The US has been displaced by Europe as the most important source of capital importation into Nigeria, following significant drop in oil exports to the North American giant.
A latest media research on capital importation between 2009 and 2012 accumulated from publications of the Central Bank of Nigeria (CBN) and the National Bureau of Statistics (NBS) reveals that Europe has taken transcendence as a source of capital flows into Nigeria.
This development pulls Nigeria and the US further apart in trade and investment, as imports of Nigerian crude oil by the US continued on an earthbound trend in the first quarter (Q1) of this year, with a reduction of 25.1 million barrels valued $2.7 billion.
During the period of the analysis, it was discovered that member countries of the European Union (EU) such as the United Kingdom, the Netherlands, Switzerland, Germany, Cyprus, Luxemburg, Sweden and Denmark collectively brought in $19.9 billion or 56 per cent of the total capital imported into the country.
The US however trails the EU closely, with US-based investment reaching $8.6 billion during the analysis period. The same was not said in 2009 when out of the $5.3 billion capital imported into Nigeria, $3.3 billion came in from the USA; it was observed that the trend began to change in 2010.
“The fact that capital came in through the London or New York financial markets does not mean that the funds originated from the UK or the US. They are the leading two of the three top financial centres in the world, with transactions originating from the Euro and the Far East Area most likely to be routed through London,” said Ayo Teriba, CEO of Economic Associates.
The ascension of Europe mirrors the trend in the nation’s crude oil export destinations. The portion of Nigeria’s crude oil imported by countries in the European Union rose from 17 per cent in 2009, reaching 47 per cent in December 2013. In contrast, the North America’s (USA) portion of crude oil imported from Nigeria stood at 2 per cent by December 2013, down from 47 per cent it imported in 2009.
In the breakdown of Nigeria’s GDP, capital importation averaged 3 per cent during the period of the analysis. This means is that the nation has to attract $16.3 billion by the end of the year in order to attain the 6.75 per cent GDP growth rate projected in the 2014 Appropriation Bill, without being affected by other factors.
The NBS figure indicates that $3.9 billion capital was imported into the country in Q1 of 2014, indicating a gap of $12.4 billion still exists.