Nigeria saw a significant decline in capital importation during the second quarter of 2024, with a 22.85% drop from $3.37 billion in the first quarter to $2.60 billion, according to the latest report from the National Bureau of Statistics (NBS). Despite this quarter-on-quarter decrease, the capital inflows rose by 152.8% when compared to the same period in 2023, when the figure stood at $1.03 billion.
Breakdown of Capital Imports by Type
The majority of Nigeria’s capital importation in Q2 2024 came from **Portfolio Investments**, accounting for $1.40 billion or 53.93% of the total. **Other Investments** followed closely with $1.169 billion, making up 44.92% of the inflows.
Within the **Other Investments** category, **loans** dominated, amounting to $1.15 billion and representing 98.6% of this category. Meanwhile, other claims amounted to just $16 million.
Portfolio Investments
In terms of **Portfolio Investments**, foreign capital into **equities** contributed 10.67%, or $149.93 million. The largest share of portfolio investments, 76.6%, went to **money market instruments**, totaling $1.07 billion. **Bonds** accounted for 12.6%, amounting to $177.79 million.
However, both bonds and money market instruments saw declines compared to Q1 2024, with foreign capital inflows into bonds dropping by 57.75% and money market instruments by 32.92%.
Foreign Direct Investments (FDI)
**Foreign Direct Investment (FDI)** remained the lowest contributor, amounting to just $29.83 million, or 1.15% of total capital importation. FDIs have been struggling due to high monetary policy rates, which have drawn investment towards money market instruments, pulling liquidity away from the real sector.
Capital Importation by Sector
The **banking sector** continued to lead in capital inflows, receiving $1.12 billion, which accounted for 43.15% of total capital importation in the second quarter. This was followed by the **Production/Manufacturing** sector with $624.71 million (23.99%) and the **Trading** sector with $569.22 million (21.86%).
Sources of Capital Importation
The majority of foreign capital came from the **United Kingdom**, contributing $1.12 billion or 43.01% of total capital importation. The **Netherlands** followed with $577.82 million (22.19%), while **South Africa** contributed $255.98 million (9.83%).
This trend in capital inflow distribution highlights the reliance on European sources, with the UK maintaining its dominant position as Nigeria’s largest capital importation partner.
Outlook
While the sharp decline in capital importation from Q1 to Q2 2024 raises concerns, the year-on-year growth suggests potential recovery and resilience. However, addressing the decline in FDIs and ensuring stability in key sectors like banking and manufacturing will be critical for maintaining positive capital inflows in the future.
