Macroeconomic Report & Economic Updates

Nigeria Economic Update (Issue 31)

According to the National Bureau of Statistics, the total value of capital importation declined by 54 percent from US$1,905.89 million in the first quarter of 2021 to US$875.62 million in the second quarter.⁴ Portfolio investments were the largest amount of capital importation accounting for 62.97 percent of total capital import and valued at US$551.37 million. Foreign Direct Investment accounted for only 8.9 percent of capital imports and valued at US$77.97 million in Q2 2021. The substantial decline in capital importation in Nigeria stems from both endogenous and exogenous factors amid the slow global recovery from the COVID-19 pandemic. Some of these endogenous factors include exchange rate volatility and the double-digit inflation rate which has amplified economic uncertainty, thus increasing pessimism among investors. In view of this, government policies should be tailored towards the reduction in the rate of inflation and stabilising the exchange rate through aggregate supply policies which can be done via boosting local productivity. Additionally, improving security would boost investors’ confidence which should enhance capital importation.

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