Capital inflow into the Nigerian economy jumped by 196.14 per cent or $7.12 billion to $10.75 billion between January and November last year compared with $3.63 billion in the corresponding period of 2023, findings by New Telegraph show.
An analysis of the Central Bank of Nigeria’s (CBN) monthly economic reports for January- November 2024 indicates that capital inflow in the country’s economy stood at $0.33 billion in January; $1.24 billion in February; $1.80 billion in March; $0.77 billion in April; $1.29 billion May and $0.54 billion in June.
Also, the reports show that capital inflow fell to $0.49 billion, $0.34 billion and $0.40 billion in July, August and September respectively. Although the monthly economic report for November 2024 released by the CBN, last Friday, indicates that capital inflow declined by 13.76 percent to $1.63 billion from $1.89 billion in the previous month, the amount was 232.65 per cent higher than the $0.49 billion recorded for the corresponding period of 2023.
Specifically, the report said: “Capital inflow declined to $1.63 billion in November 2024, from $1.89 billion in October 2024. A breakdown showed that portfolio investment inflow decreased to $1.36 billion, from $1.41 billion due, mainly, to lower purchases of equity and shares.
Similarly, foreign direct investment decreased to $0.12 billion from $0.18 billion in October 2024. ‘Other investments’, mainly loans, also decreased to $0.15 billion from $0.30 billion in the preceding month.
“In terms of share, portfolio investment inflow constituted 83.59 per cent, while ‘other investment’ and direct investment accounted for 9.11 and 7.30 per cent, respectively.”
It further stated: “Analysis of capital importation by sector indicated that inflow into the banking sector accounted for 78.59 per cent of total inflow.
This was followed by the financing sector (9.01%), production and manufacturing sector (4.98%), telecommunication (2.28%), IT services (2.15%), and shares (1.79%), while other sectors accounted for the balance.”
According to the report, the UK was the major source of capital inflow into the Nigerian economy in November last year as it accounted for 66.31 per cent of the total amount.
The report said the UK was followed by Republic of South Africa (7.83%); the Netherlands (6.24%); the United States of America (5.53%); the United Arab Emirates (5.24%); and Singapore (2.40%), adding that other countries accounted for the balance.
Analysts attribute the significant increase in capital inflow especially in the last quarter of 2024, compared with the previous year, to the return of portfolio investors who were attracted by the CBN’s liberalisation of the forex exchange market as well as its tight monetary policy stance.
The forex liberalisation policy saw the apex bank allowing the naira to freely trade in a bid to boost forex inflows as part of President Bola Tinubu’s reforms, which also included the removal of the subsidy on petrol.
