$23.2bn Inflows in 2025 by Portfolio Investors may reverse quickly …Experts

• In response to shifts in global risk appetite

BY Bonny Amadi

The dominance of portfolio investors in Nigeria’s 2025 capital importation growth has been described as a good omen that undeniably may become volatile within a short-term period.

Portfolio investors heightened their stake in Nigeria’s economy in 2025, which spiralled capital inflow to $23,2 billion.

The latest data from the National Bureau of Statistics (NBS) shows that Nigeria saw a sharp rebound in capital inflows in 2025, with total importation rising by 88.45 per cent year-on-year to $23.22 billion from $12.32 billion in the previous year.

Experts have expressed that these flows can reverse quickly in response to shifts in global risk appetite, geo political tensions, or tighter financial conditions abroad.

Events such as escalating tensions in the Middle East or a rise in global trade protectionism could easily unsettle these gains.

Cowry Research in its weekly economic review expressed that the strong recovery in capital importation reflects an improvement in Nigeria’s macroeconomic sentiment, supported by monetary policy adjustments from the Central Bank of Nigeria aimed at attracting foreign inflows.

The report added that the combination of exchange rate stability, high yields, and easing inflationary pressures since early 2025 has helped reposition the country as an attractive destination for short-term capital it cautioned, “However, beneath the surface, the story is less straightforward.

The overwhelming dominance of portfolio inflows highlights a continued reliance on short-term, and often volatile, capital. These flows can reverse quickly in response to shifts in global risk appetite, geopolitical tensions, or tighter financial conditions abroad. Events such as escalating tensions in the Middle East or a rise in glob al trade protectionism could easily unsettle these gains”

In the latest NBS released data, the overwhelming dominance of portfolio inflows highlights a continued reliance on short-term, and often volatile, capital. These flows can reverse quickly in response to shifts in global risk appetite, geopolitical tensions, or tighter financial conditions abroad. Events such as escalating tensions in the Middle East or a rise in global trade protectionism could easily unsettle these gains.

Remarkably, much of the surge in capital import was driven by short term bets of portfolio investors who leaned heavily into money market instruments, fixed income securities, and equities, drawn by elevated interest rates and a relatively stable exchange rate environment throughout the year.