Oladeinde Olawoyin, Premiumtimes
Even as the coronavirus pandemic raged, Nigeria recorded its highest Foreign Direct Investment (FDI) in eight quarters in the third quarter of 2020, as the nation attracted investment worth $414.79 million.
The new figures are contained in the data released by the Nigerian Office for Trade Negotiations (NOTN) on Tuesday.
According to the Trade Data Quarterly brochure for the third quarter of 2020, the jump in Q3 represents a 179 per cent increase from the $148 million the country attracted in Q2 2020.
PREMIUM TIMES analysis of the figures shows that this is the highest figure since the third quarter of 2018 and it is more than the sum of both Q1 and Q2 of 2020.
The data also indicates that the FDI was 100 per cent equity.
Earlier in the second quarter of 2020, FDI slumped to $148 million from $213 million in the preceding quarter.
NOTN said the FDI value for the second quarter was the lowest in the range that covers 10 quarters, representing data from Q1 2018 to Q2 2020.
Relying on data obtained from the Central Bank of Nigeria (CBN), the report said Nigeria attracted FDI of about $148.59million in Q2 2020, and this was lower than it was in Q1 2020 ($213 million).
But the FDI figures soared in the third quarter of 2020, ostensibly because the “gradual global ease of Covid-19 lockdown activated some economic activities” around the world.
In its report, NOTN said the value of Nigeria’s Capital Importation for Q3 2020 was $1.46 billion.
For full year 2019, the capital importation was $23,99 billion, and this implies that 2020 was short of $15,37 billion to match the 2019 figure.
In terms of sector, Q3 2020 capital importation figure shows that production led in value to the tune of $400.09 million, representing slightly over a quarter (27.38%) of total capital importation. Banking came second, followed by shares, financing, telecoms, trading, agriculture, oil and gas, servicing, fishing, electrical, construction, brewering, among others.
With capital importation of $594.65 million, the United Kingdom was the biggest source in the quarter under review. The second largest source was the Netherlands, while Ireland, with $130.00million, came third.
Other countries that contributed to Nigeria’s capital importation in Q3 2020 were Singapore, the UAE, United States of America, Mauritius, Togo, and South Africa.
The slump in FDI and capital inflows in Q2 of 2020 was largely attributed to the impact of the coronavirus pandemic on the global economy, just as the jump in Q3 was occasioned by the ease in lockdown measures.
Since the pandemic broke out, public health measures have caused severe economic disruptions that impact the foreign direct investment to countries of the world.
Last June, amid crash in commodity prices occasioned by the pandemic, foreign direct investment flows to Africa were projected to decline between 25 percent and 40 percent, according to the World Investment Report 2020.
FDI flows to the continent were forecast to contract based on gross domestic product (GDP) growth projections, as well as other investment factors.
The contraction was necessitated by the disruption in several services industries including aviation, hospitality, tourism and leisure, among others.
Although the COVID-19 crisis had its impact on inflows, it only made a bad situation worse by arriving at a time when FDI was already in decline.
Earlier in 2019, Africa recorded a 10 per cent drop in inflows to $45 billion.
However, UNCTAD suggested that two distinct factors offer hope for the recovery of investment flows to the continent in the medium to long run.
“The first is the higher value being assigned to ties to the continent by major global economies, promoting investment in infrastructure, resources, but also industrial development,” it said in its 2020 report.
“Investments from these countries, which have varying degrees of political backing, despite being affected by the joint impact of COVID-19 and low commodity prices to some degree, could be relatively more resilient.
“The second is deepening regional integration due to the commencement of trade under the African Continental Free Trade Area (AfCFTA) after years of deliberation and the expected finalization of its investment protocol.
“In the short term, curtailing the extent of the investment downturn and limiting the economic and human costs of the pandemic is of paramount importance.”
On a longer term basis, it said that diversifying investment flows to Africa and harnessing them for structural transformation remain a key objective.
These objectives will require a prudent, coordinated and timely response from countries on the continent, it noted.