ABUJA, Nigeria (VOICE OF NAIJA) – Foreign direct investment into Nigeria dropped sharply in January 2026, even as overall capital inflows surged, with foreign investors showing a stronger preference for bonds and money market instruments over long-term investments.
According to the latest Economic Report released by the Central Bank of Nigeria, FDI declined by 80 per cent to $30m in January from $150m recorded in December 2025.
In contrast, foreign portfolio investment rose significantly to $3.37bn from $940m during the same period, highlighting growing investor interest in debt securities.
The apex bank stated, “Direct investment fell by 80.0 per cent to $0.03 billion in the review period.”
Despite the decline in direct investment, the CBN reported a substantial increase in total capital inflows into the economy.
“The economy recorded a higher inflow of capital during the review period, driven mainly by the significant increase in portfolio investment inflow,” the report stated.
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Total capital importation climbed to $3.52bn in January 2026, up from $1.25bn in December 2025, largely due to increased foreign participation in Nigeria’s fixed-income market.
The report noted that foreign portfolio investment accounted for the bulk of the inflows.
“A disaggregation showed that inflow of foreign portfolio investment amounted to $3.37 billion, a surge from the $0.94 billion in December 2025, due to significantly higher inflows for the purchase of bonds and money market instruments,” the CBN said.
Further analysis showed that portfolio investments made up 95.72 per cent of total capital inflows during the month, while direct investment contributed just 0.77 per cent.
Other investments, largely loans, represented 3.51 per cent of total inflows and declined to $120m from $160m in the previous month.
The figures indicate that although foreign investors are increasingly returning to Nigeria’s financial markets, especially attracted by high returns on fixed-income assets, long-term investments in productive sectors remain limited.
A sectoral breakdown showed that the banking sector attracted the largest share of foreign capital, accounting for 75.15 per cent of total inflows in January.
Financing activities received 22.20 per cent, while production and manufacturing accounted for only 1.16 per cent. Investments in shares contributed 0.76 per cent, with the remaining inflows spread across other sectors.
The report also highlighted improvements in Nigeria’s external sector, driven by stronger export earnings and sustained capital inflows.
External reserves increased to $48.88bn in January 2026, providing import cover of 8.93 months for goods and services.
The naira also appreciated by 2.43 per cent at the Nigerian Foreign Exchange Market, closing at N1,416.52/$ compared to the previous month.
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The CBN report suggests that while improved macroeconomic conditions and exchange rate stability have boosted investor confidence in Nigeria’s financial markets, most foreign investors continue to favour liquid debt instruments rather than long-term commitments to the real sector.
President Bola Tinubu had earlier expressed confidence that Nigeria would attract nearly $20bn in foreign direct investment in 2026, attributing the projection to reforms aimed at removing regulatory bottlenecks, stabilising the economy, and improving transparency.
Tinubu said, “Removing all the bottlenecks gives you the necessary incentives for direct foreign investment into the country. This year alone, I can beat my chest that Nigeria is attracting close to $20bn in foreign direct investments.”
Earlier data from the National Bureau of Statistics showed that foreign direct investment accounted for less than four per cent of total capital imported into Nigeria in 2025, despite a sharp increase in overall foreign inflows.
According to the NBS, total capital importation rose to $23.22bn in 2025 from $12.32bn in 2024. However, FDI contributed only $923.01m, representing 3.97 per cent of the total.
This compared with $674.71m in 2024, when FDI accounted for 5.48 per cent of total inflows, indicating that while direct investment increased in value, its share of overall capital importation declined as portfolio and other investments grew more rapidly.