A recovery in capital imports in Q2

The headline figure in the NBS report on Nigerian Capital Importation for Q2 2017 is an increase from US$910m to US$1.79bn. The trend over several quarters, as with the CBN balance-of-payments series through to Q1 (Good Morning Nigeria, 16 August 2017), is of stable direct investment alongside pronounced swings for portfolio and other investments. Portfolio imports more than doubled in Q2 to US$770m in response to the launch of the investors’ and exporters’ fx window (NAFEX). Weekly data from FMDQ confirm the pick-up in turnover at the window.

Equities provided US$610m of the portfolio imports, money market instruments US$100m and bonds US$60m. Turnover on NAFEX has been led by dedicated Africa and frontier equity investors.

Predictably, Lagos State accounted for 97% of all capital imports in Q2. It hosts the NSE, the headquarters of DMBs and the principal manufacturing plants in Nigeria.

We expect that the Q3 report on capital importation will reflect similar trends: stable if uninspiring direct investment, a surge in portfolio investment (led by equities with some fixed-income support) and healthy other investment (driven by imports of loan capital).

The report draws on CBN data derived from software capturing banking transactions from all registered financial institutions in Nigeria. Additionally, it draws on customs declarations for imports of physical capital.

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