…As Q4 FDI fell to $344.63m

From Basil Obasi, Abuja

The nation’s unfriendly business environment has again hurt the flow of fresh investments as the National Bureau of Statistics (NBS) latest report has indicated that capital importation into the country declined by 47 per cent from $9.64 billion in 2015 to $5.12 billion in 2016; the lowest over the last nine years. This according to the NBS invariably reflects the numerous economic challenges the nation encountered in 2016.

In the NBS report titled: “Nigerian Capital Importation” released yesterday, it was revealed that of all three types of capital importation including Foreign Direct Investment (FDI), portfolio investment and other investments dropped drastically. For instance between 2015 and 2016, portfolio investment fell the most by 69.81 per cent; FDI declined by 27.83 per cent while other investments increased by 3.48 per cent during the period under review.

This is quite understandable given that for portfolio investment, are made by investors seek quick returns rather than control of management in companies. NBS said this was most likely to be affected by current market conditions while foreign direct investors take a longer-term view, noting therefore that Nigeria’s recession and currency problems may carry less weight in investment decisions.

An analysis of the report shows that the total value of capital imported into Nigeria in the fourth quarter of 2016 was estimated to be $1,548.88 million, which represents a decline of 15 per cent relative to the third quarter, and a fall of 0.52 per cent relative to the fourth quarter of 2015, adding that the level of capital imported was similar in each month of the quarter but the highest was in December, at $555.37 million.

According to the NBS, the decline relative to the previous quarter was entirely due to a decline in portfolio investment; FDI and other investments both increased.

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The report further explained that the quarterly decline in portfolio investment was mainly due to base effects as there were large investments in money market instruments and bonds in the third quarter, which were not matched in the final quarter.

In the final quarter of 2016, other investments formed the largest component of imported capital and accounted for $920.03 million, or 59.40 per cent. This followed a quarterly increase of 63.95 per cent, and a year on year increase of 91.16 per cent.

According to the report, the second largest component of capital importation in the final quarter of 2016 was FDI, which accounted for $344.63 million or 22.25 per cent of the total, representing a growth of 1.17 per cent relative to the previous quarter, and of 179.83 per cent relative to the same quarter of the previous year, the first year on year growth rate in five quarters.

Meanwhile, in the final quarter of 2016, the value of share capital imported was $228.24 million, which represents a decrease of 64.68 per cent relative to the previous quarter, leading to a large decline in the percentage of capital importation accounted for shares, from 35.47 per cent to 14.74 per cent, the lowest recorded.

The oil and gas sector also recorded a large increase of $155.67 million or 90.70 per cent to reach $327.30 million and became the second largest during the period under review.

Comparing the value of capital imported by these sectors to the value in the final quarter of 2015 reveals even larger increases; telecommunications and oil and gas sectors imported capital worth only $13.22 million and $93.37 million respectively in this period.

According to the NBS, the state to import the most capital into Nigeria in the final quarter of 2016 was Lagos, as in all previous quarters while Abuja had the second largest quantity of capital during the year.