Foreign investment in the Nigerian banking sector and the capital market fell by $3 billion, quarter on quarter, during the third quarter of 2018. The development was attributed to the political uncertainty in the country and rate appreciation in the United States.
According to the National Bureau of Statistics (NBS) in its Capital Importation report for Q3’18, investment in shares was the most affected dropping by $2.12bn from $3.79bn in the first quarter to $1.67bn in the third quarter.
This is followed by the banking sector which recorded a decline of $891m from $1.18bn to $289.4m.
Other sectors that recorded decline in their foreign portfolio investment include agriculture which recorded a drop from $130.9m in the first quarter to $23.3m, brewing from $1m to N0.3m, electrical from $18.66m to $5.67m, and financing from $485.41m to $371.6m.
Others are marketing from $4.27m to $3.43m, oil and gas from $85.62m to $7.73m, servicing from $328.15m to $205.91m, telecoms from $87.25m to $11.42m and trading from $27.33m to $10.29m.
“The largest amount of capital importation by type was received through Portfolio investment, which accounted for 60.5 percent or $1.723 billion of total capital importation, followed by other investment, which accounted for 21.07 percent $601.53 million of total capital, and then Foreign Direct Investment FDI, which accounted for 18.58 percent $530.63 million of total capital imported in the third quarter. “By sector, capital importation as shares, which is closely related to Equity investment (FDI and Portfolio Investment) dominated the third quarter of 2018 reaching $1.667 billion of the total capital importation in the quarter. “The United States emerged as the top source of capital investment in Nigeria in the third quarter of 2018 with $911.33 million. This accounted for 31.91 percent of the total capital inflow in Q3 2018.” United Kingdom came second as the top source of capital investment with $871.147 million , representing 30.5 percent of total capital inflow. The NBS report revealed that 58.17 percent decline in FPI during the quarter was driven by 51.66 percent fall in money market instruments which fell by $1.38 billion to $1.29 billion in Q2’18 from $2.67 billion in Q2’18. This was followed by 63.37 percent fall in equity (shares) investment, which dropped by $653.92 million to $394.47 billion in Q3’18 from $1.048 billion in Q2’18. FPI into bonds also fell sharply by 91 percent to $37.48 million in Q3’18 from $400.14 million in Q2’18.