Nigeria’s struggle with declining (FDI) Foreign Direct Investment has once again come under the spotlight, with members of the Central Bank of Nigeria’s Monetary Policy Committee (MPC) calling for urgent, coordinated efforts across all levels of government.
The call, captured in the Personal Statements of MPC members and published on the apex bank’s website ahead of this month’s meeting, highlights growing concern that Nigeria is losing out on long-term capital inflows despite reforms aimed at stabilising the economy.
According to the National Bureau of Statistics’ Capital Importation Report, declining FDI plunged by 70.06 per cent in Q1 2025, dropping to $126.29 million from $421.88 million recorded in Q4 2024.
The sharp fall occurred even though overall capital importation rose, suggesting that investors are showing stronger appetite for short-term, high-yield portfolio investments than for long-term commitments that boost industrial capacity and job creation.
Analysts warn that this sustained pattern of declining FDI reflects structural challenges — from security risks to regulatory uncertainty — that undermine Nigeria’s appeal compared with peer economies.
MPC member, Aloysius Ordu, voiced deep concern about the country’s performance. Citing data from the United Nations Centre on Trade and Development, he noted that Nigeria attracted just $1 billion in FDI in 2024, far below comparable economies.
“Indonesia pulled in $24 billion, India $28 billion, Egypt $46 billion, and Brazil $59 billion during the same year,” he stated.
“Clearly, the task of attracting inward investments into Nigeria must not rest on the CBN alone.
A whole-of-government approach is urgently needed, including active involvement of the Ministries of Trade and Industry, Solid Minerals, Digital Economy, Finance, Planning, Agriculture, and security agencies.”
Ordu argued that a coordinated strategy to reverse declining FDI would not only restore investor confidence but also help Nigeria achieve its ambition of building a $1 trillion economy while creating millions of jobs for its youthful population.
Not all MPC members painted a completely bleak picture.
Another member, Lydia Jafiya, noted that certain reforms were beginning to yield results, with inflows targeting strategic sectors like oil and gas.
“There is a need to strengthen positive real interest rates to align with global conditions, leading to improved capital flow and competitiveness,” she said.
“The reforms have ushered in transparency, competitiveness, and an improved business environment.
These changes are gradually attracting resources in FDI inflows, particularly in the energy sector.”
Jafiya stressed that fiscal sustainability and private sector participation remain crucial, adding that the government’s ongoing structural reforms could, over time, reverse the trend of declining FDI if consistently implemented.
The MPC itself continues to grapple with the delicate balance between supporting growth and taming inflation.
At its July meeting, the committee voted to retain the Monetary Policy Rate at 27.50 per cent, alongside other tight monetary measures, reflecting caution against premature easing.
CBN Governor Olayemi Cardoso, in his statement at the meeting, warned that underlying inflationary pressures and an excessive money supply demanded a firm stance.
“Negative real yields in the market pose a deterrent to savings and investments in the domestic economy.
Our focus must remain on lowering inflation levels to improve the attractiveness of local assets,” he noted.
Nigeria has, however, recorded progress in disinflation. Inflation fell for the fifth straight month in August to 20.12 per cent, down from 21.88 per cent in July.
Experts believe this trend may encourage the MPC to moderate its benchmark rate before year-end, a move that could also support foreign investor sentiment.
Economists argue that while monetary policy remains critical, it cannot singlehandedly reverse the slide in FDI.
A whole-of-government approach — involving fiscal reforms, sectoral policies, infrastructure investment, and security improvement — is essential to attract sustainable capital.
Nigeria’s peers, from Egypt to India, have demonstrated that coherent, predictable, and business-friendly policies can unlock billions in long-term investment.
Without such alignment, Nigeria risks remaining overly dependent on volatile portfolio flows and short-term debt instruments.
The MPC’s call for coordinated action signals recognition that Nigeria’s investment challenges are deeply structural.
While declining FDI poses risks to growth, reforms in areas such as oil and gas, digital economy, and trade policy could serve as springboards if implemented consistently.
For now, the message from the MPC is clear: reversing declining FDI requires political will, security reforms, and an enabling environment that goes beyond the remit of the central bank.
Only then can Nigeria position itself as a truly competitive destination for global capital.
