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Published On: Thu, Feb 2nd, 2017

Nigeria Suffers Ten Year Low In Capital Inflows, Says Report

Nigeria’s total capital inflows, comprising foreign direct investments and loans, fell to all time low of 48.6% in 2016.
The report by Meristem says that total capital importation into Nigeria recorded the worst decline in 10 years in 2016 with only about $80.9 billion, covering capital international transactions, as compared with $90.5 billion in 2012 and $88.6 billion in 2013, all of which amounted to 48.6 per cent loss in the year under review.
A further breakdown indicates that the total capital importation for fourth quarter in 2016 was estimated at $1.55bn, compared to $1.82bn in the third quarter of 2016, an indication of diminishing inflows a fortiori.
Other investments, says the report are made up of 44 per cent capital inflows of $2.24bn in 2016, as against $1.66bn in 2015, while Foreign Direct Investment and Foreign Portfolio Investment into equities amounted to 20 per cent ($1.04bn) and 17 per cent ($859.05m) of inflows, respectively.
According to the report, “the instability suffered in the exchange rate of naira contributed in further lowering currency deposits. Trade credits and other claims contributed minimum growth in the inflows.
“Equally noticeable is the 63.5 per cent reduction in equity participation in most public assets when compared with cases in most developing economies of the world,” the report stated.
Nigeria’s fixed income market recorded more inflows in Q3 2016 compared to the equity market due to the hike in Monetary Policy Rate of 14 per cent in July 2016, the report says.
Although the total inflows into the fixed income space in 2016 declined by 29.24 per cent year-on-year, analysts observed the increased participation in the space compared to other segments during the period of 19 per cent in 2016 against 13 per cent in 2015.
The report, on sectoral levels, stated that banking, oil/gas production/manufacturing and telecommunications services contributed less than a total of 20 percent in capital inflows during the period under review.
African countries that recorded new inflows included Mauritania, Seychelles and Tanzania.

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