The latest capital importation report released by National Bureau of Statistics (NBS) has shown that Nigeria’s foreign direct investment (FDI) rose by 41 percent in Q4 of 2014 in relation to the preceding quarter (Q3).
The NBS report said FDI increased from a value of $544.50 million in quarter three of 2014, by $224.35 million to reach $768.86 million in quarter four.
Despite the increase in FDI, Nigeria’s total capital imported to the country for the period declined. A sharp decline of $2,042.84 million or 31.22 percent was recorded from the value of $6,542.58 million that was recorded in the preceding quarter.
Also, the closing quarter of the year 2014 was still greater than the $3,904.55 million of capital imported in the opening quarter, by $595.18 million or 15.24 percent.
The bureau attributed the decline in the capital imported in quarter four to low levels of investors’ confidence owing to the build-up to the 2015 elections.
“Capital Importation is divided into three main investment types: Foreign Direct Investment (FDI), Portfolio Investment and Other Investments, each comprising various subsectors,” the report said.
According to the Wall street journal (WSJ) frontiers and frontier strategy group (FSG) frontier market sentiment index, Nigeria maintained its top spot as the frontier-market economy that is attracting the most attention from American and European multinationals for potential future investments.
Despite the election postponement causing jitters among investors, corporations are still watching the country.
The country has held the top spot since the index was launched in June 2014 despite having endured a rough ride for the past few months.
According to Nnamdi Chiekwu, a partner at New York-based corporate finance advisory firm Namdex Group, foreign companies are taking a long view on Nigeria. “The political uncertainty is putting everything on hold,” he says, “but companies that can afford to wait it out will find great opportunities there.”
Recent attacks by Boko Haram continue to have a negative impact on perceptions of Nigeria.
But for corporations looking beyond the short-term turmoil, the country’s problems may provide an opportunity to buy into Africa’s biggest economy at a discount.
“Nigeria is about to enter a world of hurt but these are the times when you can really make a difference – both from investors’ point of view and corporates’,” says Matt Lasov, FSG’s global head of advisory and analytics.
The source of the greatest value of capital imported to Nigeria, according to the report, continues to be the United Kingdom, with $1.94bn imported in the fourth quarter of 2014, representing 43.21 per cent of the total.
It said marginal declines were also observed in the United States, which is Nigeria’s second largest source of capital, declining by $54.62m or 4.84 per cent to $1.07bn in quarter four.
For portfolio investment, the report stated that this made up the largest portion of the total capital imported.
It said at a fourth quarter value of $2.0bn, portfolio investment declined by $3.12bn or 60.94 per cent from its quarter three value of $7.12bn.
JOSEPHINE OKOJIE
