Capital importation falls 12.53% in 2014

In the National Bureau of Statistics’ (NBS) Nigerian Capital Importation Q2 2018 report just released, there is a decrease of 12.53 percent compared to capital importation for the first quarter.
Experts say it is not unexpected due to the political situation in the country, BENJAMIN UMUTEME reports.
The second quarter report on the Nigerian Capital importation by the National Bureau of Statistics revealed that total value of capital importation into the country stood at $ 5,513.55 million.
This was a decrease of 12.53 per cent compared to Q1 2018, but a 207.62 per cent increase compared to the second quarter of 2017.
According to the report, the decline recorded was as a result of a decline in portfolio and other Investments, which declined by 9.76 per cent and 24.07 per cent respectively.
The report further showed that largest amount of capital importation was received through portfolio investment, which accounted for 74.7 per cent ($4,119.5m) of total capital importation, followed by Other Investment, which accounted for 20.5 per cent ($1,132.8m) of total capital, and then Foreign Direct Investment (FDI), which accounted for 4.7 per cent ($261.4m) of total capital imported in the second quarter.
Capital importation Capital Importation by Type Capital Importation can be divided into three main investment types: Foreign Direct Investment (FDI), Portfolio Investment and Other Investments, each comprising various sub-categories.
Since 2017 Q2, Portfolio Investment has been expanding faster than the other two categories.
Although the absolute value of Portfolio Investment declined in Q2 on a quarterly basis, falling from $4,565.09 million in Q1, 2018 to $4,119.46 million in Q2, 2018, it remained the largest component of the total Capital Importation in the quarter under review, followed by Other Investments, and then FDI.
The chart below shows the composition of Capital Importation in Q2, 2017 and Q2, 2018.
Foreign Direct Investment (FDI) In the second quarter of 2018, total Foreign Direct Investment stood at $261.35 million growing by 5.97 per cent from the first quarter of the same year, but falling by 4.75 per cent when compared to the corresponding quarter of last year.
FDI represented only 5% of the total capital import.
Equity Investment dominated FDI in the second quarter, accounting for 97.85 per cent of total FDI received in the second quarter.
Capital Importation in the form of Other Capital saw significant expansion, from only $5,000 as recorded in Q1 to $5.63 million in Q2, an increase of over 1000 percent compared to the same period of last year.
Portfolio investment Portfolio Investment remained the most significant component of total capital inflow into Nigeria in the second quarter of 2018, although it contracted by 9.76 per cent over the previous quarter.
The total value of Portfolio Investment in Q2 recorded was $4,119.46 million, which was a 434.64 per cent growth compared to Q2, 2017 ($770.51 million).
The 9.76 per cent Quarter-on-Quarter decrease was due to a fall in the largest subcomponent– Money Market Instruments.
Capital Importation in the form of Money Market Instrument stood at $2,670.93 million in the second quarter, which was a 24.29 per cent decrease over the previous quarter.
Investments in both Equity and Bonds (under Portfolio Investments) reported steady quarter-onquarter growth, with 49.43 per cent and 19.13 per cent respectively.
It is worth noting that investments in Bonds under this Capital Importation type has been steadily increasing since Q2, 2017, and in Q2 2018, it accounted for 9.71per cent of total Portfolio Investment.
Other investments Other Investments amounted to $1,132.75 million in the second quarter of 2018.
This category continued its decline since the beginning of 2017, from $1,526.9 million in Q4, 2017 down to $1,491.9 in Q1, 2018, and further falling by 24.07 per cent in Q2, 2018.
This category accounted for 20.5 per cent of total Capital Importation in the second quarter of 2018.
As in previous periods, Other Investment was dominated by Loans ($1,121.66 million), which accounted for over 99 per cent of Other Investments in the reviewing quarter.
Other Claims fell sharply, from $223.49 million in Q1 to $11.08 million in Q2.
Trade Credits and Currency Deposits posted no inflow in the second quarter of 2018.
