Foreign Direct Investment (FDI) into Nigeria dropped sharply by 70.06% in the first quarter of 2025, falling to $126.29 million from $421.88 million in the previous quarter, according to the National Bureau of Statistics (NBS). This decline occurred despite an overall rise in capital importation, signaling a significant shift in investor priorities away from long-term commitments in the Nigerian economy.
The data revealed that foreign investors increasingly favoured short-term, high-yield instruments like government bonds and treasury bills, bypassing more sustainable equity investments. As a result, FDI’s share of total capital inflows fell to just 2.24% in Q1 2025, compared with 8.29% in Q4 2024 and 3.53% in Q1 2024. Equity investment, which makes up the bulk of FDI, dropped 70.36% to $124.31 million.
In contrast, total capital inflows rose to $5.64 billion in Q1 2025 from $5.09 billion in Q4 2024, marking a year-on-year increase from $3.38 billion. However, over 90% of this was concentrated in money market instruments, which economists warn can exit the economy quickly and have minimal impact on long-term economic growth or employment generation.
The manufacturing sector also suffered from reduced investor confidence, with capital inflows down 32.31% year-on-year to $129.92 million in Q1. This follows a wave of multinational company exits between 2023 and 2024, as firms grappled with challenging reforms and an uncertain operating environment.
Economists and industry analysts have stressed that while Nigeria remains attractive for speculative capital, the collapse in FDI highlights the country’s struggle to secure stable, long-term investments needed for industrialisation, infrastructure development, and sustainable job creation. Without policy reforms to boost investor confidence, the reliance on volatile short-term capital could leave the economy vulnerable to sudden outflows.
Source: Business day