As of December 7, 2024, Nigeria's capital importation has seen a dramatic decline of 51.90% in the third quarter of 2024, falling to $1.25 billion from $2.60 billion in the previous quarter. However, this figure represents a significant increase of 91.35% compared to $654.65 million in Q3 2023 [069370e9]. Portfolio investments were the dominant force, accounting for $899.31 million, or 71.79% of total inflows, while Foreign Direct Investment (FDI) contributed only $103.82 million, or 8.29% [069370e9]. The banking sector emerged as the primary recipient of these inflows, attracting $579.48 million, which is 46.26% of the total [069370e9].
This decline in capital importation comes on the heels of significant capital outflows earlier in the year, where Nigeria experienced $1 billion in capital outflows in April 2024 alone, marking a 35.14% increase from March [f8356443]. The outflows were primarily driven by capital reversals, which accounted for 78% of the total, alongside rising loan repayments and a decrease in dividend repatriation [f8356443]. Despite these challenges, the naira showed some resilience, appreciating against the U.S. dollar to an average of N1,244.66 per dollar in April [f8356443].
The latest data indicates that the United Kingdom was the largest source of foreign capital in Q3 2024, contributing $502.60 million, followed by South Africa and the United States [069370e9]. Lagos emerged as the top destination for capital inflows, receiving $650.41 million, which accounted for 51.92% of the total [069370e9].
The Central Bank of Nigeria (CBN) has been actively working to stabilize the financial landscape amidst these fluctuations, with plans for a local bond issuance of $500 million [4cab8ea6]. The interplay between capital importation and outflows, alongside the naira's performance, remains crucial as the CBN navigates ongoing economic reforms and market adjustments [4c0bf14e].
Overall, the current economic climate reflects a complex relationship between capital flows, currency valuation, and foreign investment, necessitating careful monitoring as Nigeria continues to adapt to these evolving challenges.