Nigeria attracted $19.74 billion in foreign portfolio investment in 2025, significantly exceeding the $923 million recorded in foreign direct investment (FDI), highlighting the country’s continued struggle to attract long-term foreign investments.
The figures were contained in the 2025 Consolidated National Investment Reports compiled by the Economic Community of West African States (ECOWAS). They show that foreign portfolio investment accounted for approximately 85 per cent of Nigeria’s total capital importation of $23.22 billion during the year.
In comparison, foreign direct investment contributed less than four per cent of the total inflows, raising concerns about the country’s ability to attract investments that support business expansion, industrial development and sustainable job creation.
Foreign portfolio investments, commonly described as hot money, generally involve funds placed in financial assets such as government bonds, treasury bills and shares. Unlike direct investments, these funds can be withdrawn relatively quickly when market conditions become less attractive.
FOREIGN INVESTMENT INFLOWS NEARLY DOUBLE IN 2025
Nigeria recorded a substantial increase in total capital importation in 2025, rising from $12.32 billion in 2024 to $23.22 billion.
However, the growth was largely driven by foreign investors seeking attractive returns in the country’s financial markets rather than establishing or expanding businesses.
Foreign portfolio investment increased from $8.38 billion in 2024 to $19.74 billion in 2025.
Foreign direct investment also recorded some improvement, increasing from $675 million to $923 million within the same period. Despite this growth, its contribution remained relatively small compared with portfolio investments.
The figures indicate that international investors are increasingly returning to Nigeria’s financial markets, particularly because of attractive interest rates and yields on government securities.
MONEY MARKET AND BOND INVESTMENTS LEAD INFLOWS
A breakdown of the portfolio investment figures shows that money-market instruments attracted approximately $13.83 billion, while investments in bonds reached $4.89 billion.
Equity portfolio investments accounted for another $2.10 billion.
The strong performance of these financial instruments suggests that foreign investors are taking advantage of opportunities created by Nigeria’s prevailing interest rates and ongoing economic reforms.
Although the return of foreign capital has helped improve foreign exchange liquidity and strengthen activity in the financial markets, the dominance of short-term investments presents potential risks.
Investors can quickly move their funds elsewhere when interest rates decline, exchange-rate expectations change or economic conditions become unfavourable.
Consequently, Nigeria remains vulnerable to sudden capital withdrawals that could place additional pressure on the foreign exchange market.
NIGERIA STILL STRUGGLES TO ATTRACT LONG-TERM INVESTORS
Despite the significant increase in total capital importation, Nigeria has yet to record a corresponding improvement in investments directed towards productive economic activities.
Foreign direct investment is particularly important because it often involves establishing businesses, expanding factories, acquiring productive assets, transferring technology and creating employment opportunities.
The relatively low FDI figure therefore highlights the gap between attracting foreign funds into financial markets and securing investments capable of strengthening the country’s productive capacity.
Several factors continue to affect Nigeria’s investment environment, including inadequate infrastructure, foreign exchange uncertainty, security challenges and difficulties associated with transporting goods.
The government has introduced several reforms to improve the business environment, including changes to the foreign exchange market, improvements to the petroleum sector’s regulatory framework and the introduction of the National Single Window initiative to simplify international trade procedures.
Other measures highlighted in the ECOWAS report include investment facilitation efforts by the Nigerian Investment Promotion Commission and the Forum of State Investment Promotion Agencies of Nigeria.
The Arbitration and Mediation Act 2023 was also identified as part of the country’s efforts to strengthen investor confidence and improve dispute resolution.
GHANA ATTRACTS MORE FOREIGN DIRECT INVESTMENT
Nigeria’s performance also contrasts with that of Ghana, which recorded approximately $2.62 billion in foreign direct investment in 2025, according to its annual investment report.
The comparison highlights the importance of creating an investment environment capable of attracting businesses willing to commit capital over extended periods.
Although Nigeria has a significantly large consumer market and considerable opportunities across several industries, challenges relating to infrastructure, policy stability and the cost of doing business continue to influence investors’ decisions.
THE CHALLENGE BEFORE NIGERIA
The latest figures suggest that Nigeria’s challenge is no longer simply about attracting foreign capital but ensuring that a greater proportion of it enters productive sectors of the economy.
While portfolio investments can provide liquidity, support financial markets and improve access to foreign exchange, they cannot independently deliver the industrial expansion and employment opportunities associated with long-term investment.
Manufacturing, agriculture, infrastructure, technology and other productive sectors require investors willing to commit resources beyond short-term financial returns.
For Nigeria to benefit more substantially from renewed foreign investor interest, the government will need to address structural economic challenges, strengthen investor confidence and create conditions that encourage businesses to establish and expand their operations.
Ultimately, the sustainability of the country’s capital inflows will depend not only on how much foreign money enters the economy but also on how much of that money contributes to production, economic diversification and long-term growth.
