The record of foreign inflow into the country in 2018 at $16.81 billion has shown that investors targeted portfolio investments also known as “hot money” rather than establishing institutions and staking in existing ones.
Hot money, as it is called, is frequently transferred among financial institutions in an attempt to maximise interest or capital gain and could easily be pulled out by the investor depending on his/her perception of the business environment.
Specifically, hot money investments are targeted at bonds and money market instruments. They are major part of foreign investments inflow, which also exerts pressure on the naira and national reserves every time the investor’s perception of the economy is negative. The move leads to capital flight.
The National Bureau of Statistics (NBS) said the total value of capital importation into Nigeria rose to $16.81 billion in 2018 from the $12.23 billion tally of 2017, representing a 37.49 per cent growth.Of the sum, portfolio investment accounted for $11.8 billion, 70.20 per cent of the total.
The Guardian, Saturday 16, February
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