The total value of capital imported into Nigeria, in the first quarter of 2016 was $710.97 million, the National Bureau of Statistics said on Wednesday, saying it was the lowest since it began tracking the inflow since 2007.
This marked a year-on-year decline of 73.79 percent. It also represents a 54.34% decline since the last quarter of 2015.
Nigeria, Africa’s top oil exporter and biggest economy is going through its worst economic crisis in years, caused by low crude prices.
This prompted the Central Bank of Nigeria to impose currency controls.
NBS said both the quarterly and year on year declines were also the lowest recorded since the series began.
“As a result of these changes, total capital importation has fallen by 89.13% since its peak level in the third quarter of 2014.
“The scale of the decline in capital importation in the first quarter of 2016 is symptomatic of the challenging period that the Nigerian economy is going through following the fall in crude oil prices. Although there a number of reasons why the amount of capital imported in recent years may have been higher than usual (such as the inclusion of Nigerian in the JP Morgan Bond Index, and globally low interest rates triggering a search for higher yields over this period) the fact that the amount of capital imported has dropped to a record low suggests that there are further reasons why Nigeria has attracted less foreign investment in recent quarters.
“Investors may be concerned about whether or not they will be able to repatriate the earnings from their investments, given the current controls on the exchange rate. In addition, as growth has slowed in recent quarters, there may be concerns about the profitability of such investments.”
The NBS report also noted the complexion of the capital inflow.
“The first quarter of 2016 also saw a large change in the composition of capital imported. Following a quarterly decline in portfolio investment of 71.55% (also the largest quarterly fall on record) portfolio investment accounted for 38.12% of total capital imported, compared to 61.18% in the previous quarter.
“However, it remained the largest component, as Other Investment also recorded a sharp quarterly decline, of 44.84%, which prevented its share from rising higher than that of portfolio investment. Whereas Other Investment accounted for 30.91% in the final quarter of 2015, this share had risen to 37.34% in the first quarter of 2016.”