Nigeria recorded a sharp increase in foreign capital inflows in the third quarter of 2025, but the Centre for the Promotion of Private Enterprise (CPPE) says the recovery may not be as strong as it appears.
Capital importation rose to about $6.01bn between July and September, a steep jump compared with the same period last year and a modest increase from the previous quarter. The rebound reflects improving investor confidence following recent policy changes.
Reforms by the Central Bank of Nigeria, including foreign exchange liberalisation and tighter monetary policy, have made it easier for investors to bring in funds and earn higher returns on Nigerian assets.
Join our WhatsApp ChannelBut CPPE argues that the structure of these inflows raises concern.
More than 80% of the funds came in as portfolio investment — money typically placed in financial instruments such as treasury bills and bonds. This type of capital is highly mobile and can leave the country quickly if global conditions change.
By contrast, foreign direct investment — which supports factories, infrastructure and long-term production — accounted for less than 5% of total inflows.
This imbalance suggests that while financial markets are benefiting, the real economy is seeing limited impact. Most of the inflows were channelled into the banking sector, with little going into manufacturing, energy, agriculture or other productive areas.
For ordinary Nigerians, this means the surge in capital may not immediately translate into jobs, lower prices or improved services.
CPPE also points to concentration risks. A large share of the inflows originated from a small group of countries, including the UK and the US, while a few major banks handled most of the transactions. This leaves Nigeria exposed to external policy shifts and global financial tightening.
The think tank warns that if investor sentiment weakens or interest rates change in advanced economies, portfolio funds could exit as quickly as they entered, putting pressure on the naira and foreign reserves.
It says the current inflow should be seen as an opportunity rather than a breakthrough.
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To achieve more durable growth, Nigeria needs to attract long-term investment into productive sectors. That will depend on improvements in power supply, transport infrastructure, regulatory clarity and overall ease of doing business.
Until then, CPPE maintains that the rebound, while encouraging, remains vulnerable and may not deliver the broad economic gains many expect.
Prosper Okoye is a Correspondent and Research Writer at Prime Business Africa, a Nigerian journalist with experience in development reporting, public affairs, and policy-focused storytelling across Africa
