, Standard Chartered Bank, Zenith Bank Plc, Citibank Nigeria Limited and Access Bank Plc, all accounting for 87 per cent of capital importation in the fourth quarter.

Qatar Eyes Nigerian Sectors

Even as the NBS released the fourth quarter and annual capital importation report Thursday, President Muhammadu Buhari expressed delight over the massive rise in foreign private investments in Nigeria as a result of the success of his administration’s economic agenda.

A statement by his media aide, Malam Garba Shehu, said he made the remark at a meeting with a Qatari business delegation led by Sheikh Hamad Bin Khalifa Al-Thani at the State House, Abuja, Thursday.

He said the president pointed out that the federal government’s economic agenda was designed to move the country from over-reliance on crude oil and food importation, adding that the policy has in the past two years, turned Nigeria into one of the most attractive investment destinations in Africa.
“My administration’s economic agenda has always been to move away from over reliance on crude oil and food importation. Nigeria is a blessed country. We have fertile land. We have a young and energetic population. And we have a very strong legal and regulatory system that protects capital and investments, both local and foreign.

“As you are aware, Nigeria just exited its worst recession in more than two decades. We have more than doubled our foreign reserves. We are winning the war against corruption. We are developing our infrastructure. And we are enforcing the rule of law.

“As a result of these, we are seeing significant growth in the non-oil sector which is creating thousands of jobs across the country,” the president was quoted to have said.

The president, Shehu added, cited the current strategic partnership between Moroccan and Nigerian fertiliser companies as part of the success stories.

“Today, due to this alliance, Nigeria has over 13 functioning fertilizer blending plants with another four in the pipeline. This is purely driven by the private sector.

“In 2017 alone, we saw significant commitments and agreements by major global organisations in infrastructure projects such as the $9 billion Dangote refinery and petrochemical complex in Lagos; the completed $600 million Lafarge plant in Calabar; the proposed rail stock; the proposed $1.3 billion public-private partnership with General Electric on rail track development; and the proposed ENI/Agip rehabilitation of the Port Harcourt refinery.

“You can see clearly that foreign private companies are coming back to Nigeria and making massive investments within our existing legal and regulatory framework,” he was further quoted to have said.

According to the statement, Al-Thani, in his remarks, said the global opinion on Nigeria as an investment destination has been boosted by Buhari’s strong standing against corruption and adherence to the rule of law.

It also said he expressed his delegation’s interest in investing in Nigeria’s oil, railway, aviation and power sectors.