By Seun Ibiyemi
The Nigerian Economic Summit Group (NESG) has cautioned that Nigeria’s growing reliance on external borrowing could threaten economic stability, following the country’s recent $2.35 billion Eurobond issuance.
In its latest economic outlook titled “2025Q4 Capital Importation Alert,” the group acknowledged that Nigeria’s return to the international capital market signals renewed investor confidence but warned that excessive foreign borrowing could reverse recent gains.
According to the NESG, while the Eurobond issuance in November 2025 provided fiscal support, sustained accumulation of external debt should be approached with caution to avoid weakening investor sentiment and undermining credit rating improvements.
“Nigeria’s return to the international capital market is a positive development, but an overreliance on external borrowing poses risks,” the group stated.
The NESG stressed that although borrowing can help address fiscal pressures, it must be carefully managed to prevent long-term vulnerabilities in the economy.
The group also highlighted ongoing banking sector reforms as a positive signal for Nigeria’s investment climate, noting that recapitalisation efforts are expected to strengthen banks’ resilience and global competitiveness.
It said higher capital requirements could boost investor confidence, particularly among foreign and internationally licensed banks, potentially driving increased capital inflows into the financial system.
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However, the NESG warned that such gains could be undermined by external shocks and structural challenges within the economy.
It expressed concern over the composition of capital inflows, noting that investments remain largely concentrated in short-term financial instruments rather than productive sectors.
Key sectors such as agriculture, manufacturing and construction continue to attract limited long-term investments, the group said.
The NESG identified insecurity, infrastructure deficits and regulatory bottlenecks as major constraints discouraging investment inflows into the real sector.
It emphasised that addressing these structural issues is critical to attracting stable foreign direct investment, promoting economic diversification and supporting job creation.
The group warned that without decisive reforms, Nigeria may struggle to secure the sustainable investments required for long-term economic growth.
