The Lagos Chamber of Commerce and Industry (LCCI) has raised concerns over the continued decline in foreign direct investment (FDI) in Nigeria’s real sector, warning that the imbalance in capital inflows poses long-term risks to economic growth, industrialisation, and job creation.
In a statement issued on Thursday, the Director-General of LCCI, Dr. Chinyere Almona, said the latest figures from the National Bureau of Statistics (NBS) revealed structural weaknesses that continue to discourage investors from making long-term commitments.
Almona noted that while Nigeria recorded $5.64 billion in capital inflows in Q1 2025, representing a 67 per cent year-on-year rise and an 11 per cent increase compared to the previous quarter, the quality of inflows was worrying.
According to her, over 90 per cent of the inflows were portfolio investments, which are short-term speculative funds attracted to government securities due to high yields.
By contrast, FDI plunged to just $126.29 million, a sharp 70 per cent drop from the previous quarter, accounting for only 2.24 per cent of total inflows.
“The structure of these inflows underscores investors’ caution in committing long-term capital.
Nigeria’s over-reliance on short-term portfolio investments is unsustainable and leaves the economy vulnerable to capital flight,” Almona warned.
The LCCI expressed particular concern about declining inflows into the manufacturing sector, which attracted only $129.92 million in Q1 2025.
This figure represents a 32 per cent drop compared to the same period in 2024 and highlights a growing investor reluctance to channel funds into Nigeria’s productive industries.
Almona said the weak interest in manufacturing reflects persistent challenges such as:
Forex liquidity shortages
Rising energy costs
Logistics inefficiencies
Frequent job losses
Regulatory and operational uncertainties
These factors, she noted, have forced several multinationals to either scale back operations or exit Nigeria in recent years, further weakening the real sector’s contribution to GDP.
The Chamber acknowledged recent improvements in inflation, with headline inflation easing to 21.88 per cent in July 2025, down from 22.22 per cent in June and significantly lower than 33.40 per cent recorded in July 2024.
However, Almona cautioned that the month-on-month inflation rate of 1.99 per cent showed that prices were still rising in real terms for households and businesses.
She also highlighted that food inflation remained high at 22.74 per cent year-on-year, disproportionately affecting rural communities where price increases are sharper than in urban centres.
The LCCI urged the Federal Government to adopt deliberate strategies to attract productive investments into value-adding sectors. Almona listed key areas requiring urgent reform:
Stabilising forex liquidity through improved non-oil export earnings.
Reducing energy costs and improving electricity supply to industries.
Addressing logistics and infrastructure deficits that increase production costs.
Removing business process bottlenecks around licensing, registration, and taxation.
Expanding access to affordable credit for manufacturers and SMEs.
“We need interventions that support more productive economic activities, create jobs, and allow businesses to thrive in an enabling environment,” Almona stressed.
Analysts believe that Nigeria’s continued dependence on volatile portfolio inflows is a risky strategy, as such investments can exit rapidly in response to global shocks, leaving the economy vulnerable.
By contrast, FDI brings more stability, creating jobs, transferring technology, and driving industrial competitiveness.
The LCCI urged the government to consolidate the recent macroeconomic stability gains, rebuild investor confidence, and reposition the real sector as the engine of long-term growth.
“While the easing of inflation and the rise in capital inflows are positive signs, Nigeria must not lose sight of the urgent need to attract and retain long-term, productive investments.
Without deliberate action, our economy will remain fragile, households will continue to struggle, and businesses will hesitate to commit capital,” Almona concluded.