Investment Inflows Drops to Nine-Year Low at N140bn – NBS

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Yemi Kale, CEO, NBS
Kale

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THE National Bureau of Statistics on Wednesday, May 4, released the capital importation report for the first quarter of 2016 stating that the country recorded its lowest investment inflows in nine years. The bureau, in the report said the economy attracted a total investment of $710.97 million (N140.07bn), noting that this represented a decline of 54.34 percent compared to the first quarter of 2015.

The report stated that both the quarterly and year-on-year declines were also the lowest recorded since the series began in 2007. The report stated, “The total value of capital imported into Nigeria in the first quarter of 2016 was $710.97m, the lowest level since the series began in 2007.

“This represents a decline of 54.34 percent in the final quarter of 2015, and a year-on-year decline of 73.79 percent. Both the quarterly and year-on-year declines were also the lowest recorded since the series began. As a result of these changes, total capital importation has fallen by 89.13 percent since its peak level in the third quarter of 2014.”

The report attributed the huge decline in capital importation to what it described as “symptomatic of the challenging period that the Nigerian economy is going through following the fall in crude oil prices.”

It said although there were a number of reasons why the amount of capital imported in recent years might have been higher than usual, such as the inclusion of Nigerian in the JP Morgan Bond Index, and globally low interest rates triggering a search for higher yields over this period, the fact that the amount of capital imported dropped to a record low suggested that there were further reasons why Nigeria had attracted less foreign investments in recent quarters.

“Investors may be concerned about whether or not they will be able to repatriate the earnings from their investments, given the current controls on the exchange rate. In addition, as growth has slowed in recent quarters, there may be concerns about the profitability of such investments.”

In terms of the composition of the investment inflows, the report stated that the largest component of capital importation in the first quarter was portfolio investment. This, it said, accounted for $271.03 million, or 38.12 percent of all capital imported.

The largest subcomponent of portfolio investment was equity, which accounted for $201.69 million, representing 74.41 percent of portfolio investment and 28.37 percent of total capital imported. Equity, it noted, had been the largest part of portfolio investment in every quarter since 2007.

—  May 16, 2016 @ 01:00 GMT

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