Centre for the Study of the Economies of Africa (CSEA), has said that despite assurances of hope for better economy by the Federal Government, international capital investors appeared largely pessimistic to the extent that the total value of capital imported into Nigeria declined by 25.05 per cent to $2,140.0 8 million in 2018 Q4 from $2,855.21 million in 2018 Q3, making Q4 the worst performing quarter in 2018.
Besides, the group said, all components of capital importation – foreign direct investment (FDI) portfolio investment and other investment – plummeted in the review period with the highest fall seen in FDI (71 per cent to $156 million).
The huge capital outflows, it noted, demonstrate the risk-averse posture of investors, who may have diverted their funds to other profitable ventures outside Nigeria due to election and political uncertainties.
“The next few months may witness further decline in capital imports due to the perception of market unfriendliness by the investors. To encourage capital inflows, the government may need to adopt a private sector-led economic model and assure the public of political stability post elections” CSEA, said.
According to the group, the Organisation of Petroleum Exporting Countries (OPEC), in its latest monthly oil report, disclosed that Nigeria’s oil production dropped to 1.687 million bpd in January, 2019 from 1.797 million bpd recorded in December 2018.
This development, it said, resulted from the agreement by OPEC and 10 non-OPEC countries in December to cut global oil production by 1.2 million bpd effective from January 2019.
“Nigeria’s quota was cut by 53,000 barrels, and OPEC pegged Nigeria’s output at a new quota of 1.685 million bpd, all in a bid to check over-supply due to weak global oil demand. Harnessing Nigeria’s non-oil export potentials remain essential to shoring up government revenues. Specifically, supporting mid-sized businesses in key export sectors to gain economies of scale for large scale production and export is important.