The Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, has warned that Nigeria’s $6.01bn capital importation rebound in the third quarter of 2025, though impressive, remains largely short-term and vulnerable, urging the Nigerian Government to drive investment into the real economy.
Nigeria’s capital importation in the third quarter of 2025 recorded total inflows that rose to $6.01bn, representing a remarkable 380 per cent year-on-year increase and a 17 per cent quarter-on-quarter growth.”
In a statement, Dr Yusuf, warned that while total capital inflows rose to $6.01bn in Q3 2025, the structure of the inflows exposes the economy to significant risks.
Yusuf noted that the rebound reflected renewed investor confidence following foreign exchange market liberalisation, tighter monetary policy, and improved liquidity conditions.
“This development reflects a gradual restoration of investor confidence following recent macroeconomic reforms, particularly foreign-exchange market liberalisation, tighter monetary policy, and improved liquidity conditions in the domestic financial system,” he said.
But he cautioned that the rebound is largely portfolio-driven and does not signal structural transformation.
He noted that over 80 per cent of total inflows in Q3 2025 were portfolio investments, while foreign direct investment accounted for less than five per cent.
Yusuf said, “The resurgence in capital importation is overwhelmingly portfolio-led. More than 80 per cent of total inflows in Q3 2025 were portfolio investments, while foreign direct investment accounted for less than five per cent.”
He warned that portfolio flows are volatile and prone to sudden reversals, stating, “Portfolio flows, by nature, are highly sensitive to global interest-rate movements, risk sentiment, and policy credibility. They provide liquidity support and can help stabilise financial markets in the short term, but they are volatile and prone to sudden reversals.”
He stressed that sustainable growth depends on long-term investments in production, infrastructure, and technology transfer.
“Sustainable economic growth, job creation, and export expansion depend not on short-term capital but on stable, long-horizon FDI tied to production, infrastructure, manufacturing, and technology transfer,” he said.
He noted that most inflows went to the banking and financial sectors, with minimal allocation to manufacturing and infrastructure.
“Sectoral analysis shows that the bulk of inflows went into the banking and financial sectors, with only marginal allocation to manufacturing, infrastructure, and other productive activities,” Yusuf said.
He warned that financial deepening without real-sector expansion could create a liquidity-driven recovery that fails to transform Nigeria’s productive base. “Financial deepening without real-sector expansion risks creating a liquidity-driven recovery that does not fundamentally alter Nigeria’s productive base,” Yusuf stated.
GIK/APA