Nigeria’s Foreign Capital Inflows Hit $2.06bn In January

…As Investors Hunt for Yields

Nigeria saw a strong rebound in foreign capital inflows in January 2025, reaching $2.06 billion, up sharply from $1.57 billion in December 2024.

This is according to the latest Central Bank of Nigeria (CBN) Economic Report, which credited the upswing to attractive yields in the domestic financial markets.

The surge was driven largely by portfolio investments, which soared to $1.85 billion in January from $1.23 billion the previous month. The CBN noted that heightened activity in money market instruments was behind the sharp increase, reflecting renewed foreign investor appetite for short-term, high-yield opportunities.

Despite the overall growth in capital inflows, foreign direct investment (FDI) fell to $70 million from $120 million, suggesting a continued hesitancy among long-term investors. Similarly, ‘other investments’, mainly loans declined to $140 million, down from $220 million in December.

In terms of composition, portfolio investment accounted for a dominant 89.6 per cent of total capital inflow, while ‘other investments’ made up 7.01 per cent, and FDI just 3.39 per cent.

A closer look at sectoral distribution revealed that the banking sector attracted the largest share of foreign capital, drawing 45.22 per cent of total inflows. This was closely followed by the financing sector, which pulled in 44.32 per cent. Other sectors, including telecommunications (3.86 per cent), manufacturing (3.01 per cent), shares (1.57 per cent), and trading (1.43 per cent) received smaller shares.

From a geographic standpoint, the United Kingdom remained Nigeria’s top source of foreign capital, contributing 65.65 per cent of total inflows. Other key contributors included the United States (8.15 per cent), South Africa (7.66 per cent), United Arab Emirates (7.18 per cent), Mauritius (2.87 per cent), and Belgium (2.28 per cent).

The Federal Capital Territory (FCT) emerged as the top destination for inflows, receiving 62.88 per cent of the capital, while Lagos attracted 36.59 per cent.