September 29, 2025

by FBNQuest Research

The recently released Central Bank of Nigeria’s (CBN) monthly economic report shows that capital inflow declined to US$0.79bn in April 2025, down from US$1.17bn recorded in the previous month. However, on a year-on-year (YoY) basis, imported capital showed modest improvement compared with the US$0.77bn recorded in April 2024. Although the CBN’s data is lagged, it offers a more detailed and comprehensive view of foreign capital inflow into the Nigerian economy compared with FX flows figures compiled by FMDQ. The data from the CBN captures a wider range of imported capital, including foreign direct investment (FDI), portfolio investments, and other financial transactions across multiple channels.

• Returning to the data, the sharp drop in overall capital inflow was primarily driven by a slowdown in foreign portfolio activity during the review month.
• FPIs, which typically dominate the share 91% of total capital inflow, decreased by -33% month-on-month (MoM) to US$0.72bn in April 2025.
• The sharp m/m decline can be attributed to subdued interest in fixed-income securities due to global risk-off sentiment, following heightened uncertainty arising from President Trump’s aggressive tariff policies.  
• FDI inflows remained subdued, reflecting ongoing concerns about macroeconomic stability. In April, FDI inflows declined to a modest US$0.01bn, down from US$0.04bn in the previous month.  
• Other investment inflows, primarily consisting of loans, recorded a slight uptick in April, rising to US$0.07bn from US$0.06bn in the previous month.  
• The banking sector remained the top recipient of capital inflows, attracting US$0.49bn, which accounted for 61.7% of the total. This was followed by the financing sector, which received US$0.23bn, representing 29.0% of total inflows.
• By country of origin, the UK was the leading source of capital inflow in April, contributing US$0.39bn, or 46.0% of the total. South Africa followed with US$0.20bn in capital inflows.
• By destination, Lagos State emerged as the major recipient of foreign capital inflows in April, attracting approximately US$0.73bn, accounting for approximately 92.6% of the total inflows.
• Lagos State remains the preferred destination for foreign investors, driven by its vibrant commercial and financial activity, supported by a high concentration of multinational firms, financial institutions, and diverse investment opportunities across key sectors.
• With respect to capital outflows, the value dropped to US$2.04bn, down from US$2.15bn in the previous month.
• Looking ahead, recent data indicate a renewed interest from offshore investors, driven by elevated interest rates.  
• This resurgence in foreign participation has contributed to a notable boost in the nation’s external reserves.
• Consequently, the external reserves position rose by US$1.9bn month-month (MoM), reaching US$41.3bn as of the end of August 2025.