Nigeria’s total capital importation surged by 210.16% in the first quarter of 2024, rising from $1.08 billion in Q4 2023 to $3.37 billion in the reviewed period, as reported by the National Bureau of Statistics (NBS) in their capital importation report.
Compared to the same quarter in 2023, there was a 198.06% increase in capital importation in Q1 2024.
Portfolio Investment dominated with $2.07 billion, accounting for 61.48% of the total capital importation, followed by Other Investments with $1.18 billion, which is 34.99% of the total.
Foreign Direct Investment contributed the least, with $119.18 million, representing 3.53% of the total capital importation for Q1 2024.
The Banking sector received the largest share of capital inflow, with $2.06 billion, making up 61.24% of the total capital importation. This was followed by the Trading sector with $494.93 million, or 14.66% of the total, and the Production/Manufacturing sector with $191.92 million, constituting 5.68% of the country’s capital imports.
Stanbic IBTC recorded approximately $399 million in capital import inflow in Q1 2024, surpassing its full-year total of $384 million in 2023.
The majority of capital importation during this period originated from the United Kingdom, totaling $1.81 billion, which represents 53.49% of the overall amount.
The Republic of South Africa was next with $580 million (17.25%), followed by the Cayman Islands with $190 million (5.52%).
Of the three states that saw capital importation in the quarter, Lagos State was the leading destination with $2.78 billion, making up 82.42% of the total.
Abuja (FCT) came in second with $590 million (17.58%), and Ekiti State was third with $0.01 million.
Out of the 36 states and the FCT, only three recorded capital imports in the first quarter of the year, leaving about 34 states with no capital imports.
Stanbic IBTC Bank Plc led the capital importation into Nigeria in Q1 2024 with $1.26 billion (37.24%), followed by Citibank Nigeria Limited with $0.55 billion (16.22%) and Rand Merchant Bank Plc with $530 million (15.66%).
The substantial increase in capital imports, over 200% during the quarter, particularly in portfolio investment, is attributed to the 600 basis point rise in the Monetary Policy Rate (MPR) by the Central Bank of Nigeria (CBN) and the attractive returns on Federal Government of Nigeria (FGN) bonds and CBN Treasury bills in that period.
In the first quarter, there was a significant demand for FGN and CBN securities, driven by these high returns.
The modest inflow of foreign capital into the real economy as foreign direct investment validates the concerns of real economy stakeholders. They believe that the CBN’s interest rate hike will divert capital from the real economy to the financial sector.
