Capital inflows into
Nigeria worth $37.6 billion (N5.9 trillion) between January 2013 and Q3 2014
have moved the country a step closer to becoming Africa’s number one financial
centre, according to BusinessDay Research and Intelligence Unit’s (BRIU) findings.
This value represents the amount of capital importation into the country in fiscal year 2013 ($21.3billion) and from January to September 2014 ($16.3billion).
An International Financial Centre (IFC) is a place where global financial business can be done profitably, easily and efficiently. It has a pool of highly skilled management and talents covering business, finance, legal, accounting and other interdependent services that can facilitate large scale cross-border transactions within the shortest possible time.
According to the recent ranking, the top ten IFCs are New York, London, Hong Kong, Singapore and Zurich. Others are Tokyo, Seoul, Boston, Geneva and San Francisco.
BRIU analysed the data on capital importation made available by the National Bureau of Statistics (NBS) and found that these investments came from 69 countries during the period under review.
Lagos State, Nigeria’s commercial centre got 99 percent and 98 percent of the 2013 and 2014 capital inflows respectively.
In addition, the majority of the capital inflows went into equity investment. Seventy-one percent or $15.1 billion in 2013 went to equities, while $9.9 billion, or 61 percent of the amount brought in as at Q3 2014 also went to the same investment.
This is in spite of the 17.38 percent negative returns the Nigerian Stock Exchange (NSE) index has posted year-to-date. The implication of the strategic positioning of foreign investors is that the current capital market state is temporary.
“We believe a few of the factors accounting for the continued attraction of the Nigerian market to foreign portfolio investors despite the headwinds include the relative pricing of the market compared to peers (11.04x vs 15.03x peer average), sound fundamentals of the economy, CBN’s resolve to defend the naira has minimised FX volatility until recently.
“They also include the relative stability and transparency in the management of the Nigerian Stock Exchange (NSE) as well as a number of reforms taking place. This has also led to the recent admission of the NSE into the World Federation of Exchanges(WFE), which is another image booster for transparency, sound regulations, to mention a few”, according to Olawale Olusi, a research analyst with Meristem Research.
The plan to make Nigeria Africa’s financial centre is fully encapsulated in the Central Bank of Nigeria’s (CBN) report on Financial System Strategy (FSS) 2020 through which it aims to make the nation “the safest and fastest growing financial system among emerging markets which will have the capacity to drive rapid and sustainable economic growth primarily in Nigeria and Africa.”
Our analysis shows that 15 African countries invested in Nigeria during this period; ten from Asia; 24 from Europe and eight from the Middle East. There are seven countries from North America; three from the Oceania and two from South America.
The highest capital inflows into Nigeria from African countries came from Mauritius whose investors injected $673.7 million in fiscal year 2013 as well as $392.9million between January and September 2014. From Asia, Singapore was the highest source of capital inflows in 2013 with $158.8million to its credit but has since been dethroned by China whose investors have so far injected $115.1 million into the Nigerian economy in 2014 while the Singaporean investors can only boast of $74 million capital injection year-to-date.
The United Kingdom (UK) remains the highest source of capital inflows into Nigeria from Europe and among all the 69 countries put together. A total of $10.6 billion or 50 percent of the entire capital importation in 2013 came in through the UK investors, while $8.99billion or 55 percent has also come into the country through the same source in 2014.
Investments from Lebanon, worth $47.3 million, topped the list of the capital inflows from the Middle East in 2013, but that position has been taken over by Saudi Arabia which has so far invested $376.3 million into the Nigerian economy in 2014.
The United States of America (USA) has the second highest capital inflows into Nigeria overall and first among the countries from the North America. A total of $4.14 billion or 19 percent of the entire capital importation in 2013 and $2.66 billion or 16 percent of the 2014 capital importation into the Nigerian economy came from the US.
Furthermore, the $70 million and $200 million investments from Pitcairn put the small island as the highest source of capital importation from the Oceania in 2013 and 2014 respectively. The highest inflows from South America came from Brazil.
Interestingly, ten new countries in 2014 joined the list of nations investing in the country, a move which suggests that the global confidence in the Nigerian economy is very high, our short term problems regardless. These countries are Armenia, Greece, Hungary, Malaysia, Malta, Qatar, and Seychelles. Others are Thailand, Uganda and Vietnam. Total capital inflows from these countries added up to $613.43 million in 2014.
