The Nigerian Economic Summit Group has warned that Nigeria’s increasing reliance on external borrowing could pose risks to economic stability, following the country’s recent $2.35 billion Eurobond issuance.
The group disclosed this in its latest economic outlook titled “2025Q4 Capital Importation Alert”.
The group noted that while the successful return to international capital markets reflects renewed investor confidence, caution is required in accumulating foreign debt. The NESG stressed that excessive borrowing could undermine recent gains in credit ratings and weaken investor sentiment.
The warning comes as Nigeria seeks to balance fiscal needs with long-term macroeconomic stability.
What NESG is saying
The NESG emphasised the need for caution in managing Nigeria’s external debt profile.
- “Nigeria’s return to the international capital market is a positive development, but an overreliance on external borrowing poses risks.”
- “In November 2025, the government raised US$2.35 billion through a Eurobond issuance.”
- “However, sustained accumulation of external debts should be approached with caution to avoid reversing the country’s current credit rating gains and weakening investor confidence.”
The group noted that while borrowing can support fiscal needs, it must be carefully managed to avoid long-term vulnerabilities.
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The NESG also highlighted banking sector reforms as a positive development for Nigeria’s investment climate.
- The ongoing recapitalisation of banks is expected to strengthen their resilience and global competitiveness.
- “Banking-sector recapitalisation is expected to strengthen investment inflows into Nigeria, though potential gains may be tempered by downside risks.”
- Higher capital requirements could boost investor confidence, particularly among foreign and internationally licensed banks.
- The reforms are likely to attract increased capital inflows into the financial system.
However, the group warned that these gains could be offset by external and structural risks.
The NESG raised concerns about the composition of capital inflows into Nigeria and the need for structural reforms.
- Investment inflows remain concentrated in short-term financial instruments rather than productive sectors.
- Sectors such as agriculture, manufacturing, and construction continue to attract limited long-term capital.
- Structural challenges, including insecurity, infrastructure deficits, and regulatory bottlenecks, are key deterrents to investment.
- Addressing these issues is critical to attracting stable foreign direct investment and supporting economic diversification.
The group noted that without decisive reforms, Nigeria may struggle to attract sustainable investments needed for job creation and long-term growth.
Backstory
Nigeria recently returned to the international debt market after a period of cautious borrowing.
The government raised $2.35 billion through a Eurobond issuance in November 2025.
The Debt Management Office (DMO) stated that Nigeria successfully priced $2.35 billion in Eurobonds, split between two tranches: a $1.25 billion long 10-year note maturing in 2036 and a $1.10 billion long 20-year note maturing in 2046.
- The move signalled renewed investor interest in Nigeria’s economy.
- However, global geopolitical tensions, particularly in the Middle East, remain a key risk to capital inflows.
The NESG noted that countries such as the United Arab Emirates have been significant sources of investment into Nigeria.
What you should know
Nairametrics reported that Nigeria recorded a total capital importation of $6.44 billion in the fourth quarter of 2025, representing a 26.61% year-on-year increase compared to $5.09 billion recorded in the corresponding period of 2024.
A breakdown of the data shows that portfolio investment remained the dominant driver of capital inflows, accounting for $5.49 billion or 85.14% of total capital imported during the quarter.
Foreign Direct Investment (FDI) contributed $357.80 million, representing just 5.55%, while other investments stood at $599.65 million or 9.31% of total inflows.
