Nigeria’s capital inflows are rising sharply in 2025, yet Foreign Direct Investment (FDI) remains surprisingly low.
FDI Lags Behind
According to the National Bureau of Statistics (NBS), investors contributed only $565.21 million in FDI during the first nine months.
This amount represents just 3.3% of total inflows, which reached $16.78 billion.
Short-Term Money Dominates
Quarterly inflows show a strong headline picture: $5.64 billion in Q1, $5.12 billion in Q2, and $6.01 billion in Q3.
Consequently, year-to-date inflows already surpass the $12.32 billion recorded for the whole of 2024.
However, most investors target short-term returns, chasing high domestic interest rates rather than building factories or infrastructure.
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FDI is slowly improving.
It rose from $126.29 million in Q1 to $142.67 million in Q2, and then nearly doubled to $296.25 million in Q3.
Nevertheless, portfolio and other short-term investors contributed over $14 billion during the same period.
Investment Imbalance Persists
Sector distribution reveals a similar imbalance.
In Q3, foreign investors poured $3.14 billion into banking, $1.86 billion into financing, but only $261.35 million into production and manufacturing.
Therefore, jobs and industrial growth continue to see limited support.
Investors primarily came from the United Kingdom ($2.94 billion), the United States ($950.47 million), and South Africa ($773.95 million), although the NBS does not separate FDI from portfolio inflows.
This trend is not new.
In 2024, investors also favoured short-term capital, leaving long-term, productivity-enhancing investments subdued.
The key message is clear: Nigeria attracts foreign money, but not the kind that drives lasting economic growth.
Policymakers must focus on increasing FDI to fund factories, infrastructure, and industries.
Otherwise, headline inflows will remain impressive on paper, while the economy’s structural transformation stalls.