Capital importation by banks drops by over 77% in Q2 2020 amid coronavirus

The capital importation by banks has dropped by $4.56 billion when it fell from $5.85 billion in first quarter (Q1) 2020 to $1.29 billion at the end of the second quarter of 2020. This represents over 77% decrease.

This is in line with data from Nigeria’s Q2 2020 Capital Importation report by the National Bureau of Statistics, as seen by Nairametrics.

What this means: Standard Chartered Plc, Stanbic IBTC, Citi Bank, Access Bank, Ecobank Nigeria, GTBank, First Bank, and 20 other banks in Nigeria only attracted foreign investment worth $1.29 billion in Q2 compared to the $5.85 billion in Q1 2020.

Backstory: Nairametrics reported the Q1 report, when it found that Standard Chartered led the pack for banks with the highest foreign investment.

The bank attracted $1.656 billion worth of investment in the first quarter of this year, compared to $1.072 billion, during the comparable quarter in 2019.

Stanbic IBTC followed with $1.37 billion worth of foreign investment, while Citi Bank Nigeria Ltd occupied the third position, having attracted $688.44 million inflows as against $770 million recorded in Q1 2019.

Breakdown of Q2 2020

More details in the NBS report also showed that out of the 27 banks that foreign investors used to deploy foreign capital into the country, the most investment came through Standard Chartered Bank.

Though Standard Chartered Bank maintained the lead, its foreign investment dropped from $1.65 billion in the first quarter to $425 million in Q2 2020 – a 74.24% decrease.

The Nigerian Capital Importation report disclosed that Stanbic IBTC took over the second position from Citi Bank, as the former recorded $345 million ($1.37 billion in Q1) and the later had recorded only $221.9 million ($688.4 million).

Meanwhile, First Bank got $64.4 million ($677.61 million), FCMB got $46 million, followed by Access Bank with $44.17 million ($257.31 million); Rand Merchant Bank got $37 million ($611.68 million).

Others are, Ecobank with $35.15 million, Union Bank $22.3 million, Zenith $21.6 million, and Fidelity Bank $15.26 million among others.

However, Unity Bank, Providus Bank, Coronation Merchant Bank, Heritage Bank, Jaiz Bank and SunTrust Bank failed to attract any foreign investment within the period.

In terms of capital importation by country of origin, the report also revealed the top 10 highest and lowest countries that invested in Nigeria.

Top ten countries of origin for FDI

United Kingdom – $428.83 million

Republic of South Africa- $149.29 million

UAE – $145.15 million

Netherlands – $141.30 million

UAE – $145.15 million

Netherlands – $141.30 million

Singapore- $137.40 million

United States – $126.08 million

Hong Kong – $33.78 million

British Virgin Island– $24.27 million

China – $21.48 million

Mauritius – $16.53 million

Top 10 lowest countries for FDI

Philippines – $0.01 million

Pakistan- $0.02 million

Ireland – $0.03 million

Mexico – $0.05 million

Latvia – $0.09 million

Bouvet Island – $0.10 million

Korea Republic– $0.10 million

Italy- $0.13 million

Portugal– $0.13 million

Panama – $0.22 million

FDI may contract further - UNCTAD

The United Nations Conference on Trade and Development’s (UNCTAD), in its recent report, forecasts that the FDI flows to the continent, are to contract between 25% and 40%, based on gross domestic product (GDP) growth projections, as well as a range of investment specific factors.

UNCTAD’s Director of Investment and Enterprise, James Zhan, said, “Though all industries are set to be affected, several services industries including aviation, hospitality, tourism, and leisure are hit hard, a trend likely to persist for some time in the future.”

According to him, manufacturing industries intensive in global value chains are also strongly affected, a sign of concern for efforts to promote economic diversification and industrialization in Africa.