Nigeria’s prospects of sustaining the current macroeconomic stability and real sector growth has dimmed with the decline in the country’s capital importation by $1,232.96 million (about N243 billion), representing 31.58 per cent in the last year
Capital inflows represent the amount of money available from external or foreign sources for purchase of local capital assets such as lands, buildings, machines and other assets for productive endeavours.
What this implies is that with the declining capital importation into the country, major sectors such as manufacturing, power, housing, agriculture, automotive, aviation, amongst others will be facing challenges of capital assets inadequacy with the attendant negative implications for productivity and job creation in the economy
The latest National Bureau of Statistics, NBS, on Nigeria’s capital inflows in the first quarter of this year indicated that capital importation totalled $2,671.59 million (about N526.6 billion), representing the lowest value recorded by the country in the last two years of review.
The NBS attributed the huge decline on capital inflows to high levels of uncertainty in the quarter occasioned by the postponed election and depressed oil price.
The agency reported that on a quarterly basis, there was an acceleration of the downward trend observed since last quarter of year 2014, with a further drop of $1,828.15 million or 40.63 per cent.
It noted further that prior to this, Q4, 2014 saw a 31.22 per cent quarter-on -quarter decline from the $6,542.58 million peak recorded in the preceding quarter of last year.
A further categorisation of the capital importation by Investment type in the quarter under review showed that Portfolio Investment remained the largest of all investment types, totalling $1,860.65 million in Q1, 2015.
The NBS clarified however that despite declining by $142.56 million or 7.11 per cent from the value in the fourth quarter 2014, the drop was the smallest of the three Investment types’ declines, thereby increasing its share of the total capital importation from 44.52 per cent in the last quarter of last year to 73.48 per cent and 3.84 per cent points greater than the 69.65 per cent recorded in the corresponding quarter of 2014, adding that year-on-year, declines were much greater at $1,008.55 million or 35.15 per cent.
According to the agency, both year-on-year and monthly reductions in portfolio investment inflows were primarily driven by declines in equity capital, which were lower by $1,120.98 million or 49.59 per cent year on year, and by $402.69 million or 26.11 per cent relative to Q4, 2014.
It stated that both year-on-year and monthly, reductions in portfolio investment inflows were primarily driven by declines in equity capital, which were lower by $1,120.98 million or 49.59 per cent year-on-year, and by $402.69 million or 26.11 per cent relative to Q4, 2014. This is just as declines in Money Market instruments stood at 87.22 per cent.
The NBS reported further that capital imported as Foreign Direct Investment (FDI) stood at $394.61 million, representing 14.77 per cent of the total, adding that the sector showed the lowest year-on-year declines in inflows, at $96.09 million, growing at -19.58 per cent.
Source: National mirror.
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