In a strong show of investor confidence, Nigeria’s banking sector attracted an impressive $3.13 billion in foreign capital inflows in the first quarter (Q1) of 2025, representing 55.44% of the total capital importation into the country, according to the latest data from the National Bureau of Statistics (NBS).
The total capital importation into Nigeria during the period surged to $5.64 billion, marking a 67.12% year-on-year increase compared to the $3.38 billion recorded in Q1 2024. The growth trend also extended quarter-on-quarter, rising by 10.86% from $5.09 billion in Q4 2024.
The banking sector emerged as the dominant recipient of foreign capital, far outpacing other sectors. Following closely behind were the financing industry with $2.10 billion (37.18%) and the production and manufacturing sector, which lagged significantly at $129.92 million (2.30%).
Portfolio investment remained the key driver of the capital surge, contributing $5.20 billion or 92.25% of the total inflow. Other investment forms totaled $311.17 million, while foreign direct investment (FDI) remained subdued at $126.29 million, continuing a concerning trend of low long-term investment.
The United Kingdom maintained its position as Nigeria’s top source of capital inflow, contributing $3.68 billion (65.26%). South Africa and Mauritius followed with $501.29 million and $394.51 million respectively.
Abuja led as the preferred destination for capital, attracting $3.05 billion (54.11%), while Lagos followed with $2.56 billion (45.44%). Other states such as Ogun, Oyo, and Kaduna received significantly lower inflows at $7.95 million, $7.81 million, and $4.06 million respectively.
Among the leading financial institutions channeling the funds, Standard Chartered Bank Nigeria dominated with $2.10 billion (37.29%), followed by Stanbic IBTC Bank with $1.40 billion (24.78%) and Citibank Nigeria with $1.05 billion (18.66%).
Despite the overall increase in capital importation, the manufacturing sector continued to show signs of distress. Capital inflows into the sector dropped by 32.31% year-on-year, from $191.92 million in Q1 2024 to $129.92 million in Q1 2025.
This decline highlights persistent investor wariness about the sector, which has struggled under the weight of macroeconomic reforms introduced by President Bola Tinubu’s administration. The reforms, while aimed at long-term stabilization, have triggered short-term challenges such as inflation, forex volatility, and weakened consumer demand.
The Manufacturers Association of Nigeria (MAN) reported that the value of unsold goods rose by 87.5% to N2.14 trillion in 2024. Although some recovery is underway, with a 27.9% decline in inventory recorded in H1 2025, concerns about energy costs, forex availability, and general policy uncertainty continue to dampen investor sentiment.
According to Dr. Muda Yusuf, Director of the Centre for the Promotion of Private Enterprise (CPPE), “The manufacturing sector is still reeling from the shocks of the recent economic reforms. Until macroeconomic conditions improve further and confidence is restored, FDI into manufacturing may remain weak.”
Despite the slump, some sub-sectors within manufacturing showed promise. Oil refining grew by 11.51%, chemicals and pharmaceuticals by 5.33%, cement by 4.94%, and food and beverages by 3.48%, suggesting that targeted investments in high-performing areas could gradually attract more foreign capital.
The Q1 data signals a return of short-term investor confidence in Nigeria’s financial sector, especially in banking. However, the continued weakness in FDI and manufacturing capital inflow suggests that broader macroeconomic reforms need to deliver clearer results for sustainable investment.
Stakeholders say improved clarity on policies, easing of foreign exchange constraints, and infrastructure improvements could help reposition the real sector for increased foreign participation.
As Nigeria navigates its reform-driven recovery, the surge in portfolio investments may offer short-term relief, but a robust and inclusive economic strategy is needed to attract durable capital for long-term growth.