Foreign investment in Nigeria’s equities market reached approximately $150 million in the second quarter of 2024 (Q2 2024), representing a significant 204% increase from the $49.4 million recorded in the first quarter of 2024.
This surge also marks an extraordinary 1,660% growth compared to the $8.5 million recorded in the same period in 2023.
According to the latest Capital Importation report released by the National Bureau of Statistics (NBS), Foreign Portfolio Investment (FPI) in Nigeria during Q2 2024 amounted to $1.4 billion.
While this reflects a 32% decline from the $2.08 billion recorded in the first quarter of 2024, it signifies a notable year-on-year growth of about 1,215% from the $107 million recorded in Q2 2023.
In total, foreign portfolio investment in Nigeria for the first half of 2024 (H1 2024) hit $3.48 billion, a remarkable 360% increase from the $756.1 million recorded during the same period in 2023.
However, despite this impressive growth, foreign participation in Nigeria’s equities market saw a 14% decline in H1 2024, with $199.3 million recorded compared to $230.8 million in the first half of 2023.
Much of the foreign portfolio investment in H1 2024 was concentrated in money market instruments, such as Treasury bills, OMO (Open Market Operations) bills, and commercial papers.
These instruments accounted for 77% (or $2.68 billion) of Nigeria’s total foreign portfolio investment. In Q2 2024 alone, $1.08 billion was invested in money market instruments, while Q1 2024 saw $1.61 billion.
Year-on-year, foreign participation in Nigeria’s money market surged nearly 20 times from $139 million in H1 2023.
The sharp rise in foreign investment in Nigeria’s money markets is largely attributed to the high interest rates offered by the Central Bank of Nigeria (CBN). During H1 2024, the CBN offered yields of up to 22.5% on some Treasury bills and 22% on OMO bills, some of the highest rates for CBN-issued money market instruments.
By the second half of 2024, these rates had increased even further, with OMO bills yielding 27.25%, aimed at attracting more foreign portfolio investment.
In the debt securities market, private companies have also benefited from foreign portfolio inflows. Many companies with strong credit ratings have been offering commercial papers at discount rates of up to 30%.
In terms of bond investments, medium- and long-term bonds attracted $599 million in foreign portfolio investment during H1 2024, with $420.8 million of that coming in Q1 2024. This represents a 55% increase compared to the $386 million recorded in H1 2023.
Overall, Nigeria’s total capital importation in H1 2024 reached $5.98 billion, marking 177% year-on-year growth from the $2.16 billion recorded in H1 2023. Notably, foreign portfolio investment accounted for 58% of the total capital inflows into the country during the period.
By Ibe Wada
