Capital importation into the brewery, fishing, tanning and weaving sub sectors of the Nigerian economy has waned following the absence of capital importation into them, the analysis of H1 2015 data on capital importation from the National Bureau of Statistics shows.
These sectors did not attract any investments registered as capital importation in the first half of 2015.
Since 2013, these sectors have had difficulty attracting investments in the forms of capital importation. In particular, the tanning and weaving activities in the country have got no capital importation, while the fishing sub sector was on the investors’ radar in just three out of the ten quarters between January 2013 and June 2015.
The few exemptions were Q1 2013 when $5.07 million was imported; $449,965 in Q1 2014 and $100,000 in Q3 2014. And inspite of the huge market for brewery products, the sector’s attractiveness has faded, as no capital was imported into the sub sector from January 2014 till date.
“The fishing sub sector might not have attracted so much through capital importation because majority of the investors could raise their funds locally” said Ayodeji Olabisi, an analyst with Meristem Research. Olabisis also observed that the non-regulation of some of these sectors could be a causal factor.
“And the majority of new investments coming into the brewery sub sector are in the forms of equity investments. Investors prefer these forms because the industry is dominated by Nigerian Breweries and Guinness. It will require a huge FDI to set up new brewering businesses that will compete with these industry giants” Olabisi added. The quarterly data align with his view, as investment in shares went up by 47 percent from $1.28 billion in Q1 2015 to $1.88 billion in Q2, 2015, showing investors’ preference for equity investments during the period under review.
Further analysis on other sectors between Q1 and Q2 2015 shows mixed results. The Electrical sub sector, IT Services, Trading, Banking and Servicing recorded increase in capital importation. Capital importation into the electrical sub sector rose a record 8,689 percent from $834,965 in Q1 2015 to $73.38 million in Q2, 2015. IT Services got $5.75 million in Q2 2015 over $1.39 million it received in Q1 2015, representing 311 percent. Trading, Banking and Servicing also went up by 221 percent, 214 percent and 107 percent respectively.
The sudden rise in capital importation into the electrical sub sector was attributed to the power sector reforms currently going on in the country as power distribution and generation companies replace the aging distribution cables with the new ones.
On the contrary, capital importation into construction, oil & gas, production/manufacturing, telecommunications, consultancy, transport, financing, agriculture and drilling sub sectors nosedived.
The importation of capital for construction activities declined by 25 percent, from $4.3 million in Q1 to $3.23 million in Q2 2015. Oil & gas, production/manufacturing and telecommunications fell by 49 percent, 57 percent and 59 percent respectively. Consultancy, transport and financing declined by 86 percent, 89 percent and 94 percent respectively. Agricultural and drilling sub sectors recorded the most declines, amounting to 98 and 99 percent decreases during the period under review.
The growth rates in capital importation posted by different sectors also reflected in their quarterly GDP performances. At constant prices, the Q2 oil refining GDP, which is a an important segment within the production/manufacturing subsector declined by 15 percent; livestock and fishing GDP fell by 4 percent, while financing declined by 3.3 percent. On the other hand, sectors such as trade, construction, transport and telecoms witnessed an improvement in their quarterly GDP.
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