Nigeria’s capital importation reached $2.60bn in the second quarter of 2024, representing a robust increase of 152.81 per cent year-on-year compared to $1.03bn in Q2 2023.
This is according to the latest capital importation report from the National Bureau of Statistics released on Tuesday.
Despite this substantial annual growth, the figure marks a decline of 22.85 per cent from the $3.38bn recorded in the first quarter of 2024.
The decrease in quarterly figures highlights ongoing fluctuations in investor sentiment, reflecting global economic uncertainties and domestic challenges.
The report read, “In Q2 2024, total capital importation into Nigeria stood at US$2,604.50 million, higher than US$1,030.21 million recorded in Q2 2023, indicating an increase of 152.81%. In comparison to the preceding quarter, capital importation declined by 22.85% from US$3,376.01 million in Q1 2024.”
Portfolio investments emerged as the primary driver of the capital inflows, contributing $1.40bn, or 53.93 per cent of the total.
These investments often involve foreign investors injecting capital into Nigeria’s stocks, bonds, and other financial instruments, aiming for quick returns.
Meanwhile, other investments, which include loans, trade credits, and other forms of debt financing, followed with $1.17bn, accounting for 44.92 per cent of the total inflows.
Foreign Direct Investment (FDI), however, lagged significantly with just $29.83m, making up a mere 1.15 per cent of the total.
This trend points to a persistent challenge for Nigeria in attracting long-term capital that can drive sustainable economic growth and job creation.
The banking sector was the largest beneficiary of capital importation, receiving $1.12bn, representing 43.15 per cent of total inflows in the quarter.
This sector’s dominance highlights the crucial role of banks as conduits for foreign investments, facilitating access to Nigeria’s financial markets.
Following the banking sector, the production/manufacturing sector attracted $624.71m, which constituted 23.99 per cent of the total.
This influx into production and manufacturing suggests a positive outlook for industrial activities, potentially signalling a gradual recovery in Nigeria’s manufacturing capacity.
The trading sector also saw significant capital inflows, amounting to $569.22m (21.86 per cent), reflecting the resilience of trade activities in the country.
On a geographic basis, Lagos State maintained its position as the leading destination for capital importation, attracting $1.37bn, or 52.52 per cent of total inflows.
Lagos remains the commercial hub of Nigeria, offering a strategic entry point for foreign investors due to its robust infrastructure and dynamic business environment.
Abuja (FCT) followed closely, receiving $1.24bn, which accounted for 47.48 per cent of the total.
In contrast, Ekiti State recorded minimal capital inflows, with just $0.0003m during the quarter, indicating the concentration of investment in more established economic centres.
The report also highlighted the sources of these capital inflows. The United Kingdom emerged as the largest contributor, with investments totalling $1.12bn (43.01 per cent) of the overall capital importation, reinforcing its position as a key partner in Nigeria’s financial landscape.
The Netherlands was the second-largest contributor with $577.82m (22.19 per cent), while the Republic of South Africa ranked third with $255.98m (9.83 per cent).