Nigeria’s FDI crashes by 70% in three months

Foreign Direct Investment (FDI) into Nigeria dropped sharply by 70.06% quarter-on-quarter to $126.29m in Q1 2025, from $421.88m in Q4 2024, according to the National Bureau of Statistics’ latest Capital Importation report.

The slump in FDI comes despite an overall rise in capital inflows, highlighting a preference among foreign investors for short-term, high-yield financial instruments over long-term commitments to the Nigerian economy. Year-on-year, FDI recorded a modest 5.97% increase from $119.18m in Q1 2024.

FDI accounted for just 2.24% of total capital imports in Q1 2025, compared with 8.29% in Q4 2024 and 3.53% in Q1 2024. Total capital inflows rose to $5.64bn from $5.09bn in the previous quarter and $3.38bn a year earlier, driven largely by money market instruments—particularly government bonds and Treasury bills—which absorbed over 90% of inflows.

Equity investments, the main driver of FDI, stood at $124.31m, down 70.36% from $419.41m in Q4 2024. Other capital components contributed $1.98m.

The manufacturing sector saw inflows fall 32.31% year-on-year to $129.92m, with its share of total capital imports dropping from 5.68% in Q1 2024 to 2.30% in Q1 2025. Sector performance has been weakened by foreign exchange volatility, high energy costs, and reduced consumer demand following economic reforms.

Economists say the decline underscores persistent structural and macroeconomic challenges. Dr Muda Yusuf of the Centre for Promotion of Private Enterprise said investor caution remains high, though improving stability could support a recovery in the coming quarters. Lagos-based economist Adewale Abimbola noted that macroeconomic gains in Q2—such as exchange rate stability and easing inflation—may influence future FDI trends.