Nigeria’s FDI Plummets by 19% in Q1 2025, Falls to $250 Million — CBN Report

Nigeria experienced a 19% decrease in foreign direct investment (FDI) inflows during the first quarter of 2025, dropping to $250 million from the previous quarter’s $310 million, according to the Central Bank of Nigeria’s (CBN) latest Balance of Payments report.

The report stated, “DI inflows declined slightly to US$0.25 billion in Q1 2025, from US$0.31 billion in Q4 2024.”

While this represents a quarterly decline, it marks an improvement from Q1 2024’s net divestment of $310 million, indicating a tentative restoration of investor confidence in Nigeria’s long-term economic outlook.

The Q1 2025 reduction reflects broader challenges in capital inflows, with portfolio investments experiencing more severe reversals. The financial account came under pressure overall, undermining Nigeria’s external position despite a current account surplus and positive trade metrics.

CBN data reveals that Nigeria’s financial account balance decreased to $7.58 billion in Q1 2025 from $7.82 billion in Q4 2024. This decline primarily resulted from dramatic shifts in portfolio investment liabilities, from a substantial $5.61 billion inflow in Q4 2024 to a $5.03 billion net outflow in Q1 2025. This $10.6 billion reversal highlights weakening foreign investor interest in short-term Nigerian financial instruments such as CBN bills and government securities.

Similar patterns emerged across other capital movement categories. “Other investment” liabilities—typically representing non-resident loans and deposits—dropped sharply from $13.89 billion to $4.32 billion. Direct investment assets, reflecting Nigerian overseas investments, also shifted to a $550 million net outflow, suggesting increased offshore diversification by domestic investors.

These substantial capital outflows underscore the impact of ongoing exchange rate instability, persistent inflation, and uncertainty regarding monetary and fiscal policy coordination—factors that have diminished the appeal of Nigerian assets to global investors.

Despite capital flight, Nigeria maintained a $3.73 billion current account surplus in Q1 2025—slightly below Q4 2024’s $3.80 billion, but exceeding the previous year’s $3.69 billion. This surplus was supported by an improved goods trade balance, which expanded to $4.16 billion from the previous quarter’s $2.62 billion.

Export revenues increased by 9.79% to $13.91 billion, driven by a recovery in gas exports—rising 26.7% to $2.66 billion—and a 30.4% increase in non-oil and electricity exports, reflecting enhanced global demand and competitive pricing advantages from naira depreciation. Crude oil exports remained steady at $8.59 billion.

Import spending decreased modestly to $9.75 billion from Q4 2024’s $10.05 billion, due to reduced inflows of petroleum products and non-oil goods. This import reduction, combined with stronger exports, expanded the trade surplus and provided some protection against external shocks.

However, other current account components were less favourable. The services account deficit widened to $3.69 billion from $3.48 billion in the previous quarter, largely due to increased travel and business service expenditures. Financial service inflows also declined significantly during this period.

Nigeria’s overall balance of payments shifted to a $2.77 billion deficit in Q1 2025, contrasting with a $1.10 billion surplus in Q4 2024. This deficit—representing the gap between total current and capital account flows—resulted from sharp declines in portfolio and other investment inflows.

This weakening of the external position translated into falling external reserves, which decreased to $37.82 billion by March 2025, down from $40.19 billion in December 2024. The net errors and omissions account, which captures unrecorded financial flows, totalled $3.85 billion, slightly below Q4 2024’s $4.02 billion.

The secondary income account balance—which includes remittances and foreign aid—fell by 17.9% to $5.29 billion, following a decline in diaspora remittances from $5.08 billion to $4.93 billion. General government foreign aid and grant inflows dropped significantly—by over 67%—possibly due to geopolitical policy changes, including executive orders restricting aid from certain Western nations.