Nigeria was only able to attract foreign direct investment (FDI), valued at $2.15 billion out of a total capital importation of $44.76 billion that entered the country in the last four years covering 2022 to 2025.
The figure which is just 4.8 per cent of the total capital imported during the period, is in sharp contrast to the $31.70 billion attracted through portfolio investments.
Analysis of Nigeria’s capital importation between 2022 and 2025 as provided by the National Bureau of Statistics (NBS), shows that in the first quarter (Q1) 2022, out of a total foreign capital inflows of $1.57 billion, FDI was $154.97 million, or 9.85 per cent, as against $957.58 million or 60.87 per cent from FPI. In the second quarter (Q2), 2022, FDI accounted for $147.16 million, 9.58 per cent of a total capital importation of $1.54 billion, while FPI brought in a lion’s share of $757.32 million, 49.33 per cent.
In the third quarter, FDI inflows fell to $81.72 million (7.05 per cent) of total inflows of $1.16 billion with FPI accounting for $442.08 million (38.12 per cent.
In Q4 2022, total inflow was $1.06 billion, FDI contributed $84.23 million, 7.94 per cent, FPI $285.26 million, 26.89 per cent.
In Q1 2023 out of a total inflow of $1.13 billion the share of FDI was $47.60 million or 4.20 per cent, while FPI accounted for $649.28 million or 57.32 per cent. The second quarter saw a total foreign capital inflow of $1.03 billion with FDI contributing $86.03 million (8.35 per cent, and FPI bringing in $106.85 million (10.37 per cent).
Under the present administration which started effectively in the last month of the second quarter 2023, FDI has suffered its worst performance in recent years, arising from the shock of the administration’s economic reform programme. After contributing $59.77 million or 9.13 per cent of $654.65 million total capital inflows in Q3 2023 and $183.97 million or 16.90 per cent of $1.09 billion in Q4 2023, it dropped significantly to $119.18 million or 3.53 per cent of $3.376 billion inflows in Q1 2024 at a time FPI contributed $2.075 billion (61.48 per cent).
In Q2 2024, the situation became worse with FDI contributing a mere $29.83 million (1.15 per cent) of total inflows of $2.60 billion. There was a bit of an improvement in Q3 2024 when FDI contribution rose to $103.82 million (8.29 per cent) of total $1.25 billion capital importation.
The upward trajectory was sustained in Q4 2024 with FDI accounting for $421.88 million (8.29 per cent) of total inflows of $5.09 billion with FPI drawing $3.99 billion, 78.58 per cent during the quarter.
Throughout 2025, despite the relative stability that is returning to the system, FDI still struggled, attracting just $126.29 million (2.24 per cent) of $5.64 billion foreign capital that came into the country in Q1 2025. Conversely FPI attracted $5.20 billion, or 92.25 per cent in the same quarter. In Q2 2025, total inflows was $5.120 billion, FDI contributed $142.67 million (2.79 per cent), FPI $4.20 billion, 82.02 per cent. Q3 2025 witnessed slight improvement as FDI inched up to $296.25 million, or 4.93 per cent of the total $6.01 billion foreign capital inflows, but FPI maintained its dominance with $4.85 billion, 80.70 per cent contribution. The improvement continued in Q4 2025 which saw FDI contributing $357.80 million, or 5.55 per cent of $6.44 billion total foreign capital inflows, leaving FPI with a commanding lead of $5.49 billion, 85.14 per cent.
Essentially, Nigeria’s economy in recent years is dominated by portfolio investors with what experts describe as hot money, because though it boosts the financial market, especially the capital market, investors can easily pull out at the slightest sign of a hostile environment.
FDI, which is a cross-border investment where an entity based in one country establishes a lasting interest and significant management control over an enterprise in another country, involves active investment, such as setting up subsidiaries, mergers, or joint ventures. Experts believe that increasing FDI, which involves investing in long-term assets like creating or acquiring a manufacturing facility, is the most important to Nigeria.
Professor Godwin Oyedokun of Lead City University, Ibadan said part of the reason Nigeria is experiencing poor FDI inflows is low investor confidence.
“Nigeria’s economy is considered to be volatile, especially the unstable foreign exchange issues”, he said. “There is also the case of widespread insecurity in the country. No investor would want to put his money where his life and the life of his workers are threatened.”
He noted that beyond forex and insecurity issues, there is also the problem of poor infrastructure, particularly epileptic power supply which has become a major input cost for businesses. According to the Manufacturers Association of Nigeria (MAN), he said, power constitutes about 30-40 per cent of production costs particularly in the manufacturing sector.
In 2025 alone, manufacturers said they spent over N1.5 trillion on alternative power sources like diesel and generators due to unreliable national grid supply. This is also one of the reasons for the high cost of manufactured goods in Nigeria with unsold inventory hitting as high as N1.04 trillion as of the first half of 2025.
Oyedokun said addressing key barriers such as streamlining regulations through the Nigerian Investment Promotion Council (NIPC) to cut red tape and ensure transparent enforcement, checking corruption, ensuring policy consistency, and treating foreign and local firms equally to build investor confidence, as well as strengthening the legal system while prioritising the provision of critical infrastructure such as power and good road network, will make the country more attractive for investors, especially foreign investors.