Nigeria’s capital importation loses $6.92bn, as inflows dip in four consecutive quarters

The National Bureau of Statistics (NBS) has reported that capital importation declined in Q1 2022, mirroring other corresponding first quarters between 2019 and this year, with the United Kingdom maintaining the inflow.

For the period of Q1 2022, NBS disclosed that capital importation, which consists of financial and equipment capital importation, was $1.57 billion, falling short of the $1.91 billion reported in Q1 2021.

This shows investment such as foreign direct investment, portfolio investment, and other investments, which make up the equipment and capital importations, have been on a decline in the last four Q1.

Africa’s largest economy has seen investment inflow drop from $8.49 billion in Q1 2019 to $5.85 billion in the first three months of the year after. Within the four quarters, Nigeria has lost $6.92 billion, with investment declining by -81.5% within the period.

It was gathered that sources of the capital importation for the four quarters under review were dominated by portfolio investments coming from the United Kingdom down to the banking sector.

What you need to know

The dip in capital inflow occurred during the period of the Coronavirus outbreak, which disrupted trading and caused a global lockdown that significantly and negatively impacted business transactions.

This implies the Nigerian economy is yet to completely exit the shock of COVID-19 on the global market, and investors are still testing the waters, and not willing to go all in on the African nation, considering the global inflation rate birthed by post-lockdown.

Read also: Nigeria’s capital importation up by 594% in Q1

Currently, the inflation rate in Nigeria, coming out of the lockdown has reduced consumers purchasing power, and cut earnings of companies, as customers demand for products drop.

This is enough to discourage investment inflow into Nigeria, considering low earnings will not be attractive enough for companies to bear the burden of high cost of borrowing, which usually cut production level.

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