According to a report recently released by the National Bureau of Statistics (NBS), the second quarter (Q2) of 2024 saw $150 million in foreign investments in the Nigerian equities market, representing an increase of 204 percent from $49.4 million recorded in the first half (Q1). It also represents a staggering 1,660 percent annual increase over the $8.5 million reported in the second quarter of 2023. Foreign Portfolio Investment (FPI) in Nigeria in Q2 2024 was $1.4 billion, a 32% decrease from Q1’s $2.08 billion, according to the NBS report titled Capital Importation – Q2 2024.
The FPI increased over that time by around 1,208 percent on an annual basis, from $107 million in Q2 of 2023. Foreign portfolio investments in Nigeria reached $3.48 billion in the first half of the year (H1 2024), a 360 percent year-over-year increase from the $756.1 million documented in the corresponding half of 2023. The amount of foreign portfolio investment in Nigerian stocks during the first half of 2024 was $199.3 million. This represented a 14% decrease from the $230.8 million reported in the first quarter of 2023.
CBN provided OMO bills at a rate of 22 percent.
In the first quarter of 2024, $222 million in foreign investment was made in Nigerian stocks. This dropped to $8.5 million in the second quarter. Money market instruments such Treasury bills, OMO bills, and commercial papers accounted for the majority of foreign portfolio involvement in Nigeria in H1 2024. Approximately two-thirds, or $2.68 billion, of Nigeria’s overseas portfolio investments during that time were money market instruments. $1.08 billion in investments were made in Q2, down from $1.61 billion in Q1.
Foreign investment in Nigeria’s money market instruments increased approximately 20 times in the first half of the year compared to the $139 million from the same period last year. The increase in foreign investment in money market instruments is associated with certain of those bills’ extremely high interest rates. For instance, The Central Bank of Nigeria (CBN) offered yields on some of its Treasury bills of up to 22.5 percent in H1 2024. Additionally, the CBN provided OMO bills at a rate of 22%. This was one of the highest rates available for money market instruments issued by the CBN.
FPI accounted for almost 58% of all capital imports.
To draw in foreign portfolio investments towards these instruments, the CBN offered OMO bills at a rate of 27.25 percent in the second half, making the rates even higher. These enormous returns in the debt market also benefit private businesses. Commercial papers have been available at discount rates of 25, 28, and even 30 percent from companies with stellar credit ratings. FPIs invested in Bonds totaled around $599 million in H1 2024. Of this amount, $420.8 million took place during the first quarter. There was a 55 percent increase over H1 2023, considering the fact that $386 million worth of FPIs were invested in bonds during that period.
Total capital importation into Nigeria in H1 2024 was $5.98 billion, a 177 percent year-over-year increase from the $2.16 million reported in H1 2023. Foreign portfolio investments accounted for almost 58% of all capital imports. The total amount of capital imported into Nigeria in Q2 2024 was US$2,604.50 million, up from $1,030.21 million in Q2 2023—a 152.81% increase. Capital imports fell by 22.85% from US$3,376.01 million in Q1 2024 compared to the previous quarter.
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With US$1,120.15 million, or 43.01% of all capital imported during the reference period, the United Kingdom served as the source for the majority of capital imports. Following behind was the Republic of South Africa ($255.98 million, 9.83%) and the Netherlands ($577.82 million, 22.19%). Lagos State continued to be the most popular destination among the three states that reported capital importation during the quarter, with US$1,367.84 million, or 52.52% of the total capital imported. Ekiti State came in second with US$0.0003 million and Abuja (FCT) third with US$1,236.64 million (47.48%).