Insecurity, COVID-19 drain Nigeria’s FDI to $65m from $750m

Insecurity, COVID-19 drain Nigeria’s FDI to $65m from $750m

Foreign Direct Investment (FDI) inflow to Nigeria dropped to $65m as of the end of the fourth quarter of 2020 from $780m as of the end of third quarter.

Figures obtained by our correspondent from the Central Bank of Nigeria’s economic report in the fourth quarter revealed.

Part of the report read, “Foreign Direct Investment inflow declined to $0.65bn, relative to $0.78bn in the previous quarter, as both equity and reinvested earnings declined during the review period, occasioned by the lingering insecurity challenges and uncertainty surrounding the second wave of the COVID-19 pandemic.”

The report stated that foreign capital inflow improved during the review period, driven, largely by inflow for the purchase of money market instruments, signifying renewed confidence in Nigeria’s money market.

As a result of this development, the net liability incurred during the review period increased to $1.78bn, relative to $0.33bn in the third quarter of 2020.

This was a result of the boost in portfolio inflow, particularly for the purchase of short-term money market instruments.

Other investment liabilities recorded an outflow of $0.61bn, due mainly to the repayment of loans by banks and the private sector during the review period, it stated.

It stated that the estimated aggregate financial assets showed lower reduction of $0.72bn during the review period, compared with $2.23bn in the preceding quarter.

A further disaggregation showed that external reserves asset increased by $0.79bn in the review period, higher than the accretion of $0.14bn in the third quarter of 2020.

FDI in foreign entities increased by 13.6 per cent to $0.35bn, relative to the third quarter of 2020.

However, portfolio investment asset decreased to $0.04bn in the review period, compared with $0.07bn in the preceding quarter.

Other investments registered further disposal of $1.91bn in the review quarter, lower than the $2.86bn in the third quarter of 2020, due, largely, to the drawdown of foreign currency holdings of the private sector in the review period.