Nigeria Records $14bn Inflow, Long-Term Investment Still Lags

Nigeria has seen a strong increase in foreign capital inflows. The total of Foreign Portfolio Investment (FPI) and Foreign Direct Investment (FDI) nears $14 billion in the first nine months of 2025.

This information comes from data released by the Federal Ministry of Industry, Trade, and Investment (FMITI). This figure exceeds the total inflows recorded for all of 2024. It represents the highest level of foreign capital entering Africa’s largest economy in recent times.

Yet, despite the promising headline numbers, detailed data reveal that long-term investment, which is crucial for sustainable economic growth, remains very low. This raises concerns about the depth and endurance of the recovery.

Headline Gains Driven by Portfolio Flows

Most of the reported $14 billion inflow came from foreign portfolio investment, which rose to about $13 billion during the first three quarters of 2025.

Portfolio flows typically include investments in stocks, bonds, and short-term financial products. They are often referred to as “hot money.” This kind of investment can quickly move in and out of markets due to shifts in global sentiment.

According to the National Bureau of Statistics (NBS), total capital imported during this period reached around $16.78 billion, with portfolio investment making up around 97% of the total. In contrast, FDI accounted for only about 3.3% of the inflows.

Analysts point to high domestic interest rates, improved foreign exchange liquidity, and appealing returns on Nigerian treasury bills and bonds as major draws for portfolio investors.

These investments offer competitive yields compared to many emerging markets. This is especially because global monetary policy continues to tighten.

Long-Term Investment Still Limited

Despite the overall positive figures, FDI has not increased significantly. Data from the NBS indicates that FDI inflows were only around $565 million in the nine-month period.

This represents a relatively small proportion of total capital inflows. Although it shows some improvement over previous quarters, the share of long-term investment is still quite low.

Experts emphasize that portfolio investment can enhance liquidity and support local markets in the short term. However, it cannot replace the long-term capital necessary for infrastructure, manufacturing, and technology sectors. These are vital for productivity and job creation.

A Central Bank of Nigeria (CBN) report acknowledged fluctuations in FDI throughout 2025, including a notable increase in Q3. However, it also emphasized that these increases come from a very low baseline compared to Nigeria’s historical context and potential.

Government Reforms and Their Impact

Authorities attribute the rise in capital inflows to ongoing structural and macroeconomic reforms aimed at rebuilding investor trust.

These reforms include the liberalization of foreign exchange markets, the removal of fuel subsidies, updated investment policies, and efforts to improve aftercare services for investors.

In a statement, the FMITI pointed out Nigeria’s ranking among top-performing stock exchanges worldwide and noted advancements in export competitiveness as factors drawing foreign capital.

“Nigeria is on a transformational path, and the increase in foreign investment flows in 2025 reflects renewed trust in our reform agenda,” the ministry stated, highlighting efforts made to improve trade facilitation and investment coordination.

Looking Ahead

As Nigeria prepares for further economic growth, authorities have announced plans to refine investor attraction strategies. This include in sectors such as solid minerals, digital trade, the creative economy, and climate-friendly industrialization in 2026.

Observers believe that the upcoming year will be critical in assessing whether the country can turn headline capital inflows into lasting, productive investments that support long-term growth and address structural economic challenges.