Nigeria saw a significant rise in foreign direct investment in 2016 compared to the previous year, but overall, the country’s capital imports were down 9 percent, The Guardian reported.

Capital importation comprises three main investment types including foreign direct investment (FDI), portfolio investment and other investments.

Overall, capital importation into Nigeria fell 47 percent from $9.64 billion in 2015 to $5.12 billion in 2016, mainly due to the weak currency. This meant fewer dollars were required for the same naira investment, according to Nigeria’s National Bureau of Statistics.

Globally, foreign direct investment flows fell 13 percent in 2016. Nigeria recorded an uptick, closing the year at $4 billion in FDI compared to $3.1 billion in 2015, according to Global Investment Trends Monitor report by the U.N. Conference on Trade and Development (UNCTAD).

From The Guardian, Story by Benjamin Alade.

UNCTAD warned that there are significant uncertainties that could impact any FDI recovery in 2017.

“The “normalization” of monetary policy in the U.S. after nearly a decade of historically low interest rates could result in a significant shift in composition of capital flows, with implications for exchange rates and financial systems throughout the world and especially for developing economies,” UNCTAD said in the report.

“Rising cost of capital may hinder investment by multinational enterprises which have taken on significant levels of corporate debt in recent years. There is also substantial uncertainty about the shape of economic policies in the near future, especially in developed economies, which may serve to dampen FDI.”

Equity investments from portfolio investors and direct investment rose sharply from 2012 to 2014, at a time when Nigeria was one of the fastest-growing economies in the world and a top destination for investment.

But a sharp drop in the price of crude oil, Nigeria’s main export, from mid-2014, slashed government finances, weakened its economy triggering a recession and battered its currency, frustrating business and leading investors to flee its markets.

Portfolio investments fell the most in 2016, deterred by the recession and the currency, down by 69.8 percent from 2015, as investors weighed market conditions relative to expected returns.

Nigeria’s stock market fell 6.2 percent in 2016 while the naira lost a third of its official value against the dollar. In 2017, stocks have continued to fall, down 3.1 percent so far, while the naira is almost 40 percent weaker on the black market.

The NBS said Nigeria imported the bulk of its capital from Britain, the U.S. and Netherlands, with the telecoms, banking and oil sectors the main beneficiaries.

For UNCTAD however, global FDI flows fell by 13 per cent in 2016 in a context of weak global economic growth and a lackluster increase in the volume of world trade.

Equity investments at the global level were boosted by a 13 percent increase in the value of cross-border mergers and acquisitions (M&As), which rose to their highest level since 2007, reaching $831 billion.

Read more at The Guardian.