nigerian_stock_exchangeNigeria Bureau of Statistics, NBS, has disclosed that a whopping N2.2trillion was withdrawn from the national economy in 2015 alone, leading to a reduction in the confidence of investors to invest and make profit in the country.
According to statistics from NBS, as quoted by Quartz Africa, investor confidence in Nigeria rose significantly between 2010 and 2013, only to take a little dive in 2014, and a drastic drop in 2015.
Capital importation in 2015 attributed the development to the country’s struggle to cope with the fall in global oil prices and its currency slide, which resulted to the loss of investor confidence.
The capital importation report tracks the total inflow of capital into the country under three main investment types: Foreign direct investment, FDI, portfolio investment and other investments, including currency deposits and loans.
In 2015, total capital imported into the country stood at $9.6 billion, the lowest recorded total since 2011, representing a 53% drop from the $20.7 billion recorded in 2014.
A majority of the $9.6 billion imported into Nigeria’s economy came from only three countries. Netherlands, United Kingdom and the United States of America, which contributed 80% of total inflow. Mauritius, a tax haven and corporate outlet for African multinationals like MTN, was Nigeria’s biggest continental source of capital inflow with $553 million.
The report also highlighted the growing importance of Nigeria’s telecommunications industry. Telecoms, which contributed 9% of Nigeria’s GDP last year, recorded more capital inflow ($937 million) than any other sector for the first time ever. The drop in investor confidence in Africa’s largest economy is in line with the continent’s struggles in 2015.
According to data from the United Nations Conference on Trade and Development, foreign direct investment in Africa fell by a third last year.
Nigeria’s main challenges are tied to the 40% drop in oil prices since January. Oil is Nigeria’s main source of foreign revenue, and the drop has been tackled with a number of controversial monetary policies including a refusal to devalue the currency. The uncertainty has left investors frayed, describing Nigeria as a ‘heightened risk situation’. In particular, the seeming inability of the Nigerian government and its Central Bank, to manage the deteriorating situation has resulted in declining investor confidence over the last 18 months during which capital importation has dropped by 77%.
It will be recalled that when Goodluck Jonathan was announced acting president of the country in 2010, following the illness and subsequent death of Umaru Yar’Adua, investing interest in Nigeria rose by N1.17 trillion. In Jonathan’s second year, and after a “successful” presidential election, investing interest rose by N396 billion to an approximate N1.6 trillion.
By 2013, investing interest in Nigeria had risen by N2.65 trillion to N4.22 trillion. In 2014, towards the build-up of the 2015 general elections, which predicted endless doom for Nigeria, some investors withdrew their monies from the Nigerian economy, leading to a drop from N4.22 trillion to N4.1 trillion. In 2015, however, there was a drastic withdrawal of investing interest in Nigeria, and according to NBS, investing interest declined by N2.2 trillion in 2015.
Some investors blamed the current trend on the uncertainties that surrounded the 2015 elections, while many others blamed it on the lack of policy direction in the first five months of President Muhammadu Buhari’s administration.
Data from the Nigerian Stock Exchange (NSE) show that investors were voting their monies out of the economy prior to the election, but immediately after the relatively free and fair poll, they brought the monies back. Then three months before the election, NSE lost 8.40 percent of its worth, only to regain 8.30 percent in a single day after the election.
By March 31, 2015 – while the election results were being collated – the NSE market capitalisation was at N10.718 trillion, but it rose to N11.62 trillion after Buhari’s victory. The bullish phenomenon was called ‘Bullhari’. As at December 31, 2015, the market cap was down from N11.62 trillion in April to N9.85 trillion.

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