With a total inflow of $1.7 billion in the third quarter (Q3) of 2021, capital importation increased by 18.47% over the $1.5 billion recorded in Q3 2020.
Overall, there was a 97.3% increase in capital importation as the country’s inflow increased from $875.62 million in Q2 2021 to $1.73 billion in Q3 2021.
Capital importation means foreign investments in a country’s economy and is made up of Foreign Direct Investment (FDI), Foreign Portfolio Investment (FPI), and other investments like trade credits, loans, and currency deposits.
Of these three types, portfolio investment generated the highest amount of capital inflow $1.271 billion, followed by other investments which generated $406.3 million. The foreign direct investment came last in Q3 2021 and stood at $107.8 million.
FPI increased by 120.8% in the third quarter over the second quarter. Quarter on quarter, total FPI increased from $551.4 million in Q2 2021 to $1.271 billion in Q3 2021. FDI increased from $77.9 million Q2 2021 to $107.8 million in Q3 2021 representing a 38.2% change, other investments recorded a 65% increase with an import sum of $406.6 million in Q3 2021 as against $246.3 million in Q2 2021.
However, year on year, only FPI recorded an increase of 198.8% ($1.271 billion) compared with Q3 2020 import capital figure of $407.3 million. FDI and other investments both decreased by 74% and 34.5% respectively, FDI in Q3 2020 stood at $414.8 million and other investments stood at $639.4 million.
The financial sector is primarily responsible for facilitating this inflow. Data shows that 12 banks were involved in various transactions during the quarter.
Most of the capital came in through Stanbic IBTC as they brought in $537.92 million in the third quarter. This amounted to 31.0% of the total capital. Standard Chartered Bank brought in $326.01 million (18.83%) and Citi Bany $248.3 million (14.35%).
Fidelity Bank brought in just $46.15 million (2.67%) of the total, however, this is an improvement over their Q2 performance as the bank was involved in transactions in the third quarter after recording zero imports in the second quarter.
Capital importation flows into various sectors with the aim of boosting their performance and increasing output.
The finance sector accounted for the highest inflow in the third quarter. The finance industry had a total capital inflow of $469.17 million which made up 27.1% of the total capital import.
The banking sector comes second with a capital inflow of $460.39 million (26.58%). Sectors like production, trading, shares follow suit with a total capital inflow of $323.83 million, $210.69 million, and 160.91 respectively, and a corresponding 18.7%, 12.17, and 9.29% of the total.
Within the period under consideration, most of the capital came into the country from the United Kingdom with a $709.78 million inflow. South Africa follows with a total capital of $389.34. The United States of America, United Arab Emirates, and Saudi Arabia all follow with a capital of $257.12 million, $111.11 million, and $46.31 million respectively.
Prior to Q2 2021, the Republic of South Africa held the number one position of the highest capital investment in Nigeria, followed by the United States of America.
In the third quarter of 2021, only five of the 36 states and the FCT reported capital inflow. Over 99% of the capital inflow was in Lagos and Abuja with Lagos taking the bulk.
Lagos state had $1.48 billion of the $1.73 billion in the third quarter of 2021. This made up 85.57% of the total capital import into the country.
Abuja recorded $249.19 million which is the second-largest amount making 14.39% of capital imports. Anambra, Kano, and Abia had a collective capital import of $603,530.
While the Q3 performance is considered better than the previous quarters and in2020 figures, Nigeria’s capital importation has still not gone back to pre-pandemic levels which were $5.99 billion in 2019 and $4.2 billion in 2018.