Capital Importationis the investment made by individuals and companies not resident in Nigeria into the Nigerian Economy at a particular time. The Capital is either imported in the form of Shares, directly imported by different sectors of the economy or Cash investment into different financial instruments (Including government debt instruments) in the country.
Capital Importation could also be in form of equipment for raw materials or machineries for production of good and services. It can also be a loan obtained by a local company from a foreign bank to boost its production or services.
Capital Importation is one of the ways economies relied upon to boost foreign investments in their countries. They for a substantial part of the countries balance of payment and can be done only through authorized dealers like banks and other financial institutions approved by the CBN
Certificate of Capital Importation
A Certificate of Capital Importation (CCI) is a certificate issued by the Central Bank of Nigeria (CBN) to the Capital Importer through its Nigerian bank confirming an inflow of foreign capital either in the form of cash (loan or equity) or goods. A CCI is usually issued in the name of the applicant company within 24- 48 hours of the inflow of the capital into Nigeria.
The primary purpose of the CCI is to guarantee access to the official foreign exchange market for repatriations of capital and returns on investment, which include dividends, interest, and capital on divestments. The requesting company must present a copy of the CCI to the Nigerian bank to process a remittance.
What is in it for Banks
Imported capital must first be domiciled into a local bank account before it is used for whatever purpose it is meant for, also when the Capital is being returned back in form of Dividend, Interest, Profit, Capital or Loan Repayment, it must be processed through a bank.
Hence Capital Importation boosts the destination bank’s deposits apart from other bank charges for the use of funds and the repatriation of the funds and investments.
Banks with the highest Capital Inflow in 2019
Stanbic IBTC Bank was the destination of about 36 percent of total capital imported into Nigeria in 2019. The bank had the highest amount in Capital Importation amounting to $8.6 million of the total $24 million.
Relatively new Rand Merchant Bank was the destination of 12.2 percentage of Capital Importation in 2019 and 10 percent of first quarter 2020 figures. While Standard Chartered Bank that was the destination of 24% (highest) of the $5.9 million Capital Imports in the first quarter of 2020, was responsible for 11.8 percent of the 2019 Capital Imports.
Nigeria’s Tier 1 Banks appeared in the bottom of the top ten destination banks of Capital Importation in 2019 and also in the first quarter of 2020.
Coronation Merchant Bank, Heritage Bank, Jaiz Bank and Unity Bank had no Capital Inflow in 2019 as well as first quarter of 2020.