CBN: Nigerian foreign capital flows plunged 32% due to attractive US securities

According to the Central Bank of Nigeria (CBN), foreign capital has been impacted by the attractiveness of securities on the international financial markets, especially in the United States.

CBN Governor Godwin Emefiele

The apex bank revealed this in its October 2021 monthly economic report.

According to an analysis of capital imports according to destination (states), Lagos (FCT) was the largest recipient of capital, with US$0.44 trillion (or 88.3%), and US$0.06 trillion (or 11.7%), respectively.

What is the CBN saying

According to the apex bank, a more attractive market for capital is disrupting the flow of capital into Nigeria’s economy.

According to the report, foreign capital inflows into the domestic economy were adversely affected due to the relative attractiveness and availability of securities on the international financial markets, especially in the United States. Accordingly, new capital importation fell by 32.0 percent to US$0.50billion in October 2021 from US$0.66billion in September 2021.

Although foreign portfolio investment in foreign countries declined by 34%, the CBN maintained its dominance over total foreign investments.

According to the report, “Disaggregation capital importation by type investment shows that foreign portfolio investments inflow (mainly money-market instruments) decreased by 34.0 percent relative to September 2021’s US$0.50 trillion. Portfolio inflow, which accounted for 65.0 percent of total foreign investment, remained dominant despite the decrease. The inflow of loans and other investments was US$0.14 trillion, or 28.2% of the total. This is a slight increase over September 2021’s US$0.13 billion. The 6.8% em> foreign direct investment inflow was US$0.03 trillion.

Capital importation by nature of business shows that financing was 47.4%, banking (13.8%), shares (12.9%), trading (8.9 %), telecommunication (7.4 %), servicing (3.8%), production/manufacturing (3.6 %), agriculture (2.1 %), while others accounted for the balance.

According to the report, South Africa topped the list of countries contributing to capital imports into Nigeria (46.1%). Next came the United Kingdom (16.4%) and Singapore (10.0%). The Netherlands contributed 9.5%, 9.4%, USA contributed 9.4%, Guinea contributed 2.0%, Mauritius contributed 1.8% and the UAE contributed 1.0%. The Czech Republic contributed 0.9% and Denmark contributed 0.9%). Others contributed the remainder.

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