Nigeria experienced a remarkable increase in foreign portfolio investments (FPI) in the equity market during the first quarter of 2023, attracting a total of $222.3 million. This surge represents a significant 4,472% rise compared to the previous quarter of 2022, according to the National Bureau of Statistics’ Capital Importation report.
In 2022, Nigeria had struggled to attract foreign investors, receiving only $56 million in FPI equity investments due to concerns over the country’s forex policies. However, the situation has changed in the first quarter of 2023, with FPI inflows into equities surpassing the total for the entire previous year. The successful conduct of the 2023 elections appears to have influenced investor sentiment, encouraging them to reenter the equities market.
On the other hand, FPI in equities reached $639.7 million and $656 million in the first quarters of 2019 and 2020, respectively, indicating a higher level of investment during those periods.
In addition to equity investments, capital importation into bonds and money market instruments also witnessed a significant increase, reaching $426 million in the first quarter of 2023, compared to $280 million in the previous quarter. However, it is worth noting that FPI inflows into bonds and the money market were higher at $925 million in the first quarter of 2022.
Notably, FPI inflows into the money market experienced a significant year-on-year decline of 79.5% in the first quarter of 2023. This decline suggests that investors found the yields unattractive, as the current yields in the money market instruments trade below the inflation rate. Investors continue to grapple with negative real returns, which has affected their interest in these instruments.
