Capital importation into the country in the third quarter of 2016 stood at $1.822 billion a 74.84 per cent increase when compared to the figure in the second quarter of the year although it was a 33.7 per cent drop compared with the level of capital importation in the same period in 2015.
According to the capital importation report released by the National Bureau of Statistics yesterday, the highest level of capital imported was in August, when $894 million was imported, the highest level since July 2015. In September $649.76 million was imported, which was still more than any month in the first and second quarters. In contrast with the previous quarter, where Other Loans explained the majority of the increase, a number of investment types contributed to the quarterly increase.
The statistics office said much of the quarterly increase in the value of capital importation came from debt financing. Of the total quarterly increase, 85 per cent was accounted for by increases in Portfolio investment in Bonds and Money Market Instruments; the latter of which comprises short-term funding securities such as treasury bills and commercial bills from CBN.
The report said quarterly growth in FDI equity was also strong, although Portfolio equity continued to decline. FDI investments have a longer-term interest, and are therefore less likely to reflect short term challenges than Portfolio Equity.
In the third quarter of 2016, Portfolio Investment was the largest component of imported capital and accounted for $920.32 million, or 50.51 per cent. Although Portfolio Equity declined by 28.12 per cent relative to the previous quarter, this is outweighed by large increases in other types of Portfolio Investment. Bonds increased from zero in the second quarter, to $369.00 million in the third, and Money Market Instruments increased from $57.50 million to $350.20 million over the same period, an increase of 509.03 per cent.
Foreign Direct, Portfolio and Other Investments had recorded quarterly increases, of 84.84, 172.84 and 7.80 per cents respectively. The relatively strong growth in Portfolio Investment meant it regained its position as the largest investment type, and it accounted for 50.51 per cent in the third quarter, compared to 18.69 and 30.80 per cents for Other Investment and FDI respectively. Year on year growth rates remained negative as FDI,
Portfolio and Other Investment declined by 52.54, 8.80 and 45.05 per cents respectively compared to the third quarter of 2015.
In the case of FDI and Other Investment however, this was partly the result of a base effect, as there was a spike in value of FDI Equity in the third quarter of 2015. Nevertheless, it is also possible that the weaker growth in the economy in the first half of 2016 has had an impact on the value of capital importation.