Nigeria attracted a substantial surge in foreign portfolio investment in the third quarter of 2025 as elevated domestic yields and improved macroeconomic stability drew global capital into its financial markets.
Data from the National Bureau of Statistics (NBS) show that Foreign Portfolio Investments (FPIs) rose to $4.85 billion in Q3 2025, representing a 439.74 percent year-on-year increase and a 15.57 percent quarter-on-quarter rise.
Portfolio flows accounted for 80.70 percent of total capital importation during the period, reinforcing their position as the dominant source of foreign inflows.
Total capital importation climbed to $6.01 billion in Q3 2025, the highest level recorded in six years, reflecting a 380.16 percent year-on-year increase and a 17.46 percent rebound from the contraction recorded in Q2 2025.
The strong recovery was primarily supported by intensified activity in the fixed income market.
The renewed appetite for Nigerian assets was underpinned by positive real yields, moderating inflation expectations and relative currency stability.
With the Monetary Policy Rate (MPR) at 27 percent, Nigeria continues to offer one of the most attractive yield environments globally.
The country’s policy rate remains significantly higher than those in advanced economies such as the United States, Euro Area and United Kingdom, as well as several African peers including South Africa, Kenya and Ghana.
Within the portfolio segment, money market instruments maintained the largest share at 60.78 percent. However, inflows into money market assets declined 17.71 percent quarter-on-quarter as investors rotated into longer-duration instruments.
The shift reflects growing expectations of a potential monetary policy easing cycle, prompting investors to lock in elevated yields in Federal Government of Nigeria (FGN) bonds and selectively increase exposure to equities.
Bond inflows rose significantly during the quarter, with their contribution to total portfolio investments rising to 32.46 percent from 11.18 percent in Q2 2025.
In absolute terms, bond inflows reached approximately $1.58 billion, compared to just $69.87 million in the corresponding period of 2024.
Foreign participation in the equities market also strengthened considerably. Equity inflows surged 126 percent quarter-on-quarter to $328.10 million, levels last recorded in the pre-pandemic period.
This resurgence coincided with robust domestic market performance, as the NGX All-Share Index advanced 44.80 percent year-on-year and 18.95 percent quarter-on-quarter.
Equities’ contribution to total portfolio inflows increased to 6.76 percent in Q3 2025 from 3.46 percent in Q2 2025.
The improvement signals renewed foreign investor confidence in Nigeria’s capital market, supported by strong banking sector profitability, foreign exchange reforms and an improved corporate earnings outlook.
Sectoral data indicate that the banking sector attracted the largest share of total capital inflows, receiving $3.14 billion during the quarter, representing a 442.33 percent year-on-year increase.
The financing sector followed with $1.86 billion, accounting for 30.85 percent of total inflows.
The manufacturing sector recorded inflows of $261.35 million, equivalent to 4.35 percent of total capital importation, supported by exchange rate appreciation and improved foreign exchange liquidity.
The naira strengthened by 3.68 percent against the U.S. dollar during the quarter, contributing to improved investor sentiment.
Telecommunications inflows also rose sharply to $208.51 million from $14.74 million in the preceding quarter.
By country of origin, the United Kingdom remained the largest source of capital inflows, accounting for 48.80 percent of total importation, equivalent to $2.94 billion.
The United States contributed 15.80 percent followed by South Africa at 12.87 percent, Mauritius at 7.51 percent and the Netherlands at 4.70 percent.
The sustained strength of portfolio flows highlights the importance of yield differentials in shaping capital allocation decisions.
Nigeria’s elevated interest rate environment, combined with improving macroeconomic indicators, continues to attract short- to medium-term capital.
However, analysts caution that portfolio flows remain sensitive to global financial conditions and exchange rate stability.
While current inflows reflect renewed investor confidence, maintaining macroeconomic discipline and ensuring sustained foreign exchange liquidity will be critical to preserving momentum in subsequent quarters.
