By Ajibola Olarinoye
The apex bank, the Central Bank of Nigeria (CBN) has released a positive information about the country’s banking sector in its latest report released.
According the apex bank, Nigerian banking industry attracted $1.47 billion as capital inflows in the first half of 2022.
The latest data shows an increase of 46.5% and higher than the $1 billion inflows recorded in the first half of last year. It also shows an increase of of 109.8% if compared to $698.2 million recorded in the second half of 2021.
The data further shows that the banking sector recorded the highest foreign inflow in the period under review compared to other sectors in the Nigerian economy, accounting for 47.1% of the inflows into the country. The manufacturing and financing sectors followed with $457.7 million and $396.7 million respectively.
Meanwhile, a total of $3.11 billion in capital was imported into the Nigerian economy as foreign inflows between January and June 2022, most of which were in form of foreign portfolio investments. In contrast to the first half of last year, foreign inflows grew by 11.8%, however, when compared to the second half of 2021, it declined by 20.7%.
Capital inflows into the country recorded a significant decline in the second half of 2020, following the covid-19 pandemic, which triggered a downturn in the global economy, with investors wary of moving their monies to the African giant. However, since the second half of 2021 inflows have begun to pick up, albeit still very low compared to pre-pandemic levels.
The decline in the number of foreign inflows has caused a huge FX supply shortage in the economy, piling more pressure on the exchange rate as demand for FX has outpaced supply leading to a depreciation in the local currency in the official and parallel markets.
Consequently, the inability to grow export earnings from oil export and the non-remittance of proceeds by the NNPC to the apex bank has caused the foreign reserve to fall further from the $40 billion threshold, currently standing at $38.9 billion.