Nigeria attracted $10.37 billion in foreign capital during the first quarter of 2026, recording one of its strongest quarterly performances in recent years and signalling renewed investor interest in the country’s financial markets.
However, a closer examination of the latest capital importation data reveals that the bulk of foreign capital continued to target short-term financial assets rather than long-term productive investments, highlighting ongoing concerns about the economy’s ability to attract sustainable investment.
Latest data released by the National Bureau of Statistics (NBS) showed that total capital importation rose by 83.8 percent from $5.64 billion recorded in the corresponding period of 2025 and increased by 61 percent from $6.44 billion in the fourth quarter of 2025.
The increase reflects growing international appetite for Nigerian financial assets amid ongoing economic reforms, improving foreign exchange market conditions and attractive yields in fixed-income markets. However, economists say the composition of the inflows raises fresh questions about the sustainability of the capital surge and its ability to support long-term economic transformation.
Rather than flowing into factories, infrastructure, technology ventures or productive enterprises, most foreign capital entering Nigeria continues to target highly liquid financial assets that can be exited quickly when market conditions change.
According to the NBS report, portfolio investments accounted for $9.86 billion, representing 95.1 percent of all capital imported into the country during the quarter.
Money market instruments alone attracted $6.50 billion, while investments in bonds reached $3.23 billion. Combined, both asset classes accounted for more than 98 percent of all portfolio inflows recorded during the period.
The increase reflects investor interest in Nigeria’s high-yield environment, where elevated interest rates and improving foreign exchange liquidity have made local fixed-income assets increasingly attractive to international investors seeking returns.
Analysts say recent monetary tightening by the Central Bank of Nigeria (CBN) has contributed significantly to the renewed investor interest.
With benchmark interest rates remaining elevated and yields on treasury bills and government securities among the highest in emerging markets, foreign portfolio investors have increasingly returned to Nigeria’s financial markets after years of caution.
However, while portfolio flows can provide valuable foreign exchange liquidity and support external reserves, they are generally regarded as more volatile than foreign direct investment because they can reverse rapidly in response to changes in market sentiment.
The latest figures therefore highlight a growing divergence between investor confidence in Nigeria’s financial markets and confidence in the broader real economy.
That divergence became particularly evident in the performance of foreign direct investment.
The NBS reported that FDI inflows declined to $135.08 million in the first quarter of 2026 from $357.80 million recorded in the previous quarter.
Although the figure represented a seven percent increase compared to the same period in 2025, it accounted for only 1.3 percent of total capital importation during the quarter.
Foreign direct investment is generally regarded as one of the most valuable forms of capital inflow because it is typically associated with physical investments such as factories, infrastructure projects, industrial facilities, technology development and job creation.
Unlike portfolio investments, which can be withdrawn relatively quickly, FDI tends to remain invested for longer periods and often contributes directly to economic productivity.
The latest data indicates that while international investors are increasingly willing to buy Nigerian financial assets, many remain cautious about making long-term commitments to the country’s productive sectors.
Sectoral distribution of capital inflows further reinforces this trend.
The banking sector emerged as the largest recipient of foreign capital during the quarter, attracting $7.55 billion, representing 72.8 percent of total inflows.
The financing sector followed with $2.43 billion or 23.4 percent of total capital importation.
Together, both sectors accounted for more than 96 percent of all foreign capital entering Nigeria during the period.
In contrast, sectors considered critical to economic diversification received only a fraction of the inflows.
The production and manufacturing sector attracted $152.27 million, while investments in shares stood at $75.34 million.
Trading received $65.79 million, agriculture attracted $37.28 million, information technology services received $11.33 million and telecommunications attracted $7.24 million.
Oil and gas attracted just $460,000 during the quarter, despite remaining Nigeria’s largest export sector.
Construction received only $100,000, while education attracted $70,000 and health and social services recorded a mere $120,000.
The United Kingdom emerged as Nigeria’s largest foreign capital source during the quarter, contributing $5.08 billion and accounting for 49 percent of total inflows.
The United States followed with $3.18 billion, representing 30.7 percent.
South Africa contributed $983.83 million or 9.5 percent of total capital imported into the country.
Other significant contributors included Mauritius, which accounted for $390.07 million, and the United Arab Emirates, which provided $194.51 million.
The concentration of inflows from established financial centres highlights the extent to which global institutional investors are driving the recent surge in portfolio activity.
Within Nigeria’s banking system, a handful of financial institutions handled most of the incoming capital.
Standard Chartered Bank Nigeria emerged as the leading receiving institution, processing $4.41 billion or 42.6 percent of total capital importation.
Stanbic IBTC Bank followed with $2.78 billion, representing 26.8 percent of total inflows.
Rand Merchant Bank handled $930.82 million, while Citibank Nigeria and Access Bank processed $782.84 million and $710.03 million respectively.
Other major receiving banks included First Bank of Nigeria, Guaranty Trust Bank, Zenith Bank, FCMB, Ecobank and Fidelity Bank.
