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CBN Worried About Capital Flight

By on January 10, 2013

The Central Bank of Nigeria (CBN) has raised alarm concerning the heightened potential for capital reversal in the country.

According to the External Sector Development Report issued by the CBN, foreign inflows of capital increased 77% from $3.24 billion to $6.07 billion in the 3Q of 2012. Foreign portfolio inflows accounted for 76% of the amount, whilst 24% was foreign direct inflows.

The CBN stated, “The continued dominance of portfolio investment in aggregate foreign capital inflows suggests the need to put in place measures against capital reversal.

“The increase in the inflow of foreign direct investment and portfolio investment in Q3, 2012 was quite impressive. The current-account surplus rose to $5.03 billion, or 7.6 per cent of gross domestic product, from $5 billion in the second quarter, while exports rose by 4.2 per cent from the previous three months to $24.4 billion, with imports dropping by 22 per cent to $12 billion.”

Nigeria’s trade balance improved significantly from US$8.62 billion in Q2, 2012 and $1.59 billion in Q3, 2011 respectively to US$12.37 billion in Q3, 2012 as aggregate exports rose by 8.2 per cent from US$22.53 billion in Q3, 2011 to US$24.37 billion in Q3, 2012 while aggregate imports declined by 42.7 per cent to US$11.99 billion in the review period.