The Lingering insecurity in the country and uncertainties associated with the COVID-19 pandemic has pushed Foreign Direct Investment (FDI) inflow to Nigeria to $65million as of the end of the fourth quarter of 2020.
According to Central Bank of Nigeria’s (CBN) economic report for the fourth quarter of 2020, this represents 91.7 per cent decline in FDI from $780million as of the end of third quarter.
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.
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The report stated that 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 added 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 increaswa#ed 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.
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