Foreign Direct Investments into Nigeria dropped sharply by 70.06 per cent quarter-on-quarter to $126.29m in the first quarter of 2025, down from $421.88m recorded in the final quarter of 2024.
According to the latest Capital Importation report released by the National Bureau of Statistics, the steep decline in FDI occurred despite the overall increase in capital importation into the country, indicating that foreign investors are favouring short-term, high-yield financial instruments over long-term, productive commitments in the Nigerian economy.
On a year-on-year basis, FDI posted a modest growth of 5.97 per cent compared to $119.18m recorded in the same period of 2024.
However, this marginal increase has done little to shift the broader trend of dwindling interest in long-term investment.
The data show that FDI made up only 2.24 per cent of total capital imported into the country in Q1 2025, down from 8.29 per cent in the preceding quarter and below the 3.53 per cent recorded in Q1 2024.
Meanwhile, total capital importation rose to $5.64bn in Q1 2025, an increase from $5.09bn in Q4 2024 and $3.38bn in Q1 2024. The figures reflect a growing disconnect between headline capital inflows and actual investment in sectors capable of driving economic growth.
Although the headline rise in capital importation might suggest renewed investor confidence, a closer examination reveals that over 90 per cent of these inflows were directed into short-term money market instruments, such as government bonds and treasury bills, rather than equity or direct investments.
These instruments, while important for managing liquidity and stabilising the naira, do not contribute meaningfully to industrial growth, employment generation or infrastructure development.
According to local media reports, this trend raises fresh concerns about the sustainability of Nigeria’s current investment profile, which remains heavily reliant on speculative flows that can exit the economy with little warning.
The reports added that FDI, which is generally viewed as a vote of confidence in the host country’s long-term prospects, has been crowded out by short-term capital chasing quick returns in Nigeria’s high-yield debt market.