BY EMEKA EJERE
Data from the Central Bank of Nigeria (CBN) showed that foreign portfolio investments (FPIs) in Nigeria recorded a 77.4% year-on-year decline in the first quarter of 2021 to stand at $974.1 million.
Portfolio investments dropped from $4.31 billion recorded in Q1 2020 to $974.1 million in Q1 2021. However, this was a 1,635% 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. It involves an investor purchasing foreign financial assets, such as; equities, bonds, derivatives, mutual funds, and guaranteed investment certificates, among other instruments.
A cursory look at the 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% decline compared to N65.27 billion recorded in the corresponding period of 2020.
Meanwhile, foreign outflows surpassed inflows in the period, with a total of N90.12 billion recorded as foreign outflows while domestic transactions stood at N526.3 billion.
The Nigerian economy has seen a significant downturn in recent times, ravaged by the COVID-19 pandemic, banditry, and insurgency among others.
This has pushed the economy into stagflation, with Nigeria’s unemployment rate at 33.3% as of Q4 2020. Headline inflation was at 18.12% in April 2021 while food inflation stood at 22.72% in the same month.