Total capital imported to the local economy in the third quarter of 2021 rose 97.7 per cent (quarter-on-quarter (q/q) to $1.7 billion, about 18.5 per cent year-on-year (y/y), said FBNQuest Research.
The data obtained from the CBN and compiled using information on banking transactions from all registered financial institutions in Nigeria, shows the total value of capital imported in the third quarter was estimated at $1.7 billion, representing increases of 97.7 per cent quarter-on-quarter (q/q) and 18.5 per cent year-on-year (y/y). The data are gross, and not adjusted for capital exports.
Portfolio investments accounted for the largest share (70.3 per cent) of total capital inflows. It recorded q/q and y/y increases of 120.8 per cent and 198.9 per cent y/y respectively in the third quarter.
The primary drivers of portfolio inflows were money market instruments which accounted for 65.4 per cent of inflows of total portfolio investment. Inflow into the money market represented q/q and y/y increases of 76.2 per cent and 119.1 per cent respectively as foreign portfolio investors (FPIs) cautiously re-enter the market after the pandemic-induced lull. FPIs’ apathy towards money market instruments and fixed income is based on ongoing fx liquidity issues and negative real interest rates on investments due to double-digit headline inflation. Investments in money market instruments remain significantly below pre-pandemic levels.