Nigeria’s Foreign Portfolio Records $2.08bn Shortfall In 11 Years

Nigeria’s foreign portfolio equity recorded a $2.08bn shortfall between 2010 and 2021 amid an unfavourable economic environment characterised by forex challenges and loss of investors’ confidence.

According to a World Bank report titled, ‘International Debt Report 2022’ an updated record of ‘International Debt Statistics’, the portfolio equity had recorded $2.15bn in the year 2010 but reduced to $72m by 2021.

The country’s equity portfolio recorded a deficit of $1.55bn in 2019 against $1.26bn in the preceding year. Nigeria recorded a similar deficit in 2020 with $255m n portfolio equity according to Washington bank report.

Recall that it was recently reported that Foreign Direct Investment into the nation plunged by 58.98 per cent in 11 years. The report stated that FDI fell from $5.97bn in 2010 to $2.45bn in 2021.

Commenting on the nation’s depleting portfolio equity to Economic Confidential, a capital market analyst, Mr Ayotunde Alabi, said this was because the nation’s business environment was unattractive and the inability of investors to repatriate dividend.

He said, “As a foreign investor, investing in a country when you are unsure of taking your money out whenever you want, becomes very difficult.

“There is this repatriation risk that comes with investing in Nigeria by foreigners. The depleting FX reserves have been a huge factor for this decline.”

He added that the negative ranking by Fitch and other international agencies was a few of the factors behind the dip in the portfolio. Alabi further stated that policymakers in the nation need to heed the advice of the International Monetary Fund, World Bank, and others to improve the inflow of portfolio investment.

Also speaking with Economic Confidential, Mr David Adonri of HIGHCAP, added that the depreciation in the nation’s foreign equity portfolio was because the loss of confidence in the Nigerian economy. He also said the Covid-19 pandemic and insecurity were contributory factors.