Between January and September 2021, the United Kingdom and South Africa topped the list of source countries for Nigeria’s capital inflows, accounting for 64.9 percent of the total capital importation recorded by Nigeria during the period under review.
According to the National Bureau of Statistics’ capital importation report, this is the case (NBS).
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Nigeria received $4.51 billion in capital inflows during the first nine months of 2021, a 48 percent decrease from the $4.61 billion received during the same period in 2020. Capital imports have decreased by 78 percent compared to the pre-pandemic era, with $20.19 billion recorded in the same period of 2019.
Meanwhile, the United Kingdom and South Africa brought the majority of the funds into the country, accounting for 64.9 percent of the total. During the review period, Nigeria received $2.16 billion from the United Kingdom, accounting for 47.9% of total inflows.
Similarly, South Africa, a fellow African country with the continent’s second-largest economy and home to a number of large corporations with operations in Nigeria, invested $768.4 million in the country during the same period.
However, their investments in the African giant’s economy have decreased in recent years, partly due to the economic downturn brought on by the covid-19 pandemic, which has created uncertainty around investments and caused Nigeria to attract fewer foreign investors.
Other country sources include the United States ($357 million), Singapore ($241 million), the United Arab Emirates ($227 million), and the Netherlands ($182 million).
According to a more detailed analysis of the capital importation report, foreign direct investments fell from $414.79 million in January to September 2020 to $340.55 million in the following year.
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In addition, foreign portfolio investment (FPI) fell by 46% year on year during the review period, from $5.1 billion in 9M 2020 to $2.74 billion. Other investments fell to $1.43 billion in 2017 from $2.73 billion the year before. Loans totaled $1.3 billion during the period, accounting for 29% of total capital inflows.
Only 9 states have received funding, with Lagos receiving the lion’s share.
Only about 9 states received foreign inflows during the period under review, with Lagos State receiving the lion’s share, accounting for 85 percent of the total inflow with $3.84 billion. Abuja received $662.85 million, or about 15% of the total inflows during the period.
Notably, Lagos State and Abuja accounted for nearly all of the investment destinations recorded in the 9-month period, accounting for 99.8% of the total inflow.
According to the number of states that received foreign investments during the period, 28 states did not receive any. This depicts the attractiveness of some of the country’s states to foreign investment.
It now appears that the majority of funds entering the country are directed to Nigeria’s economic hub and capital, thereby depriving other states of foreign investment, further impeding their development.
What you need to know
A Foreign Direct Investment (FDI) is the purchase of a stake in a company by a company or investor from outside the country. FDIs are preferred by most economies because they have a greater direct impact on the economy than other types of foreign inflows.
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Meanwhile, Nigeria is expected to see an increase in FDIs as a result of the global giant Equinix’s acquisition of Nigeria’s telecommunications company, MainOne. The deal is reportedly valued at $320 million.
Foreign Portfolio Investment (FPI), on the other hand, refers to the purchase of securities and other financial assets by investors from outside the country. Stocks, bonds, mutual funds, and exchange-traded funds are all examples of foreign portfolio investments.