Finance minister, Edun
Against the backdrop of the declaration by the Federal Government that Nigeria’s economy has turned the corner to stability and recovery, going by some macroeconomic indicators, current trend in foreign investments inflow has indicated that foreign investors are yet to buy into the position. Financial Vanguard findings from the latest Central Bank of Nigeria, CBN, data on foreign capital importation so far in 2025 show that the share of foreign portfolio investment (FPI) component is still predominant while that of foreign direct investment (FDI) is shrinking. The FPIs are short term easy-in-easy-out foreign financial assets that have no root in the economy unlike FDIs that are long term with real physical assets in the economy creating products and jobs.
The CBN data shows that while the share of FPI in capital importation in the first eight months of 2025 rose sharply to 86 per cent from 60 per cent last year, that of FDI declined to 2.9 per cent from 3.1 per cent.
Total foreign capital importation rose by 118 per cent, year-on-year, to $14.78 billion in eight months as at August 2025 (8M’25) from $6.83 billion in the same period of 2024 (8M’24) with FPI recording $12.76 billion while FDI was $433million, indicating that foreign investors are still shying away from committing long term resources to Nigeria.
This trend, according to the World Bank, Lagos Chamber of Commerce and Industry and investment analysts, also indicates structural deficiency, policy contradictions and lack of trust by foreign investors in the economic conditions in the country.
To address this trend and revive FDI flows into the country, the analysts stressed that the Federal Government should make the economy more competitive and deepen ongoing reforms to attract long term capital.
Explaining the factors behind the slide in share of FDI, leading economists who spoke to Financial Vanguard, noted that while it takes longer time to attract FDI, as investors want to be certain about the long term return from such investments, the continued low level of FDI indicates persistence of structural deficiencies that undermining the attractiveness of the country’s economy.
Why FDIs are not yet coming —Analysts
Ayokunle Olubunmi, Head of Financial Institutions Ratings at Agusto & Co., clarified that the decline in FDI’s share does not indicate a decline in inflows, but reflects the “boisterous surge” in portfolio investment driven by high yields and improving FX liquidity.
He explained: “FDI investors typically take a longer-term view. They want to be certain about market conditions before committing capital. Portfolio investors, on the other hand, respond much faster to short-term opportunities.”
According to him, Nigeria’s recent improvements-currency reforms, resumption of FX market functioning, and stabilisation efforts-are attracting speculative capital quickly, while long-term investors remain cautious.
Ayodele Akinwunmi, Chief Economist, United Capital Plc, said long-term investors are beginning to reassess Nigeria as economic conditions improve. He expects inflows to sectors such as oil and gas, solid minerals, fintech, banking, insurance, real estate, and manufacturing.
He added: “FDI investors evaluate the long-term viability of an economy before committing capital. With improving economic outlook and deliberate government efforts, the path is becoming clearer for increased FDI inflows.”
On her part, Dr. Chinyere Almona, Director-General of the Lagos Chamber of Commerce and Industry (LCCI), the paradox of rising FDI inflows but a falling share of capital importation underscores lingering investor concerns.
She said: “The decline in relative share indicates that foreign investors may still perceive significant structural and operational risks in Nigeria, such as policy unpredictability, regulatory bottlenecks, infrastructure constraints, and macroeconomic volatility. Vanguard
