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Foreign direct investment drops by 41%

By on February 6, 2014

Foreign direct investment inflows into the country dropped from $1.46bn in the second quarter to $0.86bn in the third quarter of last year, according to the External Sector Development third quarter report released by the Central Bank of Nigeria on Tuesday.

The development represented a 41.4 per cent fall in FDI inflow into the country during the period under review.

According to the CBN report, portfolio investment inflows into the country also declined by 52.3 per cent from $6.52bn in the second quarter to $3.11bn in the period under review.

The report, posted on the CBN website reads, “At $4.91bn in third quarter 2013, aggregate foreign capital inflow declined by 42.8 per cent from $8.58bn in the second quarter of 2013 due to the decline in both direct investment and portfolio investment inflows. Direct investment inflow declined from $1.47bn in the second quarter of 2013 to $0.86bn in the review period.

“Similarly, portfolio investment inflow declined by 52.3 per cent from $6.52bn in the second quarter of 2013 to $3.11bn in the review period. Other investment inflows increased by 59.5 per cent from $0.58bn in the second quarter of 2013 to US$0.93 in the third quarter of 2013.

“Portfolio investment inflow remained dominant and accounted for 63.4 per cent of the total foreign inflows while direct investment inflows accounted for 17.6 per cent of the total. Other investment inflows accounted for the balance.”

The report says available data has revealed that foreign exchange inflows to the economy in the third quarter of 2013 stood at $38.49bn as against $38.17bn recorded in the second quarter of 2013, indicating a marginal increase of 0.9 per cent.

The report highlighted major developments in the external sector of the Nigerian economy during the third quarter of 2013, in comparison with developments in the second quarter of 2013 and third quarter of 2012.

According to the CBN report, the external account was slightly under pressure as reflected in the draw down in external reserves and reduced capital inflows although the overall position posted a lower deficit of $0.9bn compared to $2.94bn in the second quarter of 2013.

The current account was, however, in surplus, equivalent of 12.7 per cent of the Gross Domestic Product while the transactions in capital and financial account resulted in a net capital inflow of $1.1bn in the third quarter of 2013 compared with $1.8bn in the second quarter of 2013.

The CBN report reads, “The aggregate demand for foreign exchange by the authorised dealers during the review period amounted to $9.69bn as against $8.13bn in the second quarter of 2013 indicating an increase of 19.1 per cent. A total of $8.17bn was demanded at the wholesale Dutch Auction System as against $6.84bn in the preceding period, an increase of 19.4 per cent.

“Similarly, demand by the BDC operators increased by 17.5 per cent from $1.30bn in the second quarter of 2013 to $1.52bn in the review period. The total amount supplied in the third quarter of 2013 stood at $9.26bn compared with $8.42bn in the second quarter of 2013. Of the total amount supplied, $7.73bn was to the wDAS and $1.52bn to BDC operators as against $7.12bn and $1.30bn, respectively, in the second quarter of 2013.”

 

 

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