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The amount of capital importation from investors in the United Kingdom and the United States has declined by $242.03m, according to a Foreign Direct Investment data released by the National Bureau of Statistics.
In the first quarter of 2022, UK investors sent in $1.02bn while US investors sent in $82.07m, making a total of $1.10bn.
By the second quarter, the total declined to $861.25m, with $781.05m from UK investors and $80.02m from US investors.
Generally, the total amount of capital importation recorded from various investors declined by 2.40 per cent from $1.57bn in Q1 2022 to $1.54bn in Q2 2022.
According to economic experts, the decline is due to a number of reasons, such as insecurity, the upcoming general election, among others.
The Director-General of the Nigeria’s Employers Consultative Association, Mr Adewale Oyerinde, noted that foreign investors were only responding to the negative macroeconomic environment, security challenges and high inflation rate, which were contributing to low yields for their investment outlays.
A Director of Research and Strategy at Chapel Hill Denham, Tajudeen Ibrahim, said the country was experiencing a consistent decline in capital importation because of the fear of investors around the liquidity in the foreign exchange market.
He said, “Generally speaking, Nigeria is seeing a consistent decline in capital importation because of the fear of investors around the liquidity in the foreign exchange market. They are not bringing in the capital as much as they were previously in the country. In a normal environment, one quarter should be around $5bn to $6bn in capital importation. But they are celebrating $1.5bn because it is showing us a growth rate of 75 per cent which was driven by the low base that we had last year.”
Also commenting on the issue, the Co-Managing Partner and Chief Executive Officer, Comercio Partners Asset Management, Tosin Oshunkoya, said “The ravaging trend of inflation across major developed economies has triggered hawkish policy responses such as interest rate hikes, which tend to spur capital repatriation from frontier economies such as Nigeria while discouraging foreign capital inflows into the local economy, particularly through foreign portfolio investments.
“Furthermore, the impact of global headwinds does not entirely absolve the local economy of blame, as persistent tightness in the currency market and unabated insecurity remained a fundamental threat to foreign investors in the review quarter.”
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