Nigeria records $5.1bn portfolio investments in nine months


Nike Popoola

 Nigeria recorded $5.1bn portfolio investments in the first nine months of 2020.

Figures obtained from the National Bureau of Statistics revealed that while there was a significant investment of $4.3bn investments in the first quarter, investments in the second and third quarters reduced to $385.32m and $407.25m respectively.

The portfolio investment included equity, bonds and money market instruments.

Portfolio investments are passive investments, as they do not entail active management or control of the issuing company.

The foreign investors have a relatively short-term interest in the ownership of the investments because the aim is solely financial gain, in contrast to Foreign Direct Investment which allows an investor to have managerial control over a company.

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According to the Central Bank of Nigeria’s monthly economic report, in October, capital inflow declined by 71.4 per cent due to tight global financial conditions, as countries, particularly the developed economies, struggled with the second wave of the COVID-19 pandemic.

It stated that capital importation by nature of investment was dominated by portfolio investment, which accounted for 41.5 per cent, followed by production/manufacturing (16.3 per cent), financing (13.4 per cent), trading (9.6 per cent), and agriculture (eight per cent).

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A breakdown of capital by originating country showed that the United Kingdom took the lead with 25.3 per cent. The Netherlands and Singapore accounted for 14.8 per cent and 8.3 per cent respectively of the total inflow.

By destination, Lagos State, Abuja and Enugu were the top recipients of the inflow at $0.11bn, $0.07bn and $0.01bn respectively.

It stated that the moderation in the repatriation of dividends by non-resident investors resulted in the 18.6 per cent decline in the capital outflow to $0.48bn in October 2020, relative to the $0.59bn in the preceding month.

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A detailed disaggregation showed that, of the total capital outflow, loan repayment component at $0.17bn accounted for 35.9 per cent, while dividends at $0.04bn accounted for 9.4 per cent. Capital reversal of $0.26bn accounted for 54.7 per cent.

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