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Foreign direct investment in Nigeria plummeted by over 70% during the first quarter of 2025, signaling shifting priorities among global investors despite rising overall capital inflows. Fresh data from the National Bureau of Statistics (NBS) reveals FDI fell to $126.29 million between January and March 2025, a steep quarterly drop from $422.10 million in late 2024. This contrasts sharply with a broader uptick in capital imports, which surged 10.8% year-on-year to $5.64 billion—the highest Q1 total since at least 2023.

Analysts highlight growing caution as foreign capital increasingly gravitates toward short-term financial vehicles rather than long-term industrial projects. Nearly three-quarters of total inflows ($4.21 billion) targeted money market instruments like treasury bills, suggesting investors prioritize liquid, low-risk options amid Nigeria’s economic uncertainties. FDI accounted for just 2.24% of all imported capital during the quarter, down from 8.29% in late 2024 and continuing a multiyear decline in strategic investments.

While FDI showed marginal annual growth of 5.97% compared to Q1 2024 figures, the negligible share relative to total capital raises concerns about sustainable economic development. Sector experts note that prolonged reliance on short-term inflows could limit job creation and infrastructure modernization, as portfolio investments typically favor quick returns over transformative projects. The trend mirrors patterns seen in emerging markets grappling with inflation and currency instability, where foreign capital often seeks shelter in government debt instruments.

The NBS report underscores a growing dichotomy in Nigeria’s investment landscape: rising overall confidence in financial markets contrasts with waning interest in productive sectors like manufacturing and agriculture. Treasury bills and open market operations—tools used by the Central Bank of Nigeria to manage liquidity—have become unintended magnets for foreign funds, absorbing resources that might otherwise support factories, tech startups, or renewable energy initiatives.

This capital allocation pattern arrives as Nigeria implements reforms to attract industrial investments, including currency floatation efforts and tax incentives. Economists caution that while short-term inflows bolster foreign reserves and stabilize the naira temporarily, they offer limited solutions for structural challenges like unemployment and productivity gaps. The data prompts renewed debate about balancing investor confidence with policies that channel capital into sectors capable of driving inclusive, long-term growth.