…reforms yielding results
Foreign investor sentiment toward Nigeria has reached its highest level in five years. Driven by sweeping currency reforms and improved dollar liquidity, offshore funds are returning to Africa’s most populous economy after years of capital flight.
Capital importation surged 132.27 percent to $16.77 billion in the nine months through September 2025, compared with $7.22 billion in the same period two years earlier, according to newly released data from the National Bureau of Statistics.
The inflows already exceed the $12.32 billion recorded in all of 2024 and dwarf the $3.90 billion posted in the corresponding period of 2023.
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“We expect inflows to remain stable as investors seek higher yields across frontier markets and also partly diversify out of their US dollar-denominated holdings,” Samuel Sule, chief executive officer of Renaissance Capital Africa, told BusinessDay.
Sule does not see the tax reforms and the election cycle having an “immediate impact on inflows and will only have an effect if there are material disruptions.”
The rebound marks a sharp reversal from the foreign-exchange crisis that gripped Nigeria in 2023 and 2024, when multiple exchange rates, severe dollar shortages, and rising insecurity pushed foreign investors to the sidelines.
Foreign portfolio investment accounted for the bulk of the inflows. FPIs jumped 226.09 percent year-on-year to $14.25 billion in the nine months, compared with just $565.21 million in foreign direct investment.
The surge reflects Nigeria’s high-yield environment, with the benchmark interest rate at 27 percent after aggressive tightening by the Central Bank of Nigeria to tame inflation and stabilise the naira.
Elevated yields on treasury bills and open market operations have offered foreign funds some of the most attractive carry trade opportunities in emerging markets. Nigeria’s carry trade remains one of the highest in Africa at 20.2 percent compared to Egypt’s 9.7 percent and Ghana’s 3.9 percent, offering investors juicy returns.
Still, the composition of the inflows underscores lingering structural fragilities. Portfolio investments, often described as “hot money”, can exit as quickly as they arrive, particularly if global risk sentiment shifts or domestic policy credibility wavers.
Foreign direct investment, which typically signals longer-term commitments to factories, infrastructure, and job creation, remains subdued. Nigeria last recorded FDI inflows above $1 billion in 2020, highlighting persistent investor caution despite investment pledges.
President Bola Tinubu’s administration launched sweeping reforms in 2023, including scrapping fuel subsidies, liberalising the foreign-exchange regime, and initiating tax overhauls aimed at broadening compliance.
The currency reforms, though initially painful and inflationary, have helped narrow the gap between official and parallel market rates and improved dollar supply in formal channels.
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Sectoral data show that the banking industry attracted the largest share of inflows in the third quarter of 2025, drawing $3.14 billion or 52.25 percent of total capital imported, followed by the financing sector at $1.85 billion.
Geographically, the United Kingdom led as the largest source of capital, accounting for $2.93 billion, or 48.8 percent of total inflows, followed by the United States.
Among financial intermediaries, Standard Chartered Bank Nigeria Limited received the highest capital importation in the third quarter at $2.11 billion, trailed by Stanbic IBTC Bank Plc and Citibank Nigeria Limited.
