Foreign direct investment (FDI) struggled to make a mark in Nigeria despite soaring foreign capital inflows.
In 2025, investors poured $23.22 billion into Nigeria, nearly double the $12.32 billion recorded in 2024.
Foreign Direct Investment (FDI) Struggles
However, FDI, which fuels factories, business growth, and sustainable jobs, remained below 4% of total inflows.
According to the National Bureau of Statistics, investors contributed just $923.01 million in FDI during the year.
Portfolio Investment Dominates
Meanwhile, portfolio investors dominated, sending $19.74 billion, more than double the $8.38 billion seen in 2024.
Consequently, over eight out of ten dollars entering Nigeria flowed through short-term, mobile portfolio channels.
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Although FDI rose 36.8% year-on-year, its percentage share of total capital declined from 5.48% previously.
Quarterly data revealed FDI contributions started at 2.24% in Q1 and rose steadily to 5.55% in Q4.
Moreover, investors delivered nearly 71% of all FDI in the second half of 2025 alone.
Equity capital dominated FDI, totalling $868.29 million, which represented roughly 94% of the total figure.
In addition, investors increased “other capital” under FDI, rising from $9.20 million in 2024 to $54.72 million.
The Urgent Investment Challenge
Despite these improvements, total FDI remained smaller than portfolio inflows in any single quarter of 2025.
Portfolio funds provide liquidity; however, they react quickly to interest rates, exchange, and global risk.
By contrast, FDI demonstrates stronger confidence in Nigeria’s real economy and long-term growth prospects.
Although FDI improved, foreign investment still skews toward quick, yield-seeking portfolio money rather than stability.
The rise in total inflows shows growing foreign interest, yet meaningful, durable investment remains limited in impact.
FDI’s progress is encouraging, but policymakers must attract deeper, job-creating, and long-term foreign capital.
Otherwise, Nigeria risks dependence on volatile, short-term portfolio inflows, vulnerable to sudden withdrawals or shocks.
Therefore, the country must transform inflows into sustainable, job-creating, and growth-supporting foreign investment.
Ultimately, the 2025 data highlights progress but emphasises the urgent need for deeper, long-term FDI participation.