This value represents the amount of capital importation into the country in fiscal year 2013 ($21.3billion) and from January to September 2014 ($16.3billion).
An International Financial Centre (IFC) is a place where global financial business can be done profitably, easily and efficiently. It has a pool of highly skilled management and talents covering business, finance, legal, accounting and other interdependent services that can facilitate large scale cross-border transactions within the shortest possible time.
According to the recent ranking, the top ten IFCs are New York, London, Hong Kong, Singapore and Zurich. Others are Tokyo, Seoul, Boston, Geneva and San Francisco.
BRIU analysed the data on capital importation made available by the National Bureau of Statistics (NBS) and found that these investments came from 69 countries during the period under review.
Lagos State, Nigeria’s commercial centre got 99 percent and 98 percent of the 2013 and 2014 capital inflows respectively.
In addition, the majority of the capital inflows went into equity investment. Seventy-one percent or $15.1 billion in 2013 went to equities, while $9.9 billion, or 61 percent of the amount brought in as at Q3 2014 also went to the same investment.
This is in spite of the 17.38 percent negative returns the Nigerian Stock Exchange (NSE) index has posted year-to-date. The implication of the strategic positioning of foreign investors is that the current capital market state is temporary.
“We believe a few of the factors accounting for the continued attraction of the Nigerian market to foreign portfolio investors despite the headwinds include the relative pricing of the market compared to peers (11.04x vs 15.03x peer average), sound fundamentals of the economy, CBN’s resolve to defend the naira has minimised FX volatility until recently.
“They also include the relative stability and transparency in the management of the Nigerian Stock Exchange (NSE) as well as a number of reforms taking place. This has also led to the recent admission of the NSE into the World Federation of Exchanges(WFE), which is another image booster for transparency, sound regulations, to mention a few”, according to Olawale Olusi, a research analyst with Meristem Research.
The plan to make Nigeria Africa’s financial centre is fully encapsulated in the Central Bank of Nigeria’s (CBN) report on Financial System Strategy (FSS) 2020 through which it aims to make the nation “the safest and fastest growing financial system among emerging markets which will have the capacity to drive rapid and sustainable economic growth primarily in Nigeria and Africa.”
Our analysis shows that 15 African countries invested in Nigeria during this period; ten from Asia; 24 from Europe and eight from the Middle East. There are seven countries from North America; three from the Oceania and two from South America.
The highest capital inflows into Nigeria from African countries came from Mauritius whose investors injected $673.7 million in fiscal year 2013 as well as $392.9million between January and September 2014. From Asia, Singapore was the highest source of capital inflows in 2013 with $158.8million to its credit but has since been dethroned by China whose investors have so far injected $115.1 million into the Nigerian economy in 2014 while the Singaporean investors can only boast of $74 million capital injection year-to-date.
The United Kingdom (UK) remains the highest source of capital inflows into Nigeria from Europe and among all the 69 countries put together. A total of $10.6 billion or 50 percent of the entire capital importation in 2013 came in through the UK investors, while $8.99billion or 55 percent has also come into the country through the same source in 2014.
Investments from Lebanon, worth $47.3 million, topped the list of the capital inflows from the Middle East in 2013, but that position has been taken over by Saudi Arabia which has so far invested $376.3 million into the Nigerian economy in 2014.
The United States of America (USA) has the second highest capital inflows into Nigeria overall and first among the countries from the North America. A total of $4.14 billion or 19 percent of the entire capital importation in 2013 and $2.66 billion or 16 percent of the 2014 capital importation into the Nigerian economy came from the US.
Furthermore, the $70 million and $200 million investments from Pitcairn put the small island as the highest source of capital importation from the Oceania in 2013 and 2014 respectively. The highest inflows from South America came from Brazil.
Interestingly, ten new countries in 2014 joined the list of nations investing in the country, a move which suggests that the global confidence in the Nigerian economy is very high, our short term problems regardless. These countries are Armenia, Greece, Hungary, Malaysia, Malta, Qatar, and Seychelles. Others are Thailand, Uganda and Vietnam. Total capital inflows from these countries added up to $613.43 million in 2014.
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