By Jonah Nwokpoku

NIGERIA’S foreign direct investment, FDI fell by 52.54 per cent in the third quarter of 2016 to $340.64 million from $718 million in corresponding quarter of 2015.

This is according to a capital importation report for Q3 released by the national bureau of statistics, NBS yesterday.

President Muhammadu Buhari

However, when compared with the FDI of second quarter of 2016, it rose by 84.84 per cent to $340.64 million from $184.3 million.

According to the report, “The total value of capital imported into Nigeria in the third quarter of 2016 was estimated to be $1,822.12 million, which represents an increase of 74.84 per cent relative to the second quarter, and a fall of 33.70 per cent relative to the third quarter of 2015.”

The report 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. 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.”

The report further showed that, “Each type of investment including, FDI, Portfolio and Other, recorded quarterly increases, of 84.84 per cent, 172.84 per cent and 7.80 per cent respectively.” NBS said, “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 per cent and 30.80 per cent for Other Investment and FDI respectively, adding that Year on year growth rates, however, remained negative.

The report also noted: “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 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.

This is the first quarter since 2007 Q2 in which Equity was not the largest part of Portfolio investment; at $201.12 million this type of Portfolio Investment remains considerably subdued relative to previous highs of $4930.55 million in the first quarter of 2013, and $3875.35 million in the second quarter of 2014.