Banking sector attracts N1.12 trn FDI in 3 years

Out of a total N10.48 trillion ($ 34.16 billion) in capital imports to Nigeria over the last three years, the banking sector has been able to command N1.12 trillion, the largest sectorial share save for the hot money coming into the country. In the last three years, the banking sector has been the go-to for foreign investors who looked beyond investing in shares.

Capital importation stems from an inflow of foreign capital either in the form of cash (loan or equity) or goods. Capital importation into Nigeria has been on the rise in 2019 as it grew by 216 per cent in the first quarter of 2019 as compared to the last quarter of 2018.

According to NBS data, hot money has been the most dominant form of capital importation averaging 55.5 percent of total capital imports since 2014. Looking

past the Foreign portfolio investments, the banking sector is the next best place to invest money according to the data provided. The banking sector had received N1.12 trillion ($3.89 billion) 26.35 percent of all capital importation less investments.

The service industry followed as the second most attractive sector for foreign direct investments pulling a total of N825.83 billion since 2014. Production (N598.65 billion), Finance (N583.3 billion) and Telecoms (N488.13 billion) completes the top five sectors in terms of the ability to draw foreign direct investment into the country.

Under Nigerian law, it is very important that every foreigner investing in a local business in Nigeria is required to procure a Certificate of Capital Importation (“CCI”) on the inflow of foreign currency or raw materials or equipment imported into Nigeria.

A Certificate of Capital Importation (“CCI”) is a certificate issued by a Nigerian bank confirming an inflow of foreign capital either in the form of cash (loan or equity) or goods. A CCI is usually issued in the name of the applicant company within 24- 48 hours of the inflow of the capital into Nigeria.

The primary purpose of the CCI is to guarantee access to the official foreign exchange market for repatriations of capital and returns on investment, which include dividends, interest, and capital on divestments. The requesting company must present a copy of the CCI to the Nigerian bank to process a remittance.

Essentially, a capital importation can be done through an authorized dealer, which is usually a commercial bank or via a debt-equity scheme of the federal government.