FDI inflows down by 82.4%, says NBS report

‘Nigeria’s debt hits $65.42b, Lagos leads with $1.2b’

THE impact of the de-listing by JP Morgan of Nigeria’s FGN Bonds in its Government Bond Index – Emerging Markets (GBI –EM Bonds) between September and October last year may have taken a very serious toll on Foreign Direct Investments (FDIs) inflows to the country as both equity investments and portfolio investment (also known as Hot money) decreased by 82.4 per cent and 64 per cent respectively.

This is part of the fall-out the Nigerian Capital Importation Report for the Third and Fourth Quarters of 2015 recessed by the National Bureau of Statistics (NBS) yesterday.

Though the report was silent on the reason for the drastic drop in FDI inflows for the last two quarters, economic experts in the wake of the warning by JP Morgan last year warned of the devastating consequences of Nigeria’s delisting from the JP Morgan Emerging Market Index, but the Director-General of the Debt Management Office (DMO) and some officials of the Central Bank of Nigeria (CBN) allayed Nigerians’ fears, insisting that the action may not pose any threat to Nigeria’s FDI drive.

However, the NBS report indicated otherwise as it said during the two quarters, Nigeria suffered serious FDI inflows.
Meanwhile, Nigeria’s total debt rose to N12.6 trillion ($65.42 billion) as of December 2015, up from N12.4 trillion and N11.2 trillion in the comparable period of September 2015 and December 2014 respectively, the latest report from the Debt Management Office (DMO) has shown.

According to the DMO, state and federal governments’ external debt stock as at December 31, 2015 also showed a combined debt profile of $10.7 billion or N2.1 trillion, as Lagos State government led other states with a debt profile of $1.207 billion out of $3.37 billion recorded at the period, while Kaduna ranked second with $226.36 million, followed by Edo state with $168.18 million.

Similarly, the Federal Government’s external debt stock for the period under review stood at $7.34 billion, while a domestic debt stock of $44.8 billion or N8.83 trillion was recorded during the period.

The disturbing report came on a day Nigeria’s Finance Minister, Mrs. Kemi Adeosun, reminded the Federal Inland Revenue Service (FIRS) – the country’s tax agency, which last Tuesday promised to raise at least N4.95 trillion largely from non-oil taxes to fund this year’s Federal Government’s N6.08 trillion budget that it can’t afford to fail the nation at this trying period, hence it must do all within its powers to meet up with the promise.

The NBS report released by the Statistician-General of the Federation, Dr. Yemi Kale, read in part: “Foreign Direct investment, comprising mostly of equity, remained the smallest component of capital importation, and accounted for $717.71 million, or 26.12 per cent of the total value of capital imported in the third quarter. This was despite increasing by $506.58 million or 239.93 per cent relative to the previous quarter. Other capital remained insignificant relative to Foreign Direct Equity investment; $1.86 million was recorded, which was considerably higher than the $0.13 million recorded in the previous quarter, but still accounts for only 0.26 per cent of total direct investment

“In the final quarter, Portfolio Investment reverted to being the largest component of imported capital, accounting for 61.18 per cent. This large change relative to the third quarter emphasises the volatile nature of capital inflows. Within portfolio investment, equity accounted for 83.16 per cent, slightly less than in the third quarter.

This was mainly due to a quarterly decline of 9.98 per cent in equity, and a quarterly increase of 47.12 per cent in the value of Money Market Instruments, which was the second largest component and accounted for 16.81% of portfolio investment. Investment in the form of bonds nearly stopped entirely, falling by 98.61 per cent, and accounting for an insignificant share of over portfolio investment.

Further analysis of the debt figures showed that between September and December 2015, domestic debt rose by N225 billion, while the external debt recorded an increase of N21 billion ($101 million).