Foreign direct investment (FDI) into Nigeria surged dramatically in the third quarter (Q3) of 2025, rising by about 700 percent compared to the previous quarter, according to the latest balance of payments data released by the Central Bank of Nigeria (CBN). The sharp increase signals a rebound in long-term investor interest in Africa’s largest oil producer at a time when policymakers are working to rebuild confidence in the economy.
FDI represents money coming into the country to establish or expand physical and productive assets such as factories, infrastructure or service operations. It is typically regarded as ‘patient capital’ because investors committing these funds usually take a long-term view and are less likely to withdraw them in the face of short-term shocks.
The CBN report showed that FDI inflows jumped to $0.72 billion in Q3 of 2025, up from just $0.09 billion in the second quarter (Q2). Though still modest compared to pre-reform highs, the increase highlights growing appetite for fixed investments that contribute directly to economic output and job creation.
However, the picture was more mixed on the portfolio investment side. Portfolio inflows, representing funds invested in financial instruments such as government bonds, treasury bills and equities, fell significantly to $2.51 billion, down from $5.28 billion in the previous quarter, representing a contraction of 52.5 percent. These inflows are often described as ‘hot money’ because they can move rapidly across borders as investors chase the highest short-term returns. Unlike FDI, portfolio flows can exit just as quickly as they arrive, making them a more volatile source of capital.
The fall in portfolio inflows alongside the rise in FDI suggests that investors may be shifting preference toward longer-term positions in Nigeria rather than short speculative plays, although global financial conditions and shifting risk sentiment are also likely to have influenced flows during the quarter.
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Beyond investment trends, the balance of payments report underscored continued strength in Nigeria’s external trade position. The current account remained in surplus, supported largely by higher export earnings. Crude oil export receipts increased to $8.45 billion in Q3 of 2025 from $7.66 billion in Q2, an increase of 10.31 percent. Exports of refined petroleum products also rose sharply, climbing to $2.29 billion from $1.59 billion, representing a 44.03 percent increase.
At the same time, imports of refined petroleum products fell by 12.70 percent to $1.65 billion, down from $1.89 billion in the previous quarter. This trend suggests that Nigeria is gradually edging away from its long-standing dependence on imported fuel, reflecting the impact of improvements in domestic refining capacity.
Overall, the goods account posted a surplus of $4.94 billion, slightly lower than the $5.28 billion recorded in Q2, but higher than the $3.93 billion surplus in the same period of 2024. Total exports rose to $15.24 billion in Q3 from $14.90 billion previously, driven mostly by crude and refined petroleum shipments.
However, the services and income components of the current account continued to exert pressure. Net outflows in the services account widened to $4.07 billion, reflecting higher payments for transport, travel, insurance, ICT, and other business services. The primary income account deficit also increased sharply to $2.95 billion, up from $1.25 billion in the previous quarter, largely because domestic banks repatriated reinvested earnings from foreign investments, particularly direct investments abroad.
The secondary income account, which includes remittances, remained comfortably in surplus at $5.50 billion, although this was marginally lower than the $5.51 billion recorded in Q2. Personal remittances from Nigerians abroad slipped slightly to $5.24 billion, down from $5.30 billion, but still provided significant support to household incomes and foreign exchange supply.
Within the financial account, the CBN reported mixed trends. While portfolio investment liabilities recorded $2.51 billion in inflows, this was much weaker than the previous quarter. Direct investment inflows, by contrast, rose strongly to $0.72 billion. There was also a net reversal in direct investment assets of $0.16 billion, meaning Nigerian investments abroad declined during the quarter. Portfolio investment assets saw an outflow of $0.82 billion, while other investment liabilities brought in $0.84 billion, with other investment assets reversing by $0.86 billion.
Rising crude and refined product exports, a narrowing fuel import bill, and stronger FDI inflows point to improving structural dynamics. But persistent service-related outflows, higher income debits, and weaker portfolio inflows highlight ongoing vulnerabilities.
Still, the standout message from the report is that long-term investment interest appears to be returning, even as short-term speculative flows moderate. For policymakers, the challenge will be to consolidate these gains by strengthening macroeconomic stability, deepening structural reforms and ensuring that rising investment translates into broad-based growth, jobs and improved living standards, analysts say.
