The Centre for the Promotion of Private Enterprise (CPPE) has described the surge in Nigeria’s capital importation in the third quarter of 2025 as a positive outcome of recent macroeconomic reforms, noting it will restore investors’ confidence.
According to the National Bureau of Statistics (NBS), Nigeria’s capital importation climbed to $6.01 billion in the third quarter of 2025.
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The surge represents a significant rise from the $1.25 billion recorded in the same period of 2024. The capital inflows also increased on a quarter-on-quarter basis, rising by 17.46 per cent to $5.12 billion from $4.34 billion in the second quarter of 2025.
While responding to the development, the CPPE, in a statement signed by its CEO, Muda Yusuf, on Sunday, said the surge reflects the results of the government’s recent macroeconomic reforms, particularly foreign-exchange market liberalisation, tighter monetary policy, and improved liquidity conditions in the domestic financial system.
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But the think tank also warned that the surge is largely portfolio-driven and concentrated mainly in the financial sector. The CPPE noted that the increase in capital inflows underscores the need for structural reforms to channel them into durable, long-term economic transformation.
Portfolio dominance
The CPPE stated that the resurgence largely relies on portfolio investments rather than foreign direct investment, noting that it is sensitive to global interest-rate movements, risk sentiment, and policy credibility.
The think tank noted that while portfolio flows provide liquidity and stability to financial markets in the short term, they are volatile and prone to sudden reversals. It added that the current structure reflects cyclical financial recovery rather than structural economic transformation.
“The resurgence in capital importation is overwhelmingly portfolio-led. More than 80 per cent of total inflows in Q3 2025 were portfolio investments, while foreign direct investment (FDI) accounted for less than five per cent. This composition raises important concerns.
“Sustainable economic growth, job creation, and export expansion depend not on short-term capital but on stable, long-horizon FDI tied to production, infrastructure, manufacturing, and technology transfer,” the statement read.
Weak transmission
The CPPE also faulted the limited allocation to manufacturing, infrastructure, and other productive activities, while the banking and financial sectors experienced the bulk of inflows. It argued that this pattern points to structural weaknesses in the economy rather than a meaningful expansion of productive capacity.
“Without stronger capital flows into industry, agro-processing, logistics, energy, and export-oriented manufacturing, the broader economy will see limited gains in employment, productivity, and inclusive growth.
“Financial deepening without real-sector expansion risks creating a liquidity-driven recovery that does not fundamentally alter Nigeria’s productive base,” it stated.
Concentration, Risks
The CPPE further noted that the heavy concentration of foreign inflows among a few countries (the United Kingdom, the United States, and South Africa) exposes Nigeria to policy shifts, monetary tightening cycles, and changes in investor sentiment within a limited set of jurisdictions.
The CPPE argued that the concentration of capital inflows through a limited number of Nigerian banks creates both concentration and transmission risks, particularly in the event of shifts in correspondent banking relationships or changes in global liquidity conditions.
“A more resilient capital-flow structure requires both geographic diversification and broader financial intermediation channels,” the CPPE noted.
The think tank further revealed that the current capital-flow structure exposes the Nigerian economy to several risks, including sudden portfolio reversals, persistently weak FDI, external concentration risks, and financial-system transmission risks. It stated that the present rebound may prove fragile unless structural reforms accelerate.
Liquidity conversion
The CPPE advised the government to maximise the opportunities from capital inflows through policies that convert portfolio-driven inflows into FDI-led industrial expansion.
It also urged governments to intensify efforts to improve macroeconomic stabilisation.
According to the CPPE, reliable electricity supply, efficient transport and logistics systems, predictable regulatory frameworks, and improved contract enforcement mechanisms are indispensable to attracting durable, productive investment.
“The government must also deliberately incentivise capital flows into export-oriented manufacturing, agro-processing, mineral beneficiation, industrial parks, and infrastructure development.
“Without such policy direction, foreign capital will remain concentrated in short-term financial instruments rather than real economic assets.”
The CPPE added that there must be diversification of capital sources, such as Gulf sovereign wealth funds, Asian institutional investors, and intra-African investment flows under the AfCFTA framework.
It argued that diversifying capital sources will broaden Nigeria’s capital base and reduce the country’s vulnerability to foreign financial-cycle volatility
“This would broaden Nigeria’s capital base and reduce vulnerability to Western financial-cycle volatility. Increased inflows into the banking system must translate into long-term credit for infrastructure, SMEs, and manufacturing enterprises. Financial-sector gains must support real economic transformation,” it stated.
Investment outlook
It warned investors to remain cautious about global risk repricing and policy-continuity risks, despite opportunities in Nigeria’s fixed-income and money-market instruments.
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“Over the medium to long term, subdued FDI presents early-entry opportunities in reform-sensitive sectors such as power and energy infrastructure, agro-processing, logistics, digital financial services, and export-oriented manufacturing.
“Sustained macroeconomic stability will be the decisive factor in converting financial inflows into durable real-sector returns,” the statement said.
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