Nigeria’s banking industry garnered $15.83 billion in foreign investment from 2017 through the end of the previous year, a clear indication of its appeal to the global market.
The amount equals 23% of the nation’s total capital imports over the previous five years. However, since the research is based on sectoral disintegration, it is implied that the quantity affects both direct investments and portfolio investments.
According to information from the National Bureau of Statistics (NBS), total foreign portfolio and foreign direct investments (FDIs) in the nation during the time period were $69.39 billion.
The banking industry, which received over a quarter of the nation’s foreign capital intake, was preferred by foreign investors over shares.
Foreign portfolio investment (FPIs) are frequently referred to as “hot money” or “fair-weathered money.” As a result, it is regarded as a reliable source of finance for expansion. However, FDI and FPI both play a significant role in assessing a country’s balance of payments status.
In the five years running up to December 2021, approximately $26.21 billion entered the nation through the shares category. The sector’s average percentage of all capital imports in 2017 and 2018 was 61.5%.
The overwhelming weighted average slowed to 22% in 2019 before falling even lower to 19% in 2019. It was 6% the year before. Since 2020, the banking industry has seen more foreign investment than shares or any other sector.
In 2019 banks received 32% of the vote, while in 2020 banks received 39% of the vote, in that order. As of last year, the banking sector continued to dominate with 22% of the market, compared to 16% for stocks.
Banking accounted for N1.47 billion, or 47%, of the estimated $3.11 billion in foreign capital inflows recorded in the first two quarters of the year (H1), while just N301 million, or 10%, went to stocks.
Production and telecommunications, with respective shares of the capital importation value of 15.24 and 10% in the most recent quarter (Q2), also engaged in fierce competition. 12.85 percent went to general finance, 3.68 percent to trading, and 3.74 percent went to agriculture, which is crucial.
The overall value of capital imported into Nigeria was $1.535 billion, up from $875.62 million in the equivalent quarter of 2021, a 75.34 percent rise, according to NBS’s assessment of Q2 performance. Capital importation dropped from $1.573 billion in the previous quarter to $1.497 billion. The largest portion of capital inflow, or 49.33 percent ($757.32 million), came through portfolio investments.
“This was followed by other investments with 41.09 per cent ($630.87 million) and FDI accounted for 9.58 per cent ($147.16 million) of total capital imported in Q2 2022. Disaggregated by sectors, capital importation into banking had the highest inflow of $646.36 million amounting to 42.1 of total capital imported in Q2 of 2022.”
