November 8, 2016/Cordros Research
On Monday, the National Bureau of Statistics (NBS) released its Capital Importation report for the third quarter of 2016, wherein it revealed that the total value of capital imported into the country in Q3-2016 was US$1.82 billion, representing 74.84% q/q increase and 33.70% y/y decline. Noteworthy, the highest level of capital imported during the review period was recorded in August when US$894.00 million (c.49% of total during the quarter) was imported – the highest level since Q3-2015. Although total capital imported in September (US$649.76 million) lagged August’s figure, the amount was higher than that recorded in any of the first six months of the year. Bucking the trend recorded in previous quarters, wherein Other Loans contributed the most to capital imported, the review period shows a more harmonized contribution across the various investment types.
Subdued Prospects on Renewed Forex Crisis
While acknowledging the 84.84% q/q (from US$184.29 million to $340.64 million) growth in Foreign Direct Investment during the review period, (on a y/y basis however, FDI actually slumped by 289.45% from $717.72 million), we also highlight the dismal 18.69% contribution of this investment class to total capital importation as evidence of continued recognition that Nigeria’s overall macroeconomic outlook is weak. Overlaying this with the volatility in the FX market, which has created a wider divergence between the official and parallel market rates, with the CBN acting as the major supplier of FX, the likelihood of further improvement in capital importation in the near term appears slim.
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