As investor appetite for domestic financial instruments, particularly money market assets reached a new high, foreign capital inflows into Nigeria surged to $2.06 billion in January 2025, marking a 31 per cent increase from $1.57 billion in December 2024.
This was disclosed by the Central Bank of Nigeria (CBN) in its latest Economic Report for January posted on its official website over the weekend.
The latest figures indicate that the increase was primarily spurred by favourable returns in the Nigerian financial market.
A breakdown of the inflow data shows that portfolio investments dominated, rising sharply to $1.85 billion in January from $1.23 billion in December.
This accounted for 89.6 per cent of the total inflows, as investors piled into short-term debt instruments amid attractive yields.
According to the CBN: “Capital inflow increased due to favourable returns in the domestic financial market. Capital inflow rose to $2.06 billion, from $1.57 billion in December 2024.
“A breakdown by type of investment showed that portfolio investment inflow increased to $1.85 billion, from $1.23 billion due, mainly, to higher purchases of money market instruments.
“On the contrary, foreign direct investment declined to $0.07 billion from $0.12 billion in December 2024. Other investments, mainly loans, also decreased to $0.14 billion, from $0.22 billion in the preceding month.”
In terms of share, portfolio investment inflow constituted 89.60 per cent, while ‘other investment’ and direct investment accounted for 7.01 and 3.39 per cent, respectively.
“Analysis of capital importation by sector showed the banking sector as the highest recipient of foreign capital, accounting for 45.22 per cent of total inflow. This was followed by the financing sector 44.32 per cent, telecommunication, 3.86 per cent, production and manufacturing sector 3.01 per cent, shares 1.57 per cent, and trading 1.43 per cent, while other sectors accounted for the balance,” the CBN said.
It added: “Capital inflow by originating country showed that the UK was the major source of capital, accounting for 65.65 per cent of the total.
“This was followed by the United States, 8.15 per cent, Republic of South Africa 7.66 per cent; United Arab Emirates 7.18 per cent; Mauritius 2.87 per cent; Belgium was 2.28 per cent and other countries accounted for the balance.
“Capital importation by destination indicated that the Federal Capital Territory was the highest recipient, with a share of 62.88 per cent of total inflow. This was followed by Lagos 36.59 per cent, Ogun 0.04 per cent and Kano 0.01 per cent. Other destinations accounted for the balance.”
Capital outflow, it added, increased in January 2025 driven by higher loan repayments and capital reversals. “Capital outflow rose to $1.20 billion, from $1.06 billion in the preceding month.
“A disaggregation showed that loan repayments and capital reversals increased by 27.45 and 3.85 per cent, respectively, to $0.65 billion and $0.54 billion. Repatriation of dividends, however, declined by 66.67 per cent to $0.01 billion.
“In terms of share in total outflow, repayment of loans constituted 54.33 per cent, followed by capital reversals and repatriation of dividends at 44.81 and 0.85 per cent, respectively. Other forms of outflow accounted for the balance,” the CBN said.
Nume Ekeghe
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