Capital importation by sectors By sector, Capital could be imported either in the form of Shares or directly imported into different economic sectors of the economy.
Capital importation as shares, which is closely related to Equity investment (FDI and Portfolio Investment) dominated the second quarter of 2018 reaching $4,091.55 million, or 74.21 per cent of the total capital Importation in the quarter.
The contribution of Share investments increased marginally by 0.03 per cent in the second quarter.
A total of $1,422.15 million or 25.79 per cent of the total foreign capital was directly invested in different economic sectors in Q2, 2018.
This was a decline of 43.36 per cent from the $2,510.90 million recorded in the previous quarter.
In the second quarter of 2018, the Servicing sector became the leading recipient of foreign capital Inflow into Nigeria, attracting $479.85 million.
The banking sector, which followed, recorded $294.96 million in the second quarter of the year, a considerable reduction from the $1,180.01 million realised in Q1, 2018.
Production, Financing and Agriculture sectors received $479.9 million, $150.32 million and $104.97 million in foreign capital investment respectively in the second quarter.
These five economic sectors together accounted for over 87 per cent of the total capital investment (excluding Shares).
The Trading sector attracted $60.35 million in Q2, 2018 which was a significant growth from the $27.33 million recorded in previous quarter.
The IT Service sector also had substantial improvement in foreign capital inflow in the quarter under review, recording a value of $48.04 million in Q2, 2018, up from the $1.10 million recorded in the first quarter.
Capital importation by states The Federal Capital Territory, Abuja, at $2,547.73 million, maintained its lead among recipients of capital import in the second quarter of 2018 after surpassing Lagos in the fourth quarter of 2017.
This represented 46.21 per cent of the total capital importation into Nigeria in the quarter under review, and was followed by Lagos which received the second largest amount of capital inflow, $1,267.65 million or 30.08 per cent of the total.
When compared to the preceding quarter, however, the capital inflow into Abuja and Lagos, declined by 28.13 per cent and 37.80 per cent respectively.
Abia State received $1,267.65 million, accounting for 22.99 per cent of the total capital importation in the quarter.
Abuja, Lagos, and Abia together represented more than 99 per cent of the total capital import in the second quarter.
Foreign capital investment in Akwa Ibom and Ogun recorded $16.10 million and $12.74 million respectively, a decline of 63.09 per cent and 48.05 per cent, over the previous quarter.
Enugu, which only had marginal foreign inflow previously, recorded $1.31 million in the second quarter and became the eighth top destination in Nigeria to attract foreign capital investment.
Capital importation by country of origin The United Kingdom maintained its top position as source of capital investment in Nigeria in the second quarter of 2018, with $1,772.53 million.
This accounted for 32.15 per cent of the total capital inflow in Q2, 2018, but was a 21.29% decline from the previous quarter.
Since 2010, the UK has accounted for the highest amount of capital importation in all but two quarters (both in the second half of 2015).
The US recorded $1,224.09 million total Capital Importation into Nigeria in the second quarter of 2018, which was a 2.85 per cent decline from the amount recorded in the first quarter of 2018.
The US has also been one of the most important origins in Nigeria, usually either the largest or second largest investor country.
Capital imports from the United Arab Emirates was $535.98 million while $297.32 million was imported from Switzerland.
Capital inflow from Ghana in the second quarter of 2018 was $156.30, which was a 58.88 per cent decline from the previous quarter.
Capital importation by banks Capital is imported through financial institutions into Nigeria.
In the second quarter of 2018, the bank through which the highest share of capital flowed was Stanbic IBTC Bank, accounting for 54.9 per cent of the total foreign capital inflow, slightly up from the 48.5% share recorded in the previous quarter.
This was followed by Standard Chartered Bank, CitiBank, Access Bank and Zenith Bank which accounted for 14.82 per cent, 13.11 per cent, 3.61 per cent and 3.52 per cent of the total capital importation in the second quarter of 2018 respectively.
Together, the six banks accounted for nearly 90 per cent of capital importation in Q2 2018.