Foreign Capital Fell by 27.8%
The poor performance of foreign inflows into the country as depicted in the capital importation report 2016Q4 points to the aftermath of the numerous foreign exchange challenges prevalent in recent times. The challenges, which are associated with foreign exchange supply and wide disparity between the official exchange and parallel market rates, have resulted in higher foreign exchange risks, lowered credit ratings, financial market instability and, of course, diminished investors’ confidence.
By way of illustration, about US$1.5 billion worth of foreign investment flew into Nigeria in 2016Q4. This figure represents a decline of about 15% and 0.5% from 2016Q3 and 2015Q4 values, respectively. On broad aggregate, total foreign investment experienced a drastic decline from US$9.64 billion in 2015 to about US$5.12 in 2016. In the same vein, exchange rate crisis in 2016 affected Portfolio Investment which fell on both quarter-on-quarter (q/q) as well on year-on-year (y/y) by about 69.2% and 70.6%, respectively. FDI, however, rose by 1.2% and 179.8% in same period, in continuation of the resurgence that began in 2016Q2.