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), the nation received a total of $69.39 billion in FDIs over the time period, including both foreign portfolio and FDIs.
In addition to stocks, banking received over one-fourth of the nation’s foreign capital intake, making it the preferred industry among international investors.
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.
Of Q2 performance, NBS said: “The total value of capital importation into Nigeria stood at $1.535 billion from $875.62 million in the corresponding quarter of 2021, showing an increase of 75.34 per cent. When compared to the preceding quarter, capital importation decreased by 2.4 per cent from $1.573 billion. The largest amount of capital importation was received through portfolio investment, which accounted for 49.33 per cent ($757.32 million).
“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.”
