Foreign capital inflows into Nigeria fell by $4.46bn to $1.29bn in the second quarter of this year from $5.85bn in Q1, the National Bureau of Statistics said on Friday.
The NBS, in its capital importation report for Q2 2020, said the total value of capital importation into the country in the period represented a decrease of 77.88 per cent, compared to Q1 2020 and 78.60 per cent in Q2 2019.
It said foreign direct investment, which accounted for 11.47 per cent of the total capital imported into the country, fell by 30.65 per cent to $148.59m from $214.25m in Q1 2020.
According to the report, portfolio investment, which accounted for 29.76 per cent, plunged by 91.06 per cent to $385.32m from $4.31bn in Q1.
The statistics office said the largest amount of capital importation by type was received through other investments (58.77 per cent), declining to $761.03m from $1.33bn in Q1.
It said, “By sector, capital importation by shares dominated in Q2 2020, reaching $464.57m of the total capital importation in Q2 2020.
“The United Kingdom emerged as the top source of capital investment to Nigeria in Q2 2020 with $428.83m. This accounted for 33.12 per cent of the total capital inflow in Q2 2020.”
According to the NBS, Lagos State emerged as the top destination of capital investment in Nigeria in Q2 2020 with $1.13bn, accounting for 87.30 per cent of the total capital inflow in Q2 2020.
“Standard Chartered Bank Nigeria Limited emerged at the top of capital investment in Nigeria in Q2 2020 with $425.21m. This accounted for 32.84 per cent of the total capital inflow in Q2 2020,” it said.
The Financial Derivatives Company Limited said in its latest monthly economic update that the scarcity of foreign currency in Nigeria was a huge blow to investor confidence.
The FDC said the country’s weakening currency and the uncertainty about the central bank’s plan to shift to a market-determined price mechanism would continue to be a major drag on foreign direct investment.
“The unavailability of forex, which is a major constraint to the repatriation of profits and persistent currency weakness amid projections that the naira could still depreciate is a huge blow to investor confidence,” it said.
According to the FDC analysts, more FDI inflows will help boost external reserves, which is favourable for the exchange rate.