Capital Importation Falls 24% to $4.56bn

Capital importation into Nigeria’s economy fell year-on-year (y/y) by 24.6 percent to $4.56 billion in the first 10 months of 2022 (10M’22) from $6.05 billion in the corresponding period of 2021.

Vanguard findings from the Monthly Economic Report of the Central Bank of Nigeria, CBN, also showed that capital outflows declined y/y by 32 percent to $5.53 billion in 10M’22 from $7.3 billion in 10M’21.

During the review period, capital inflow stood at  $610 million in January  and declined steadily to $360 million in May   from where it ticked up to $700 million in June (highest inflow during the period) before another round of steady decline to $280 million in October.

Further analysis showed that Capital outflows stood at $290 million in January 2022 from where it rose gradually to $740 million in April and declined to $490 million in May.

In July, outflows rose to $710 million and dropped to $280 million in October.

According to the CBN  Economic report for October 2022, “foreign capital imported into the economy grew in the review period due to improvement in portfolio inflow as capital imported into the domestic economy increased by 4.5 per cent to $0.28 billion, from $0.27 billion in September 2022.

The CBN stated: “A breakdown of capital inflow by type of investment shows that foreign direct investment inflow, constituting 6.3 per cent of the total, declined by 56.3 per cent to $0.02 billion. Inflow of foreign portfolio investment, representing 40.7 per cent, grew by 75.6 per cent to $0.11 billion, with investment in fixed income securities dominating. Other investment capital (mainly loans), which accounted for 53.0 per cent of the total, fell by 2.6 per cent to $0.15 billion.

“Lower repatriation of dividends and outflow of loans moderated capital outflow. Capital outflow decreased significantly by 38.0 per cent to US$0.28 billion, compared with US$0.45 billion in September 2022.

“A breakdown shows that repatriation of dividends decreased by 61.9 per cent to US$0.05 billion, from $0.14 billion in September 2022. Outflow of loans also declined to $0.12 billion, relative to $0.21 billion in September 2022.

“However, outflow in the form of capital reversals increased by 5.7 per cent to $0.11 billion, from $0.10 billion in September 2022.”

January 13, 2023