The banking sector with $555.52 million, or 30.49 percent of the total capital imported into the country in the third quarter of 2016, regained its position as the sector to import the largest value of capital, according to the capital importation report from the Nigerian Bureau of Statistics (NBS).
The data shows that the total value of share capital imported was $646.28 million, which represents an increase of 85.72 percent relative to the previous quarter.
Meanwhile the report also noted that portfolio investments in equity dropped by 11 percent to $201 million. According to the report, the third quarter was the first since 2007 Q2 in which Equity was not the largest part of portfolio investment.
It said much of the quarterly increase in the value of capital importation came from debt financing adding that this was the first quarter on record in which no capital was imported in the form of FDI.
Specifically, inflows into equities were $201.12 million in Q3, compared to previous highs of $4.930 billion in Q1 of 2013 and $3.875 billion in second quarter of 2014.
While inflows into equities fell, the total capital imported into the country in Q3 rose from the level in Q2. According to NBS, the total value of capital imported into Nigeria in Q3 2016 was estimated to be $1.822 billion, which represented 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 highest level of capital imported was in August, when $894.00 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 agency said.
NBS explained that much of the quarterly increase in the value of capital importation came from debt financing, noting that of the total quarterly increase, 85 percent 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 foreign direct investment (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.
“Nevertheless, each type of investment (FDI, portfolio and other) recorded quarterly increases, of 84.84 per cent, 172.84 per cent and 7.80 per cent 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 per cent and 30.80 per cent for Other Investment and FDI respectively. Year on year growth rates remained negative; FDI, portfolio and Other Investment declined by 52.54 per cent, 8.80 per cent and 45.05 per cent respectively compared to the third quarter of 2015,” NBS said.
Also from the report was the sector to import the second largest amount, the Telecommunications sector, which is also usually one of the key sectors involved in capital importation. The value of capital imported by telecommunications was $244.80 million, or 13.34 percent of the total representing an increase of $126.09 million, or 106.21 percent, relative to the previous quarter. However, compared to the previous year this is still a decline of 33.75 percent.
The Oil and Gas sector maintained a high level of capital importation; although it decreased by 14.4 percent relative to the previous quarter, it is still elevated relative to previous periods at $171.63 million. This sector is characterised by isolated periods of high capital importation, and it is therefore unusual that the level has remained high for two consecutive quarters. This sector accounted for the third highest amount in the third quarter of 2016.