By Ada Samson, Abuja
Nigeria’s capital inflows have surged by nearly 400% in the first quarter of 2025 compared to the same period in 2023, according to a latest data from the National Bureau of Statistics (NBS).
The total inflow rose from $1.13 billion in Q1 2023 to $5.64 billion in Q1 2025, driven largely by a massive increase in portfolio investments. However, foreign direct investment (FDI), a critical indicator of long-term investor confidence, remains stagnant at just $126.29 million, raising concerns over Nigeria’s ability to attract sustainable economic commitments.
The figures reveal a stark contrast between short-term financial inflows and long-term investment trends. Portfolio investments, which include foreign purchases of stocks and bonds, skyrocketed from $649.28 million in Q1 2023 to $5.20 billion in Q1 2025—an astonishing 700% increase. This suggests strong foreign interest in Nigeria’s financial markets, likely spurred by high-yield opportunities and recent economic reforms.
Meanwhile, other investments, such as loans and currency deposits, fluctuated, dropping from $1.18 billion in Q1 2024 to $311.17 million in Q1 2025.
Despite the overall capital inflow boom, FDI growth has been sluggish, inching up only marginally from $119.18 million in Q1 2024 to $126.29 million in Q1 2025. This stagnation highlights persistent challenges in Nigeria’s business environment, including infrastructure deficits, foreign exchange volatility, and regulatory uncertainty.
The lack of significant FDI growth is particularly worrying because it reflects weak investor appetite for long-term projects such as manufacturing, energy, and industrial development—key drivers of job creation and economic diversification.
The broader trend over the past decade further underscores Nigeria’s FDI struggles. From a peak of $2.28 billion in 2014, FDI plummeted by over 70% to $674.71 million in 2024. Although last year saw a 79% rebound from 2023’s low of $377.38 million, the recovery remains fragile.
Experts argue that while portfolio investments can provide quick liquidity, sustainable economic growth depends on higher FDI, which brings technology transfer, skills development, and stable employment.
Analysts attribute the FDI stagnation to structural bottlenecks, including inconsistent policies, security concerns, and an unfavourable tax climate. While recent government efforts, such as the floating of the naira and the removal of fuel subsidies, have boosted short-term investor sentiment, more reforms may be needed to convince multinational firms to commit to large-scale, long-term projects. Without stronger FDI, Nigeria’s economic growth may continue to rely on volatile capital flows rather than stable, productivity-enhancing investments.
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