Foreign direct investment (FDI) into Nigeria plunged by 80 per cent to just $30 million (about $0.03 billion) in January 2026, underscoring persistent investor caution toward long-term productive investments even as foreign capital inflows into the country surged.
According to the latest Economic Report of the Central Bank of Nigeria (CBN), the sharp decline came as foreign investors increasingly favoured bonds and money market instruments, with foreign portfolio investment rising to $3.37 billion in January from $940 million in December 2025.
The trend highlights a growing preference for short-term debt assets over direct investments in businesses and productive sectors of the economy.
According to the CBN,
“Direct investment fell by 80.0 per cent to $0.03 billion in the review period.” The apex bank, however, noted that total capital inflow into the economy rose significantly during the month.
“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.
Overall capital importation climbed to $3.52bn in January 2026, compared with $1.25bn recorded in December 2025, largely on the back of increased foreign participation in the domestic fixed-income market.
The report stated that foreign portfolio investment accounted for $3.37bn of the total inflow. “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 investment accounted for 95.72 per cent of total capital inflows during the review period, while direct investment contributed only 0.77 per cent.
Other investment, consisting mainly of loans, accounted for 3.51 per cent of total inflows and declined to $120m from $160m in the preceding month.
The figures suggest that while foreign investors are returning to Nigeria’s financial markets, particularly attracted by high yields on fixed-income securities, appetite for long-term investments in factories, infrastructure, and other productive ventures remains subdued.
Sectoral analysis in the report showed that the banking industry was the biggest beneficiary of foreign capital inflows, attracting 75.15 per cent of the total funds imported into the economy in January.
Financing activities accounted for 22.20 per cent of total inflows, while production and manufacturing received just 1.16 per cent. Investments in shares accounted for 0.76 per cent, with trading and other sectors making up the balance.
The development came amid improved performance in Nigeria’s external sector. The CBN reported that the country recorded a stronger trade position during the review period, supported by higher export earnings and sustained capital inflows.
External reserves rose to $48.88bn in January 2026, providing import cover of 8.93 months for goods and services.
The naira also appreciated by 2.43 per cent at the Nigerian Foreign Exchange Market to N1,416.52/$ from the level recorded in the preceding month.
The report suggests that although macroeconomic conditions and foreign exchange stability have encouraged increased foreign participation in Nigeria’s financial markets, investors continue to favour liquid debt instruments over long-term commitments in the real sector of the economy.
President Bola Tinubu earlier said Nigeria is on course to attract close to $20bn in foreign direct investment in 2026 alone. He attributed the figure to his administration’s systematic removal of regulatory bottlenecks, macroeconomic stabilisation, and transparency reforms.
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.”
(Source: Punch)
