Total capital flows into Nigeria rose by 594.03% percent year-on-year to $6,303.63 million in the first quarter of this year, compared to $908.3 million recored in same period of 2017, according to National Bureau of Statistics (NBS) figures released Friday.
The is the fourth consecutive quarterly increase since Q2 2017, according to the statistics, following last year’s liberalisation of the currency for foreign investors and steps to tighten liquidity to attract offshore funds.
The report showed that capital inflow was dominated by offshore portfolio investors buying local shares and bonds rather than foreign direct investment.
Capital imports have been growing especially as economic activity gains pace after Nigeria emerged from a recession last year. They rose for the fourth straight quarter since the second quarter of 2017.
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Portfolio investment has been rising faster than direct investment which is still weak. The NBS said the strong growth in portfolio investment was due to money market yields.
Yields on treasury bills traded as high as 18 percent in the past. But the government has been working to lower its borrowing cost by repaying matured bills rather than rolling them over as it has done in the past. Bills now trade at rates of around 12 percent.
The fall in bond yields have prompted foreign investors to repatriate profits rather than re-invest them, putting pressure on the currency.
The NBS said most of foreign capital inflow in the first quarter went into the banking sector, followed by the telecoms sector and services sector. Britain exported the most amount of capital to Nigeria, the statistics office said.
Capital imports were more than $5.3 billion in the third quarter