Business
Foreign Capital Imports in Nigeria drop by 78%
The National Bureau of Statistics of Nigeria, or NBS, has reported at the start of September that the value of Nigeria’s capital imports fell to $1.29 billion. This means that there is an active decline of 77.88 percent in the value. This is especially troublesome considering the fact that during the first quarter of 2020 the capital import used to be $5.85 billion.
This means that cumulatively, on a year-to-year basis, the drop amounted to a whopping 78.60 percent from what it used to be in the second financial quarter of 2019 ($6.05 billion).
It is no secret that this large decline is largely attributed to the ongoing novel coronavirus pandemic which is currently plaguing the world. Nigeria is not the only country that has been affected by the global problem. Almost every other country in the world is having financial problems with global economies like the US and UK shrinking by 20%. In Nigeria during the period between April and June the Foreign Direct Investment, or FDI, calculated in equities and other capital, has fallen by 30.65 percent on a quarterly and by 33.41 percent on yearly basis. The current number is sitting at $148.59 million. According to NDS, the FDI accounts for almost 12 percent of the total capital that has been imported in the second quarter of 2020. One of the leading causes is portfolio investment (equities, bonds, foreign exchange market, etc). These investments accumulate to 29.76 percent of the total inflow of foreign money. This unit has fallen by an incredible 91.06 percent just between the first and second quarters of 2020 to $385.32 million.
Major capital investment contributor is classified under “other investment” and comprises trade credits, currency deposits, loans, etc. The statistics show that these types of investments account for as much as 58.77 percent of total imported capital or $761.03 million. The decline here is also quite visible as there is a drop of 42.81 percent on quarter to quarter and 48.60 percent on yearly basis.
According to the report made by the NDS, during these times of crisis, Great Britain has become a major capital investor of Nigeria in the second quarter where the inflow of money shows $428.83 million. This is 33.12 percent of the total capital inflow in the second quarter of 2020.
The largest capital importing state is still considered to be Lagos with $1.13 billion or 87.30 percent of the total capital inflow in Q2 of 2020 closely followed by the states of Abuja and Ogun in second and third positions. However, the difference of capital investment here is quite troubling since Abuja has only $145.30 million and the Ogur state is netting $11 million which are 11.20 percent and 0.85 percent of the capital importing total.
The foreign exchange market (Forex, FX) in Nigeria is starting to boom though. Due to the novel coronavirus which has left a huge number of residents unemployed and others locked up in their own homes the number of people who started researching additional ways to generate income has increased by a significant amount. Forex has proved to be a useful instrument in this battle against unemployment. The educational material is freely available online, so it isn’t far from reality that anyone with a decent computer, smartphone, or even a tablet could go through some materials over the internet.
Choosing a proper, licensed broker is also quite an endeavor. However, it is made easier due to the efforts of regulatory bodies that work hard on licensing these firms which afterward have the ability to offer reliable services. If you’re a trader, you can read online forex reviews here to choose your desired broker, test the waters with a demo account, invest, and start trading currency pairs. It is a unique opportunity for people living in developing countries that do not have enough finances to manage the Coronavirus pandemic. This has been successfully done by countries like South Africa, which has introduced its own regulatory body – Financial Services Conduct Authority (FSCA) – that managed to put the country on the global playfield with the South African rand now becoming the 18th most traded currency on Forex globally.
The reason FX is profitable now is because of the Nigerian naira pushing the limits. The currency has become stronger during the last couple of months (everything is comparable) but this can be largely attributed to the fact that the decrease in imports leaves more focus on exports which directly translates to the strengthening of the local currency. However, the margin at which it strengthened leaves something to desire more. Unfortunately, the Nigerian naira has been devaluing for a very long time now and unless something changes in the inner politics of the nation it is not going to improve. The devaluation happens due to the oil prices jumping around constantly. Nigeria is extremely dependent on the crude price. This has gone to the extent where there are multiple exchange rate policies for naira. Currently, it is sitting around N381 which is a 21 point increase from what it used to be prior to the lockdown.
The Central Bank of Nigeria (CBN) yesterday said 33 banks have met new minimum capital requirements under its recapitalisation programme, raising a combined N4.65 trillion to strengthen the financial system.
The apex bank disclosed this in a statement marking the end of the exercise, which commenced in March 2024 and drew participation from domestic and foreign investors.
The statement was jointly signed by the Director of Banking Supervision, Olubukola Akinwunmi, and the Acting Director of Corporate Communications, Hakama Sidi-Ali.
The statement said “Over the 24-month period, Nigerian banks raised a total of N4.65tn in new capital, strengthening the resilience of the financial system and enhancing its capacity to support the economy.”
The regulator said local investors accounted for 72.55 per cent of the funds, while international investors contributed 27.45 per cent, reflecting continued confidence in the sector.
