FDI Lags Behind Amidst Surge in 2025 Capital Inflows

Foreign direct investment (FDI) accounted for less than four per cent of total capital imported into Nigeria in 2025, despite a significant increase in overall foreign inflows, data from the National Bureau of Statistics has shown.

The data indicated that total capital importation rose to $23.22bn in 2025 from $12.32bn recorded in 2024, reflecting a strong rise in foreign inflows during the year. However, FDI contributed only $923.01m, representing 3.97 per cent of the total.

This compares with $674.71m recorded in 2024, when FDI accounted for 5.48 per cent of total inflows, showing that although FDI grew by $248.30m year-on-year, its share declined as other investment categories expanded at a faster pace.

Further analysis showed that portfolio investment remained the dominant driver of capital importation in 2025, rising to $19.74bn from $8.38bn in 2024. This accounted for 85.03 per cent of total inflows, compared with 68.00 per cent in the previous year.

On a quarterly basis, portfolio investment maintained a strong presence throughout the year, accounting for 92.25 per cent of inflows in the first quarter, 82.02 per cent in the second quarter, 80.70 per cent in the third quarter, and 85.14 per cent in the fourth quarter.

In contrast, FDI remained weak across all quarters, contributing 2.24 per cent in Q1, 2.79 per cent in Q2, 4.93 per cent in Q3, and 5.55 per cent in Q4, despite some improvement in the second half of the year.

In nominal terms, portfolio inflows of $19.74bn were more than 21 times higher than FDI inflows, highlighting the imbalance in the structure of foreign capital entering the country.

A breakdown of FDI showed that inflows increased steadily from $126.29m in Q1 to $142.67m in Q2, before rising sharply to $296.25m in Q3 and $357.80m in Q4. The fourth quarter accounted for about 38.8 per cent of total FDI, while the second half of the year contributed roughly 70.9 per cent.

Equity investment remained the largest component of FDI at $868.29m, representing about 94.1 per cent of total direct investment, while other capital rose to $54.72m from $9.20m in 2024.

Despite the improvement in FDI value, the data showed that Nigeria’s foreign inflows remained largely driven by short-term portfolio investments rather than long-term capital associated with business expansion and job creation.

The World Bank Group’s Chief Economist and Senior Vice President, Indermit Gill, recently said that FDI is plummeting to new lows at the same time that public debt is reaching record highs.

According to him, private investment will now have to boost economic growth, and FDI happens to be one of the most productive forms of private investment. “Yet, in recent years, governments have been busy erecting barriers to investment and trade when they should be deliberately taking them down. They will have to ditch that bad habit,” he warned.

In February 2026, the Federal Ministry of Industry, Trade, and Investment unveiled plans to deepen trade facilitation and tighten policy execution in 2026, following a sharp rebound in capital inflows and export performance in 2025.

According to the FMITI Outlook 2026, the ministry will focus on sustaining reform momentum while strengthening implementation frameworks to translate consolidation into sustained growth, exports, and jobs.