Banking, financing top sectors with most foreign inflow in 10 years

Foreign investment into Nigeria over the past 10 years has been concentrated in the banking and financing sectors, reflecting investor preference for liquidity-driven industries and short-term yield opportunities.

A BusinessDay analysis of the National Bureau of Statistics (NBS) Capital Importation report’s nine-month data in the last ten years across the 30 sectors covered in the report shows that banking led the pack with over $30.5 billion, followed by financing with $16.9 billion and production/manufacturing with $4.82 billion.

Other sectors include telecoms ($2.96 billion), trading ($2.53 billion), electrical ($1.45 billion), agriculture ($1.3 billion), public administration & defence ($1.14 billion), IT services ($328 million), and insurance ($140 million).

The decade-long data shows that financial services consistently attracted the largest share of inflows, outperforming sectors such as manufacturing, telecommunications, and oil and gas in several reporting periods. 

Read more: Stocks pull back 0.48% amid overbought signals

The banking sector’s attraction for investors is linked to yield conditions. The Central Bank of Nigeria’s monetary policy rate stands at 27 percent, supporting returns in financial instruments and banking-related investments. Banks also serve as intermediaries for capital entering other sectors, particularly through international institutions operating locally.

Data from the NBS capital importation report for the third quarter of 2025 shows that Standard Chartered Bank Nigeria Limited recorded the highest inflow at $2.11 billion (35.17 percent), followed by Stanbic IBTC Bank Plc with $1.78 billion (29.75 percent) and Citibank Nigeria Limited with $561.40 million (9.33 percent).

According to the country’s GDP report for the third quarter of 2025, financial institutions recorded growth of 19.46 percent, up from 15.91 percent in the first quarter. Growth strengthened in the second quarter as higher interest rates supported net interest income, while improved credit expansion and sustained investment flows contributed to third-quarter performance.

The sector accounted for more than 52 percent of total capital importation in Q3 2025. Banking inflows reached $3.14 billion, compared with $579 million in the same period of 2024, although inflows declined by 7.7 percent relative to the preceding quarter.

“The financial sector recorded the second-highest capital inflow of $1.85 billion, or 30.85 percent, while the production and manufacturing sector recorded $261.35 million,” the NBS capital importation report stated.

The report indicates that the largest share of capital originated from the United Kingdom with $2.93 billion, representing 48.80 percent of total inflows. This was followed by the United States with $950.47 million (15.80 percent) and South Africa with $773.95 million (12.87 percent).

FDI is showing signs of recovery

Long-term FDI inflows into the broader economy remain comparatively low at the moment. Nigeria last recorded FDI above $1 billion in 2020, reflecting continued investor caution. In 2020, FDI constituted nearly 11 percent of total capital inflow. By 2024 and 2025, it had fallen to an average of 4 percent.

In 2023, the administration of Bola Tinubu introduced a series of structural reforms, including the removal of fuel subsidies, foreign exchange liberalisation, and tax reforms aimed at improving compliance and broadening the revenue base. These measures were complemented by exchange rate reforms that significantly narrowed the gap between the official and parallel market rates, improving transparency and increasing dollar availability within the formal FX market.

Data from NBS shows that these reforms are beginning to positively influence foreign direct investment. FDI inflows reached $565.2 million in the first nine months of 2025, representing the highest level recorded over the past five years and marking a significant recovery from the post-pandemic lows.

Read also: Foreign inflows into property market shrinking despite 20% price correction

An analyst at FMDA Research said the latest data points to a gradual recovery in long-term investment inflows, reflecting improving macroeconomic conditions and reform credibility. 

“FDI is showing signs of recovery, with inflows reaching $565.2 million in the first nine months of 2025, the highest level in five years. While reforms have largely supported the surge in portfolio inflows, sustained policy stability could also strengthen FDI inflows, which are critical for supporting GDP growth, job creation, and long-term economic development,” the FMDA research analyst said.