The April 2024 Monthly Economic Report published by the Central Bank of Nigeria (CBN) attributes the decline to a reduction in investments in money market instruments.
According to the report, “A lower foreign capital inflow was recorded in the review period primarily because of lower investments in money market instruments.”
It noted that portfolio investment inflow which declined to $330 million from $1.16 billion in March, was responsible for the drop as investors shunned purchase of money market instruments.
The report noted that other forms of investment, especially loans, also declined with inflows falling to $430 million from $620 million in the previous month.
According to the report, foreign direct investment (FDI) also nosedived, as it also dropped to $10 million, down from $20 million in March, following a reduction in equity investments.
In terms of the composition of foreign capital inflows, other investments constituted the largest share at 55.84 per cent, followed by portfolio investments at 42.71 per cent, and direct investments at a mere 1.45 per cent.
The implication of the drop in foreign capital inflows is that Nigeria is heavily dependent on loans which has worsened the country’s debt position.
Sectoral analysis of the capital importation, shows that the banking sector dominated, receiving 70.46 per cent of the total inflows.
This was followed by trading which accounts for 12.89 per cent, production/manufacturing recorded 5.77 per cent, telecommunications 4.94 per cent, and shares 4.35 per cent. The remaining inflows were distributed across various other sectors.
Lagos State maintained the lead as the primary destination for these investments, attracting 83.13 per cent of the total capital inflow, while the Federal Capital Territory (FCT) accounted for the balance.
The report also shows that the United Kingdom emerged as the largest contributor, accounting for 54.59 per cent of the total inflows. South Africa followed with 13.22 per cent, Mauritius with 9.22 per cent, the Netherlands with 6.57 per cent, the United Arab Emirates with 5.77 per cent, and the United States with 3.44 per.