Nigeria: Capital importation to reach $19.3bln in 2025, Afrinvest forecasts
The investment banking and advisory firm attributed the upbeat outlook to a favourable domestic interest rate environment, relative price and currency stability, shifting global investment sentiment amid ongoing trade tensions, and the possibility of a U.S. interest rate cut later in the year.
The projection built on the $5.64 billion inflow recorded in Q1 2025—the strongest quarterly figure in five years—and, if realised, would underscore Nigeria's renewed appeal to global investors. Afrinvest noted, however, that while higher capital inflows can support currency stability and short-term economic growth, the underlying quality of the capital remains a concern.
Foreign Direct Investment (FDI), often regarded as the most stable and growth-enhancing form of capital, rose 6.0 percent year-on-year to $126.3 million in Q1 but slumped 70.1 percent quarter-on-quarter. FDI accounted for just 2.2 percent of total inflows, down from 3.5 percent in the same period last year. In contrast, other investments fell sharply by 53.3 percent q/q and 73.0 percent y/y to $311.2 million.
Afrinvest observed that the persistent decline in FDI reflects lingering structural challenges such as insecurity, weak institutions, bureaucratic bottlenecks, and high corruption perception. These factors, combined with tepid investment in non-financial sectors including manufacturing, ICT, construction, oil & gas, and transportation, temper the optimism surrounding headline capital inflow figures.
While these flows can provide immediate liquidity and foreign exchange support, they are highly sensitive to changes in domestic monetary policy, global risk sentiment, and macroeconomic shocks. Past episodes of such dependence have left the economy vulnerable to sudden capital reversals.
While Afrinvest's projection points to a potential year of robust capital inflows, the firm emphasised that Nigeria must deepen structural reforms and attract more patient, sector-diverse investments to translate foreign capital into sustainable, long-term economic development.
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