Out of 30 banks in Nigeria, Stanbic IBTC Bank Plc, Citibank Nigeria Limited, and Rand Merchant Bank are the top three that received the most foreign investments in the first quarter of 2024, according to the latest capital importation report.
The report published by the National Bureau of Statistics (NBS) shows that Stanbic IBTC had the highest investment with $1.25 billion (37.24 percent), followed by Citibank with $547 million (16.22 percent) and Rand Merchant Bank with $528 million (15.66 percent).
Standard Chartered Bank Nigeria Limited and Access Bank Plc received $399 million and $278 million, respectively.
The NBS report also highlighted that the banking sector received the highest inflow with $2.07 billion, representing 61.24 percent of total capital imported which was $3.38 billion.
Analysts say that international banks like Citibank and Rand Merchant Bank benefit significantly from having robust parent banks, which they leverage effectively. They added that if two or three Nigerian banks can establish a presence in major global markets (beyond just African markets), the competition will intensify.
“These banks enjoy parent-company advantage which gives them an edge in attracting foreign inflows. Not entirely surprising,” Israel Odubola, a Lagos-based analyst, said.
Rufy, an investment banker said on social media platform X that the common factor with these banks is their relationship with their foreign parent company. “It is a significant competitive advantage.”
He added, “This is one of the reasons why Access has been aggressively investing across other African markets, and the results are seemingly evident.”
According to the NBS report, capital importation during the reference period originated largely from the United Kingdom with $1.8 billion, representing 53.49 percent of the total capital imported. Followed by the Republic of South Africa with $582 million (17.25 percent) and the Cayman Islands with $186 million (5.52 percent).
The report highlights that these banks have played a pivotal role in channeling foreign investments into various sectors of the Nigerian economy, including oil and gas, manufacturing, telecommunications, and agriculture.
Nigeria witnessed a significant uptick in capital inflows, marking a 198.06 percent surge when compared to Q1 of last year. The numbers rose to $3.3 billion, higher than the $1.13 billion recorded in Q1 2023,
On a quarter-to-quarter basis capital importation rose by 210.16 percent from $1.08 billion in Q4 2023, signalling a robust recovery and a positive response to the economic strategies President Bola Tinubu’s administration deployed to enhance the nation’s investment appeal.
The economy generated this capital from Portfolio Investment, Other Investments, and Foreign Direct Investment.
It said, “Portfolio Investment ranked top with $2.07 billion, accounting for 61.48 percent, followed by Other Investment with $1.18 billion, accounting for 34.99 percent. Foreign Direct Investment recorded the least with $119 million (3.53 percent) of total capital importation in Q1.
“The portfolio foreign investment category has benefited from the Central Bank of Nigeria’s tight monetary policy stance, which resulted in elevated interest rates and attracted significant inflows from the offshore community,” an analysis at FBNQuest Capital Research said in a recent note.
BusinessDay reported in April that foreign investors were buying Nigerian stocks again after an extended time off sparked by dollar shortages made worse by the apex’s capital controls.
Foreign inflows into the stocks jumped fivefold in the first three months of this year to N93.37 billion from N18.12 billion in the same period last year. That’s also the highest number of inflows in any three-month period since 2019.
“The CBN’s reforms have taken Nigeria from uninvestable only a year or so ago to investable this year,” a foreign portfolio manager who invests in Africa said.
“The settlement of the FX backlog, shift to a more market-determined exchange rate and a more credible monetary policy are proving too hard to resist for investors.”
Earlier in the year, Yemi Cardoso, governor of CBN revealed in an exclusive interview with Arise TV that FPIs were eager to return to the country.
“A lot of FPI are still interested in coming back to the country. They have taken a lot of methodical interest in understanding the reforms that have taken place and seeing how it is taking the country in the right direction,” he said.
“They also see rating agencies coming out with their own conclusions, of how they see the economy of the country progressing, it validates what they are thinking,” he added.