The major transactions done by foreign investors on the Nigerian Exchange Limited decreased by 53.16 percent from N19.62billion (about $42.51m) to N9.19billion (about $19.94m) between February and March 2023.
This was disclosed in the March edition of the Domestic & Foreign Portfolio Investment Report of Nigerian exchange group, which was released this month.
The report stated, “Total transactions executed between the current and prior month of (February 2023) revealed that total domestic transactions decreased by 19.06 percent from N169.29billion in February to N137.03billion in March 2023. Similarly, total foreign exchange transactions decreased more significantly by 53.16 percent from N19.62billion (about $42.51m) to N9.19billion (about $19.94) between February 2023 and March 2023.”
Also, as of March 31, 2023, total transactions at the local bourse ( a sale, as of coins or postage stamps, by dealers at a convention) decreased by 22.60 percent from N188.91billion (about $409.72m) in February 2023 to N146.22billion (about $317.09m) in March 2023.
The performance of the current month when compared to the same period in 2022 (N185.26bn) exposed that total transactions decreased by 21.07 percent. In March 2023, the total value of transactions executed by domestic investors outperformed transactions executed by foreign investors at around 88 percent; the figure for local investors stood at 96 percent to the six per cent of foreign investors.
A comparison of domestic transactions in the current and prior month (February 2023) revealed that retail transactions increased by 51.85 percent from N34.79billion in February to N52.83billion in March 2023. Nonetheless, the institutional composition of the domestic market decreased significantly by 37.40 percent from N134.50billion in February 2023 to N84.20billion in March 2023.
In 2022, total domestic transactions accounted for about 84 percent of the total transactions, whilst foreign transactions accounted for about 16 per cent of the total transactions in the same window frame.
As of the end of the first quarter of 2023, foreign transactions stood at N53.71billion; with the figure for January being N24.90billion, February 2023 recorded N19.62billion and N9.19billion was reported in March 2023.
In an interview with news outlets, Prof Olawale Ajai of the Lagos Business School attributed the depreciation in Foreign Direct Investment generally in Nigeria to uncertain exchange rates as well as the environment not being conducive for business operations.
“Insecurity and the obscure Naira foreign exchange regime have not helped in recent times, in spite of strenuous efforts on ‘doing business reforms’. National productivity is too low, infrastructure deficits too high and investment in human capital development is abysmal,” he said.
While speaking at the end of the Capital Market Committee meeting, the Director-General of the Securities and Exchange Commission, Alhaji. Lamido Yuguda, also blamed forex for the exit of foreign investors.
Yuguda said, “No matter how attractive the domestic capital market is, a foreign investor will always factor in the ability to transfer their domestic earnings into foreign exchange so that they can repatriate this foreign exchange to their countries.
“At the moment, we all know that we are having some challenges with the foreign exchange situation in Nigeria. That is international investors who are invested, are reporting some delays in assessing foreign exchange for the repatriation of their dividends or their capital.
“So because of this, you are seeing a reduced proportion of foreign investors in the Nigerian capital market relative to what this market has been used to. That is a situation that is not permanent. We expect the foreign exchange situation in this country to substantially improve.”
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