Foreign capital inflows into Nigeria are expected to reach $23.3 billion at the end of 2025, the strongest in six years, as a steadier naira, easing inflation, and elevated fixed-income yields pull offshore investors back into Africa’s most populous economy.
Analysts at Afrinvest revised their 2025 forecast upward from $19.3 billion, citing sustained momentum into the fourth quarter. “On current momentum, FY:2025 capital inflows are tracking ahead of our initial projection. We now revise our forecast upward to $23.3 billion, which would mark the strongest annual capital importation in six years,” the firm said in a note.
The upgrade reflects “currency stability, disinflation, and attractive yield dynamics on the domestic front in Q4.”
The latest data from the National Bureau of Statistics show inflows rose to $6.0 billion in the third quarter, up 17.5 percent from the previous quarter and 380.2 percent from a year earlier, the strongest quarterly print since 2019. Total inflows for the first nine months climbed to $16.8 billion.
Portfolio investment remained the main driver. In the third quarter, such flows jumped 15.6 percent quarter-on-quarter and 439.7 percent year-on-year to $4.9 billion, lifted by demand for equities and bonds.
Over the first nine months, portfolio inflows surged 225.6 percent to $14.3 billion, accounting for 85 percent of total capital importation, compared with 60.5 percent a year earlier. Money-market instruments alone drew $10.7 billion.
The surge has been underpinned by policy shifts that have improved foreign-exchange liquidity and boosted real returns.
The naira appreciated 4.8 percent in the fourth quarter to an average N1,451.70 per dollar at the official window, while headline inflation eased to 15.2 percent by year-end.
Meanwhile, gross Open Market Operation issuance reached N18 trillion in the fourth quarter, with yields above 19 percent, reinforcing Nigeria’s carry-trade appeal.
Yet the composition of inflows is raising questions about durability.
“The resurgence in capital importation is overwhelmingly portfolio-led,” said Muda Yusuf, chief executive officer of the Centre for the Promotion of Private Enterprise. “More than 80% of total inflows in Q3 2025 were portfolio investments, while foreign direct investment accounted for less than five percent.”
Portfolio flows, he said, are highly sensitive to global interest-rate movements and shifts in risk sentiment. “They provide liquidity support and can help stabilise financial markets in the short term, but they are volatile and prone to sudden reversals.”
Foreign direct investment — typically tied to production, infrastructure, and technology transfer — remains modest. FDI rose 107.6 percent quarter-on-quarter to $296.3 million in the third quarter, bringing nine-month inflows to $565.2 million, or 11.6 percent of total capital.
Other investments increased slightly to $864.6 million in the quarter but fell nearly 25 percent year-on-year over the nine months, dragged down by weaker loan volumes.
Sectoral data point to another imbalance. Outside banking and finance, the electrical sector attracted $710.3 million in the first nine months, followed by manufacturing at $463.5 million and telecommunications at $392.9 million. Agriculture drew just $116.1 million.
“The bulk of inflows went into the banking and financial sectors, with only marginal allocation to manufacturing, infrastructure, and other productive activities,” Yusuf said. “Financial deepening without real-sector expansion risks creating a liquidity-driven recovery that does not fundamentally alter Nigeria’s productive base.”
For policymakers, the rebound offers breathing space. But sustaining it may depend on converting short-term capital into longer-term commitments, particularly in non-oil exports, agro-processing, and industry. Without that shift, analysts warn, the headline recovery in capital flows could prove cyclical rather than transformative.
