Nigeria’s capital inflow has risen to $6.3 billion almost sixfold in the first quarter compared to a year ago, following last year’s liberalisation of the currency for foreign investors and steps to tighten liquidity to attract offshore funds.
Figures released on Friday by the National Bureau of Statistics showed capital inflow had hit $6.3 billion in the quarter, dominated by offshore portfolio investors buying local shares and bonds rather than foreign direct investment.
Capital imports have been growing especially as economic activity gains pace after Nigeria emerged from a recession last year.
They rose for the fourth straight quarter since the second quarter of 2017.
Portfolio investment has been rising faster than direct investment which is still weak. The NBS said the strong growth in portfolio investment was due to money market yields.
Yields on treasury bills traded as high as 18 percent in the past.
But the government has been working to lower its borrowing cost by repaying matured bills rather than rolling them over as it has done in the past.
Bills now trade at rates of around 12 percent.
The fall in bond yields have prompted foreign investors to repatriate profits rather than re-invest them, putting pressure on the currency.
The NBS said most of foreign capital inflow in the first quarter went into the banking sector, followed by the telecoms sector and services sector.
Britain exported the most amount of capital to Nigeria, the statistics office said.
Capital imports were more than $5.3 billion in the third quarter.