A recent report released by the National Bureau of Statistics Statistics (NBS) has revealed that the total amount of capital inflow for the third quarter (Q3) of 2024 was US$1,252.66 million, a significant drop of 51.90 percent, compared to the previous quarter (Q2 2024), when total capital inflow stood at US$2,604.50 million. On a year-on-year basis, it recorded a 91.35% increase over the US$654.65 million reported in Q3 2023. This duality of growth and contraction pattern underscores the dynamic and erratic pattern of Nigeria’s capital importation outlook.
As per the report, portfolio investments of US$899.31 million accounted for the majority of capital inflows in Q3 2024, representing 71.79% of all capital imported into the nation. The enduring appeal of portfolio investments indicates that, despite economic difficulties, foreign Investors still find Nigeria’s financial markets appealing. Other Investments came in US$249.53 million, or 19.92% of the overall inflow, whereas Foreign Direct Investment (FDI) brought in US$103.82 million, or only 8.29%.
Banking industry covers 46.26% of the total overall inflow.
The comparatively lower FDI figure shows that while foreign investors are still interested in Nigeria, long-term, growth-oriented investments in tangible assets or companies are still less appealing. This pattern can be ascribed to macroeconomic environment uncertainty, inconsistent policies, and Infrastructure deficiencies that could discourage investors from making long-term commitments. The banking industry received a significant US$579.48 million, or 46.26% of the overall inflow during the reviewed quarter, making it the top receiver of capital importation in terms of sectoral distribution.
Moreover, the high portion allotted to banking shows how crucial financial institutions are to propelling Nigeria’s Economy and acting as entry points for international investment. The banking industry was followed by the Financing industry, which brought in US$294.55 million, or 23.51% of the total, highlighting the industry’s significance in supporting a range of economic endeavors through credit facilities and loans. With US$189.22 million, or 15.11% of the total inflows, the Production and Manufacturing sector secured the third position. This suggests that there is still some interest in Nigeria’s industrial base and its potential for economic diversification, value addition, and job development.
Lagos remains the top destination for capital imports.
Based on geographical origins of the capital inflows, the United Kingdom accounted for US$502.60 million, or 40.12%, of the total amount of capital imported into Nigeria in Q3 2024. This was followed by the United States, with an inflow of US$163.86 million, or 13.08%, and the Republic of South Africa, with US$185.03 million, or 14.77%. Domestically, Lagos State, the country’s economic hub, continued to be the top destination for capital imports, bringing in a staggering US$650.41 million, or 51.92% of all inflows during the quarter.
Abuja (FCT) emerged as the second-largest recipient, with US$600.02 million, or 47.90%, highlighting the capital city’s increasing importance as a draw for investments, especially in Real Estate and government-related ventures. Further analysis revealed that Standard Chartered Bank Nigeria Limited was the largest financial institution receiving capital inflows, with US$385.62 million, or 30.78% of the total. Stanbic IBTC Bank Plc came in second, drawing US$382.08 million, or 30.50% of the total. Followed by Citibank Nigeria Limited, which contributed US$192.88 million, or 15.40% of the total.
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Overall, the Q3 2024 report paints a nuanced picture of Nigeria’s capital importation trends. While the 91.35% year-over-year gain indicates growing investor interest, the 51.90% quarter-over-quarter fall suggests caution. The equal distribution of assets throughout the nation is also called into question by the notable concentration of capital in Lagos and Abuja. Policymakers need to carefully examine the reasons behind this drop, especially in light of the reliance on portfolio investments, which are often more erratic and vulnerable to changes in the global financial conditions.