CBN Data Shows Strongest Foreign Direct Investment Inflow of the Year Amid Improved External Position
Foreign Direct Investment (FDI) inflows into Nigeria surged sharply in the third quarter of 2025, rising to $720 million, a dramatic increase from the $90 million recorded in the previous quarter, according to new data released by the Central Bank of Nigeria (CBN).
The increase represents a 700 per cent quarter-on-quarter growth, marking the strongest FDI performance so far in 2025, based on the CBN’s Balance of Payments (BoP) Highlights for the period.
On a year-on-year basis, the inflow also exceeded the $570 million recorded in the third quarter of 2024, reflecting a 26.3 per cent annual increase.
CBN figures show that direct investment liabilities, which measure foreign investors’ equity participation and reinvested earnings in the Nigerian economy, stood at $0.72 billion in Q3 2025, compared with just $0.09 billion in Q2.
“Direct investment into the economy recorded a much higher inflow of US$0.72 billion in Q3 2025, compared with US$0.09 billion in Q2 2025,” the report stated.
The rebound comes against the backdrop of prolonged concerns over Nigeria’s investment climate, including macroeconomic volatility, foreign exchange pressures and policy uncertainty that had weighed on capital inflows in recent years.
The improvement in FDI coincided with stronger external-sector performance during the quarter. Nigeria recorded an overall balance-of-payments surplus of $4.60 billion, while external reserves increased to $42.77 billion by the end of September 2025, up from $37.81 billion at the end of June.
The financial account also shifted to a net lending position of $0.32 billion, compared with net borrowing of $6.90 billion in Q2, indicating increased accumulation of foreign assets.
In contrast, portfolio investment inflows declined to $2.51 billion in Q3 from $5.28 billion in the previous quarter. Analysts say this suggests a moderation in short-term capital flows, even as longer-term equity investments strengthened.
The CBN attributed movements in the financial account to higher direct investment inflows, earlier increased participation in domestic financial instruments and stronger reserve asset accumulation.
FDI is widely regarded as a more reliable indicator of investor confidence, as it reflects long-term commitments such as equity ownership and reinvestment of earnings rather than short-term speculative flows.
While Nigeria’s FDI levels remain modest relative to the size of its economy and historical benchmarks, the sharp rebound in Q3 marks a notable shift from the subdued inflows recorded over several quarters.
However, the data also points to continued challenges. Repatriation of reinvested earnings by domestic banks on foreign assets contributed to a primary income deficit of $2.95 billion during the quarter, underscoring the persistent impact of profit outflows on the current account.
The rise in FDI occurred alongside a current account surplus of $3.42 billion, supported largely by higher oil and refined-product export earnings, as well as steady diaspora remittances.
Crude oil export receipts climbed to $8.45 billion, while refined petroleum product exports increased to $2.29 billion. The CBN also reported a continued decline in refined fuel imports, easing pressure on foreign exchange demand.
These developments helped boost foreign exchange liquidity and strengthen reserves key factors that influence foreign investors’ willingness to commit long-term capital.
Nigeria has struggled with structurally weak FDI inflows in recent years, driven by currency instability, infrastructure gaps, security challenges and policy uncertainty. Earlier data showed that FDI fell by 19 per cent to $250 million in Q1 2025, down from $310 million in the preceding quarter.
The sharp turnaround in Q3 2025, however, signals a renewed appetite for risk among foreign investors, likely supported by ongoing foreign exchange reforms, fiscal and monetary policy adjustments, and improved oil-sector earnings.
Whether the rebound can be sustained will depend on continued policy consistency, macroeconomic stability and further improvements in the investment climate.
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