FDI into Nigeria falls by 41% over the first quarter of 2017 dropping to 10 year low

FOREIGN direct investment (FDI) into Nigeria fell by over 41% during the first quarter of 2017 to $9.8.27m compared with the $1.55bn that was recorded during the fourth quarter of 2016 according to the National Bureau of Statistics (NBS).

Data just published by the NBS reveals that the FDI inflow recorded in the first quarter of 2017 is the lowest seen in 10 years. According to the report tagged the Capital Importation Report, the figure represents a decline of $640.61m from the last quarter of 2016, representing a 41.36% fall.

According to the report, the decline in investment inflow was due to the fall in other investment and portfolio investments category made up of equity, which dropped from $176.44m in the fourth quarter of 2016 to $101.99m in the first quarter of 2017. Similarly, loans declined from $917.01m to $369.28m while bonds, which recorded $25.4m at the end of the last quarter of 2016, recorded nothing in the first quarter of the current fiscal year.

An NBS spokesman said: “Capital importation was particularly low in January, at $187.9m. This was only the fourth month since 2007 in which capital importation was less than $200m."

Furthermore, according to the report, the fall in FDI, came after four consecutive quarters of increase, while the fall in other investments followed three consecutive quarters of increase. On a sector-by-sector basis, the report noted that in contrast to the previous quarter, there were no obviously dominant sectors.

Two sectors that were responsible for the largest proportions of the value of imported capital were servicing, which accounted for $146.05m or 16.08% and telecommunications, which accounted for $145.78m or 16.05%. Despite recording decreases, the banking and oil and gas sectors were the third and fourth largest capital importing sectors, accounting for $126m, representing 13.87% and $101.08m or 11.13% respectively.

Four sectors recorded no capital importation in the first quarter of 2017, including drilling, hotels, tanning and weaving. On capital importation by states, the NBS said the state to import the most capital into Nigeria in the first quarter of 2017 was Lagos, accounting for 95.32%, representing a slight decrease in its share relative to the previous quarter, when it was 96.38%.

Akwa Ibom and Abuja were the states to record the second and third largest amounts of imported capital, recording values of $18.36m and $14.87m respectively. The country from which Nigeria imported the most capital was the UK, which accounted for $302.47m, or 33.3% of the total, representing a decline of 37.36% compared with the previous quarter.

Also according to the report, the country to account for the second largest value of capital importation was the US, accounting for $215.66m in the first quarter of 2017, or 23.74%. The next two largest investors in the period under review were Singapore and Mauritius, accounting for 8.09% and 7.86% respectively.