Lower but still healthy capital inflows in Q2

The NBS recently released its latest report on Nigerian Capital Importation, which covers Q2 2018. The data was obtained from the CBN and compiled using information on banking transactions from all registered financial institutions in Nigeria. The total value of capital imported in Q2 was estimated at US$5.5bn, representing an increase of 208% y/y but a decrease of -13% q/q. The decrease was driven by declines in inflows from the portfolio and other investment categories. The data are gross, and not adjusted for capital exports.


  • Portfolio investment decreased by -10% q/q. However, it still accounted for the largest share (75%) of total capital importation. We did notice a larger 24% q/q decline in investments geared towards money market instruments (including NTBs), which still represented 65% of total portfolio investment. Meanwhile, equities accounted for 15% of this total.
  • Foreign direct investment (FDI) inflows grew by 6% q/q to US$261m but posted a y/y decline of -5%. FDI accounted for just 5% of total capital importation in Q2. The FGN could boost both greenfield and brownfield direct investment inflows by achieving relevant milestones in structural development. The reduction of power shortages would be the first step.
  • Abuja saw inflows of US$2.5bn in Q2 and Lagos US$1.7bn while Abia State reported US$1.3m. Inflows recorded in the latter may be due to healthy investment appetite towards the Enyimba Industrial City, an export free processing zone. Our channel checks confirm that foreign investments have been made towards this project.

Sources: National Bureau of Statistics (NBS); FBNQuest Capital Research
  • We do not see significant growth in the total value of capital imports in Q3. That is when the report is published. This is mainly because we expect increased risk aversion from both local and foreign investors due to the upcoming national elections. Additionally, we have noticed an increased sell-off on the back of US rate tightening by the FOMC.

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