FDI in Nigeria Crashes 70% in Just Three Months as Foreign Investors Favour Hot Money

Nigeria’s inflow of Foreign Direct Investment (FDI) plummeted by a staggering 70.06% quarter-on-quarter, dropping from US $421.88 million in Q4 2024 to just $126.29 million in Q1 2025. This sharp decline was confirmed in the latest Capital Importation report by the National Bureau of Statistics (NBS) and covered by Nairametrics .

Despite a modest 5.97% year-on-year increase—from US $119.18 million in Q1 2024—the collapse remains a serious setback for long-term investment confidence .

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Key Highlights

Short-Term Investment Surges, Productive Investment Implodes

Total capital inflows rose to US $5.64 billion in Q1 2025, up from $5.09 billion in Q4 2024. However, over 90% of these funds were allocated to short-term money market instruments—such as government bonds and treasury bills—rather than into long-term ventures like equity or infrastructure .

FDI’s Share Plummets

FDI accounted for only 2.24% of total capital importation in Q1 2025, a sharp fall from 8.29% in Q4 2024 and 3.53% in Q1 2024 .

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What It Means

The sharp fall in FDI underscores a critical shift in investor sentiment toward Nigeria—away from long-term, stable investments toward speculative, short-term gains. While the surge in hot money provides temporary liquidity, it poses significant risks:

Volatility Risk: Hot money is highly reactive and can withdraw swiftly in response to policy shifts or global shocks.

Economic Impact: Diminished long-term investment stifles infrastructure development, employment growth, and sustainable economic expansion.

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Source

“FDI crashes by 70% as foreign investors opt for hot money in Nigeria” — Nairametrics, August 6, 2025

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