Portfolio investments drive Nigeria’s $6.44bn Q4 2025 capital inflows, analysts react

Nigeria recorded total capital importation of $6.44 billion in the fourth quarter of 2025, marking a 26.61% year-on-year increase from $5.09 billion in the same period of 2024.

This represents a 7.13% rise compared to $6.01 billion recorded in Q3 2025, according to the latest report from the National Bureau of Statistics (NBS) released on Wednesday.

The report shows that portfolio investments remained the primary driver of foreign capital, accounting for $5.49 billion, or 85.14% of total inflows. Money market instruments alone attracted $3.08 billion, while bonds contributed $1.97 billion, reflecting continued investor preference for short-term and fixed-income assets.

Foreign Direct Investment (FDI) remained modest at $357.80 million (5.55%), while other investments totaled $599.65 million (9.31%). Experts noted that the relatively low FDI share indicates that long-term, productive investments into the real sector remain limited despite improving macroeconomic indicators.

Analysis of sectoral flows shows a heavy concentration in financial services. The banking sector attracted $3.85 billion (59.75%), while the broader financing sector received $1.94 billion (30.15%).

Production and manufacturing drew $308.93 million (4.79%), with other sectors—including telecommunications, agriculture, and oil and gas—recording significantly lower inflows.

This distribution underscores that investors continue to favour liquid and financial assets over real sector investments, raising questions about Nigeria’s ability to convert capital inflows into sustainable industrial growth.

In terms of origin, the United Kingdom was the largest source of inflows, contributing $3.73 billion (57.94%), followed by the United States with $837.91 million (13.00%) and South Africa at $516.96 million (8.02%). Belgium and Mauritius also featured among the top contributors, indicating Nigeria’s reliance on established financial hubs for foreign capital.

At the institutional level, Stanbic IBTC Bank Plc led the inflows with $2.23 billion (34.58%), followed by Standard Chartered Bank Nigeria Ltd at $1.85 billion (28.75%) and CitiBank Nigeria Ltd with $840.72 million (13.05%). Other banks, including Access Bank, Rand Merchant Bank, and First City Monument Bank, attracted moderate volumes.

Economists and financial analysts describe the Q4 2025 capital inflows as a positive indicator of investor confidence in Nigeria’s financial markets.

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Bismarck Rewane, a Lagos-based economist, noted: “The growth in capital inflows, particularly in portfolio investments, shows that investors are responding to improved regulatory oversight and monetary reforms. It also highlights Nigeria’s attractiveness as a short-term investment destination.”

Investment strategist Ayodeji Ebo added: “While the numbers are impressive, the low level of FDI is concerning. For sustainable economic growth, Nigeria must convert these inflows into long-term productive investments in manufacturing, agriculture, and infrastructure.”

Financial analyst Kalu Aja echoed the sentiment: “Foreign investors prefer liquid and safe assets. Policymakers need to create incentives and reduce risks in the real sector to diversify investment beyond banking and finance.”

The NBS data signals improving confidence in Nigeria’s financial markets, particularly in liquid instruments. However, the dominance of portfolio investments and the weak FDI component highlight structural challenges in attracting long-term capital to productive sectors.

Experts suggest that translating rising inflows into industrial expansion, job creation, and economic diversification remains a key policy priority for Nigeria’s government.