Commenting on the outcome, the CBN Governor, Olayemi Cardoso, said in the statement, “The recapitalisation programme has strengthened the capital base of Nigerian banks, reinforcing the resilience of the financial system and ensuring it is well-positioned to support economic growth and withstand domestic and external shocks.”
It added that while 33 banks have complied with the new thresholds, a few others are still undergoing regulatory and legal processes.
The statement noted, “The CBN confirms that 33 banks have met the revised minimum capital requirements established under the programme.
“A limited number of institutions remain subject to ongoing regulatory and judicial processes, which are being addressed through established supervisory and legal frameworks.
“All banks remain fully operational, ensuring continued access to banking services for customers.”
The apex bank stressed that the exercise was executed without disrupting banking operations, ensuring uninterrupted access to services nationwide.
It further stated that key prudential indicators have improved, particularly capital adequacy ratios, which remain above global Basel benchmarks.
The minimum ratios were set at 10 per cent for regional and national banks and 15 per cent for banks with international licences.
The bank also said the recapitalisation coincided with a gradual exit from regulatory forbearance, a move it said improved asset quality, strengthened balance sheet transparency, and enhanced overall stability.
To preserve these gains, the CBN said it has reinforced its risk-based supervision framework, mandating periodic stress tests and adequate capital buffers for banks.
It added that supervisory and prudential guidelines would be reviewed regularly to strengthen governance, risk management, and resilience across the sector.
“The successful completion of the programme establishes a stronger and more resilient banking system, better positioned to support lending, mobilise savings, and withstand domestic and global shocks,” the statement said.
The Tide learnt that foreign capital inflows into Nigeria’s banking sector rose by 93.25 per cent year-on-year to $13.53bn in 2025, up from $7.00bn recorded in 2024, amid the ongoing recapitalisation drive by the Central Bank of Nigeria.
Data from the National Bureau of Statistics capital importation report showed that the banking sector remained the dominant destination for foreign capital, accounting for $13.53bn of the total $23.22bn recorded in 2025, representing 58.26 per cent of total inflows, up from 56.81 per cent in 2024.
The surge reflects heightened investor interest in Nigerian banks as they raised fresh capital to meet new regulatory thresholds introduced by the apex bank, with industry-wide recapitalisation activities driving large-scale inflows across all quarters of the year.
However, the Centre for the Promotion of Private Enterprise (CPPE) recently raised concerns over weak credit flows to small businesses despite recent banking sector reforms.
The CPPE, led by a renowned economist, Dr Muda Yusuf, acknowledged that the ongoing bank recapitalisation exercise by the CBN has strengthened the financial system, but warned that the benefits have yet to translate into meaningful support for the real economy.
The facility will be disbursed through participating Microfinance Institutions (MFIs), which will in turn extend the loans to their customers, particularly SMEs, as they directly interface with businesses at the grassroots level.
The Executive Director of COMCIN, Mr. Micheal Ogbaa who represented the Chairman, Dr. Iredele Oyedele (FCA, FCCA), said the initiative is designed to strengthen micro-lending institutions and expand access to finance for grassroots entrepreneurs, particularly women and youths in the informal sector.
Ogbaa explained that COMCIN does not lend directly to individuals but works through its network of microfinance and cooperative institutions, which in turn provide loans to end users.
“We came together to advocate for the microfinance ecosystem. Commercial banks often exclude people at the grassroots, but our members are positioned to reach them. This facility will empower them to do more,” he said.
He noted that the loan scheme offers low interest rates and flexible repayment plans, making it more accessible to small business owners.
According to him, about 90 percent of beneficiaries are expected to be women, who play a key role in sustaining families and driving economic activities at the local level.
“Our focus is on traders, service providers, and players in the informal sector. These are the real movers of the economy. By supporting them, we are strengthening families and contributing to national development,” he added.
Ogbaa disclosed that eligible SMEs with proven integrity and business track records could access up to N5 million each through participating micro-lending institutions. The rollout has commenced in Lagos and will extend to Abuja, Enugu, and other regions, including the South-West, South-East, and North-East.
He said 12 micro-lending institutions have already benefited from the scheme, while 85 applications are currently being processed under the pilot phase.
“Our target is to reach at least 100,000 SMEs nationwide. We are building a platform that connects funding partners with credible micro-lending institutions, creating a reliable channel for financial inclusion,” Ogbaa said.
He added that COMCIN is also working to attract larger funding pools from development finance institutions and private investors, noting that successful implementation of the pilot phase would boost confidence and unlock more capital for SMEs.
“We have seen encouraging testimonies from early beneficiaries. As we demonstrate transparency and efficiency, more institutions will be willing to channel funds through us,” he said.
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