CPPE urges shift from portfolio inflows to FDI as Q3 investment hits $6bn

Despite Nigeria’s capital importation surging to $6.01 billion in the third quarter of 2025, the Centre for the Promotion of Private Enterprise (CPPE) is urging the government to urgently shift its focus from short-term portfolio inflows to long-term Foreign Direct Investment (FDI) to drive real economic growth.

Nigeria’s capital importation in the third quarter of 2025 rose to $6.01 billion, indicating a 380 percent year-on-year increase and a 17 percent quarter-on-quarter growth, according to the National Bureau of Statistics (NBS).

Muda Yusuf, chief executive officer, CPPE, in a statement, warned that while the headline numbers are encouraging, the structure and distribution of inflows are not yet translating into meaningful expansion of productive capacity.

Yusuf stated that without stronger capital flows into industry, agro-processing, logistics, energy, and export-oriented manufacturing, the broader economy will see limited gains in employment, productivity, and inclusive growth.

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“Financial deepening without real-sector expansion risks creating a liquidity-driven recovery that does not fundamentally alter Nigeria’s productive base.

“Unless structural reforms accelerate, the present rebound may prove fragile,” he noted.

Sectoral analysis of the capital importation data showed that the bulk of inflows went into the banking and financial sectors, with only marginal allocation to manufacturing, infrastructure, and other productive activities.

Yusuf added that the resurgence in capital importation is overwhelmingly portfolio-led, stating that more than 80 percent of total inflows in Q3 2025 were portfolio investments, while foreign direct investment (FDI) accounted for less than five percent.

He said that portfolio flows provide liquidity support and can help stabilise financial markets in the short term, but are volatile and prone to sudden reversals.

“Sustainable economic growth, job creation, and export expansion depend not on short-term capital but on stable, long-horizon FDI tied to production, infrastructure, manufacturing, and technology transfer,” he said, noting that the current structure therefore reflects cyclical financial recovery rather than structural economic transformation.

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Yusuf further stated that the critical policy challenge is to convert portfolio-driven inflows into FDI-led industrial expansion, noting that macroeconomic stabilisation must now transition into deep structural competitiveness reforms.

He urged the government to deliberately incentivise capital flows into export-oriented manufacturing, agro-processing, mineral beneficiation, industrial parks, and infrastructure development.

“Without such policy direction, foreign capital will remain concentrated in short-term financial instruments rather than real economic assets.

“Diversification of capital sources is equally important. Strategic engagement with Gulf sovereign wealth funds, Asian institutional investors, and intra-African investment flows under the AfCFTA framework would broaden Nigeria’s capital base and reduce vulnerability to Western financial-cycle volatility,” Yusuf said.

He also urged the policymakers to move from liquidity-driven recovery to investment-led transformation.

“Only by converting short-term capital inflows into long-term productive investment can Nigeria achieve sustainable growth, employment expansion, export diversification, and macroeconomic resilience,” Yusuf said.