Nigeria’s FPIs shrink by 77.4% in Q1 2020
Foreign portfolio investments (FPIs) in Nigeria recorded a 77.4 per cent year-on-year decline in the first quarter of 2021 to stand at $974.1 million.
This is according to data obtained from the Central Bank of Nigeria (CBN) on Nigeria’s foreign investments. Analysis of the report showed that portfolio investments dropped from $4.31 billion in Q1 2020 to $974.1 million in Q1 2021. Quarter-on-quarter, however, this was a 1,635 per cent increase compared to $56.15 million recorded in the previous quarter (Q4 2020).
FPIs generally consist of securities and alternative foreign financial assets that are passively held by foreign investors. Further analysis of the report showed that investments in money market instruments stood at $808.57 million, accounting for 83 per cent of the total foreign portfolio investments in the review period.
Investments in bonds followed with a total of $138.7 million (14.2 per cent) invested while $26.88 million was directed towards equity. In terms of monthly investments, the highest FPI was recorded in February with $503.17 million, while January and March portfolio investments stood at $30.72 million and $440.25 million respectively.
The decline in FPIs is not surprising however as the recent domestic and foreign portfolio investment report of the Nigerian Exchange (NGX), revealed that a sum of N60.11 billion was recorded as foreign inflows in the first quarter of 2021, representing a 7.9 per cent decline compared to N65.27 billion recorded in the corresponding period of 2020. This is due to the current economic situation as Nigeria has been heavily affected by the COVID-19 pandemic, insurgency, banditry, inflation among others.
The situation has led to analysts calling on the current administration to devise new ways of creating an enabling environment, empowering the youths as well as churn out effective policies which could attract foreign investments.