NEWS: NIGERIA'S CAPITAL IMPORTATION UP 595%; SAYS NBS

According to figures released today, May 11 2018 by the National Bureau of Statistics (NBS) foreign capital imported into Nigeria grew 594% first quarter of this year compared to same time last year.

Indeed, good news but there can only be limited celebration by Nigerians because the bulk of the inflow in temporary and can be withdrawn immediately there is unfavourable condition.

According to the NBS, the total capital imported into the country from January to March 2018 came to $6.303bn, up 594.03% on quarter one 2017 and 17.11% on the previous quarter (October to December 2017). 

This was the 4th quarterly consecutively and portends well for both the Nation's foreign reserves and investment in Nigeria.

The inflow was dominated by Portfolio investment which came to $4.565bn compared to $3.477bn in the previous quarter.

There the good news really ends. This is because money market instruments in flow accounted for $3.527m or 77.27% of the portfolio investment in flow. 

The rest of the portfolio inflow is made up of only $701.61m equity investment and $335m in bonds.

Decoded: This means the foreign investors are look up to Nigeria give them higher returns on money they borrowed elsewhere at lower costs. If the cost of such funds increase ( as in for example, increase in UK or US interest rates) or the returns fall below expectation, (eg, major drop in Nigerian interest rate etc) they will jump ship in a rush taking their money with them.

Another thing, capital imported as loans within the same period was &1.27bn. While these have longer term usage tie up than money market inflow, a time also will come for repayment.

The day Nigeria and Nigerians can celebrate good growth in capital inflow is when such is dominated by direct invest on long term basis.

For now, says the NBS, the inflows were mainly from the UK ($2.25bn); US ($1.26bn); South Africa ($453.2m) and, wait for it, Ghana ($380.14m).

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