The Centre for the Promotion of Private Enterprise (CPPE) has warned that the current capital flow structure exposes the economy to multiple risks despite the impressive headline growth.
CPPE gave the warning in a policy brief seen by Nairametrics on Sunday, February 22, 2026.
According to the latest report from the National Bureau of Statistics (NBS), total capital inflows rose to $6.01 billion in Q3 2025, marking a 380% year-on-year surge and a 17% quarter-on-quarter increase.
The rebound reflects improving investor confidence following macroeconomic reforms, including foreign-exchange market liberalisation, tighter monetary policy, and enhanced liquidity in the domestic financial system.
What they are saying
CPPE acknowledged that the rebound suggests policy stabilisation efforts are beginning to positively influence investor behaviour.
- “However, while the headline numbers are encouraging, a deeper examination of the structure and distribution of inflows reveals underlying vulnerabilities that must be addressed to ensure durability and long-term economic transformation.”
The think tank noted that the current structure of capital flows exposes the economy to several risks, including:
- “Sudden portfolio reversals, which coulddestabiliseexchange rates and external reserves.
- “Persistently weak FDI, reflecting unresolved structural constraints in power supply, infrastructure,logisticsefficiency, and regulatory predictability.
- “External concentration risks, increasing exposure to global financial tightening and geopolitical uncertainty.
- “Financial-system transmission risks, due to heavy reliance on a limited number of intermediary institutions.”
It cautioned that without faster structural reforms, the rebound in inflows may prove fragile.
More insights
CPPE observed that the surge in capital importation is overwhelmingly driven by portfolio investments, which accounted for more than 80% of total inflows in Q3 2025, while foreign direct investment (FDI) contributed less than 5%.
The group warned that portfolio flows are inherently volatile, reacting quickly to global interest rates, investor sentiment, and policy credibility.
While they can provide short-term liquidity and market stability, they are prone to sudden reversals.
In contrast, sustainable economic growth, job creation, and export expansion depend on long-term FDI tied to production, infrastructure, manufacturing, and technology transfer.
CPPE argued that the current inflow pattern signals cyclical financial recovery rather than structural economic transformation.
Sectoral data show that most inflows were directed to the banking and financial sectors, with limited allocation to manufacturing, infrastructure, and other productive industries.
- “This pattern underscores a persistent structural weakness: rising capital importation is not yet translating into meaningful expansion of productive capacity. Without stronger capital flows into industry, agro-processing, logistics, energy, and export-oriented manufacturing, the broader economy will see limited gains in employment, productivity, and inclusive growth.
- “Financial deepening without real-sector expansion risks creating a liquidity-driven recovery that does not fundamentally alter Nigeria’s productive base,” CPPE stated.
What you should know
According to NBS data, the banking sector attracted the largest share of inflows, receiving $3.14 billion, or 52.25% of total capital importation in Q3 2025.
The financing sector followed with $1.86 billion (30.85%), while production and manufacturing accounted for $261.35 million, representing 4.35% of total inflows.
The dominance of the banking sector highlights sustained foreign investor interest in Nigeria’s financial system, particularly in portfolio-driven transactions.
