The recent report released by National Bureau of Statistics witnessed a modest increase in total capital importation during the first quarter of 2023.
The statistics from NBS showed that Nigeria attracted a total of $1.13 billion in capital inflows, reflecting a 6.78 per cent growth from the last quarter 2022.
This amount represents a significant decline of 28 per cent when compared to the capital importation recorded in first quarter 2022,
which stood at $1.57 billion.
The decline in capital importation attributed to a variety of factors, including the prevailing global economic uncertainty as well as the
persistent political instability within Nigeria. These factors have likely contributed to a cautious approach among foreign investors, leading to a decline in capital inflows.
Within the various categories of capital
importation, portfolio investment
emerged as the largest source of
inflows during first quarter of 2023, accounting for $649.28 million or 57.32 per cent of the total capital imported.
This surge in foreign portfolio investment can be attributed to the implementation of market-focused and progressive policies advocated by presidential aspirants during the pre-election period.
These policies have successfully piqued the interest of foreign portfolio investors, encouraging them to explore investment opportunities in Nigeria’s equities market as they test the waters during a period of political transition.
In terms of the breakdown by investment type, portfolio investment claimed the largest share of capital importation, amounting to $649.28 million or 57.32 per cent of the total.
It was followed by other investment at $435.76 million or 38.31 per cent,
and foreign direct investment (FDI) at $47.60 million or 4.20 per cent.
Analyzing the capital flows through portfolio
investments, investments in fixed income instruments (specifically bonds) witnessed a significant quarter-on-quarter
increase of 108.4 per cent, rising from $144.4 million in fourth quarter of 2022 to $301.08 million.
However, when compared to the same
period in 2022, there was a slight decline of 2.9 per cent from $310.06 million. Interestingly, this decline occurred despite a
3.6 per cent quarter-on-quarter increase in fixed income yields, reaching 14.31 per cent in December 2022, indicating that other
factors may have influenced investor decisions.
