Nigeria's Capital Inflows Soar to $20.98 Billion in First Ten Months of 2025

Significant Rebound in Foreign Investment

Nigeria experienced a substantial increase in foreign capital inflows, totaling $20.98 billion in the first ten months of 2025. This figure represents a significant rebound in external investor confidence, as announced by the Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso. Speaking at the 2025 Annual Bankers' Dinner of the Chartered Institute of Bankers of Nigeria in Lagos, Cardoso highlighted that these inflows are the highest in years.

The reported $20.98 billion inflow marks a 70 percent rise compared to the total inflows recorded in 2024 and an impressive 428 percent surge from the $3.9 billion registered in 2023. This upward trend reflects a renewed trust in Nigeria's economic direction and the credibility of ongoing monetary reforms, according to the CBN Governor.

Reforms Drive Investor Confidence

The surge in capital inflows is largely attributed to a series of structural reforms implemented by the Nigerian government and the Central Bank. Key among these are the visible transformations in the foreign exchange (FX) market. The CBN has sustained the unification of FX windows and successfully cleared a multi-billion-dollar backlog that previously undermined investor confidence.

Further reforms include the introduction of the Nigerian Foreign Exchange Code and the deployment of the Electronic Foreign Exchange Management System (EFEMS). These measures aim to enhance transparency, ensure mandatory order submission, facilitate real-time surveillance, and improve price discovery in the market. Cardoso stated that these reforms 'have restored discipline to the market,' reducing the premium between the official and parallel markets to under 2 percent, a significant drop from over 60 percent a year ago.

Another crucial factor contributing to the restored confidence is Nigeria's exit from the Financial Action Task Force (FATF) grey list. This achievement is seen as a major step in easing compliance frictions for correspondent banks and is estimated to have reclaimed over $30 billion in potential investments.

Composition of Inflows and Sectoral Focus

While the overall capital inflow has seen a substantial increase, the composition of these investments indicates a strong preference for short-term instruments. Data from the first quarter of 2025 shows that portfolio investments dominated, accounting for over 92 percent ($5.2 billion) of the total $5.64 billion capital importation during that period. In contrast, Foreign Direct Investment (FDI) remained subdued, contributing only $126.29 million, or 2.24 percent, of the total. This highlights that a significant portion of the new capital is 'hot money,' which can be more volatile.

The banking sector emerged as the primary recipient of these inflows in Q1 2025, attracting $3.13 billion, representing 55.44 percent of the total. The United Kingdom was the leading source country for capital in the first quarter of 2025, contributing $3.68 billion.

Outlook and Future Considerations

The significant rise in capital inflows underscores the positive impact of recent economic and monetary policy reforms in Nigeria. While the dominance of portfolio investments suggests a need for continued efforts to attract long-term FDI, the current trend signals a positive shift in global investor sentiment towards the Nigerian economy. The CBN aims to sustain this momentum through ongoing reforms and a commitment to maintaining a flexible exchange-rate framework.